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TMI Blog1988 (10) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... s for reopening as it transpire are as follows. These 3 assessee were co-owners of another property in Basheergbhah. They had become partners in a firm called Hyderabad Builders and the partnership deed was execute on 27th June, 1975. These 3 partners had. They 45 per cent of the share of profit between them. As contribution of their capital, they had transferred to the firm their common properties. In the booked of the firm, this property was valued at Rs. 5,10,000. Each one was credited which Rs. 1,70,000 in their capital account. 4. The ITO was of opinion that this transfer to the firm was liable to capital gains. He referred the question of market value of the property to the Valuation Officer who fixed a value of this property at Rs. 10,30,000. In this draft assessment order, he calculated the capital gains on basis. In the proceedings before the IAC, under s. 144B, he approved the findings of the ITO that there was a transfer. However, he did not approve of the value fixed by the Valuation Officer. He directed the capital gains to be computed on the basis of the book value. This assessment to income-tax had come before the Tribunal but the Tribunal without going into the me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission to given relevant materials in the assessment would be sufficient for reopening of the assessment. This would amount to a failure to give full and true disclosure of the materials for the assessment. If any authority is required we may refer to the decision cited by Sri Viswanatham. The Delhi High Court's decision in the case of Sushila Devi Jain vs. CIT (1982) 27 CTR (Del) 48 : (1982) 138 ITR 551 (Del). In that case, the assessee failed to give in part-III of the return, information regarding particulars of other partners. The column relating to relationship between the partners left blank. The Delhi High Court held that this amounting to failure to disclose full and true materials in the assessment. The same facts would apply here also. The transfer of a property for consideration below the market value is a property to which the assessee was rightly entitled and which has been vested in the assessee and other persons jointly is also a relevant material. Such a transfer would occur when the assessee and other persons jointly is also a relevant material. Such a transfer would occur when the assessee gives as his contribution to the partnership, his own immovable property. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was resisted by the assessee on the ground that the returns did not require disclosing this information and therefore there was no failure on the part of the assessee to disclose material facts. This argument was rejected by pointing out that there is no reason for restricting the words "omission or failure on the part of the assessee to disclose fairly or truly all material facts and particulars" in the light of the proforma of the returns prescribed under the Rules. Every materials fact which has got a bearing must be disclosed. Thus, the case in much stronger where the return form requires disclosure of certain materials. 10. The second contention of Mr. Razaak is that all these materials are already available with the GTO. We cannot accept this. The materials available in the IT Proceedings does not mean that they were available in the GT proceedings. It may be that under s. 6(1) GT Act, the ITO is having jurisdiction over an assessee for income-tax purposes would be the Officer for Gift-tax purposes also. But, these are two separate enactment s. Disclosure is in another set of proceedings. In this connection, he had referred to the decision of the Calcutta High Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the said proceedings and findings. In spite there of, it appears that the GTO has picked up and taken note of only certain aspects of the transaction and appears to have ignored or overlooked the other aspects of the transaction which had been considered and endorsed by the highest judicial forum of the land. In our view, the GTO was not entitled to do so." It will be seen that the same set of transactions on which the Department initially attempted to tax capital gains were being considered for Gift-tax purposes. The Gift-tax proceedings itself were started only to bring to tax what was already considered earlier in Income-tax proceedings. In the case before us there is an existing gift-tax proceedings. In the proceedings, the assessee has filed a gift-tax return which did not contain any particulars about the transfers. These facts were not found in the Calcutta High Court's case. We are, therefore, of opinion that the decision of the Calcutta High Court can be distinguished from the facts. 11. It is not necessary for us to consider whether the reopening would be valid under s. 16(1)(b). Both the assessees and the Department have ruled out the consideration of s. 16(1)(B) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand what will be the position in terms of monetary value of a partner's share on that date." Thus, their figure given in the books and credited to the partner's account are not at all relevant. Therefore, there is no case for the Department to start proceedings on the basis that the consideration received was only Rs. 1,70,000. As Mr. Razaak has rightly remarked the consideration would be the willingness of the assessee on becoming a partner to take the risks involved in conducting the business, the liabilities and the losses which may occur. These are personal and it is impossible to evaluate them monetarily. At page 522 in the same case the following passage occurs which is very illuminating: "What is profit or gain which can be said to accrue or arise to the assessee when he makes over his personal asset to the partnership firm as his contribution to its capital? The consideration as we have observed, is the right of the partner during the subsistence of the partnership to get his share of profits from time to time and after the dissolution of the partnership or with his retirement from the partnership, to receive the value of the share in the net partnership assets as on t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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