1969 (3) TMI 15 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the notices issued under Section 148 of the Income-tax Act, 1961.
2. Jurisdiction of the Income-tax Officer under Section 147(a) of the Income-tax Act, 1961.
3. Obligation of the petitioner to disclose incomes of wives and minor children under Section 22 of the Income-tax Act, 1922.
4. Whether there was a failure to disclose fully and truly all material facts necessary for the assessment.

Issue-wise Detailed Analysis:

1. Validity of the Notices Issued under Section 148 of the Income-tax Act, 1961:
The petitioner was assessed to income-tax for the years 1955-56, 1956-57, 1957-58, and 1958-59. The assessments were completed by March 28, 1961. The Income-tax Officer issued notices on March 13, 1964, under Section 148, claiming that some income had escaped assessment. The petitioner filed writ petitions seeking prohibition of these proceedings, arguing that the conditions for invoking Section 147(a) were not met.

2. Jurisdiction of the Income-tax Officer under Section 147(a) of the Income-tax Act, 1961:
The assessments were completed under the Income-tax Act, 1922. Section 34 of the 1922 Act dealt with "income escaping assessment." The court noted that reopening assessments under clause (a) required omission or failure by the assessee to disclose all material facts. The petitioner argued that there was no such omission or failure, and thus, the Income-tax Officer lacked jurisdiction under Section 147(a).

3. Obligation of the Petitioner to Disclose Incomes of Wives and Minor Children under Section 22 of the Income-tax Act, 1922:
The petitioner contended that Section 22 required disclosure of the assessee's own total income and not the incomes of wives and minor children. The court agreed, stating that Section 22 did not impose any obligation to include such incomes in the return. The court cited several precedents, including a Supreme Court ruling, affirming that the Act and the Rules did not require the inclusion of income of wives and minor children in the assessee's return.

4. Whether There Was a Failure to Disclose Fully and Truly All Material Facts Necessary for the Assessment:
The petitioner argued that all material facts were disclosed, including the status of the three ladies and their children. The court noted that the Income-tax Officer had sought clarification on their status, and the petitioner's agent had provided a detailed explanation, stating that the ladies were not legally wedded wives but were referred to as wives out of courtesy. The court found that sufficient material was available with the department at the time of the original assessments, and the subsequent trust deeds did not disclose any new facts. The court held that the department's attempt to reopen the assessments was unjustified and lacked jurisdiction under Section 147(a).

Conclusion:
The court concluded that the Income-tax Officer had no valid reason to believe that the petitioner had failed to disclose fully and truly all material facts necessary for the assessments. The respondent was prohibited from proceeding under Section 147(a) of the Income-tax Act, 1961, and the notices issued under Section 148 were invalid. The petitioner was awarded costs.