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TMI Blog1981 (1) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... which was partitioned on Diwali 1969. The assessee was married on 2-5-1976. However, he filed the return of wealth for the assessment year 1971-72 in the status of a HUF and he was assessed as such. Similarly, he filed the return of wealth for the assessment years 1973-74 to 1975-76 and he was assessed accordingly as under : Assessment year Date of assessment Wealth assessed as returned Rs. 1973-74 11-2-1974 &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision in the case of C. Krishna Prasad, the assessee's correct status would be that of an individual. So, he concluded that the decision of the Supreme Court is an information on the basis of which he is within his jurisdiction to reopen the assessment and he placed further reliance on the Supreme Court decision in the case of CIT v. A. Raman & Co. [1968] 67 ITR 11. 6. The matter was agitated in appeals before the AAC who dismissed the appeals of the assessee ; and thereby upheld the action of the WTO. 7. The assessee being aggrieved and dissatisfied with the orders of the AAC, has preferred these appeals. 8. In view of our above ex parte order, we have to depend upon the memorandum of appeals. The grounds of appeal in all these three appeals in the memorandum of appeals are the same and as such we are reproducing the grounds for the assessment year 1975 which are there in WT Appeal No. 220 (Nag.) of 1978-79. The grounds of appeals are as under : "1. That the Wealth-tax Officer erred in taking the status of the assessee as individual though the status of the assessee has been declared as HUF and the learned AAC erred in upholding the same. On facts and circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade on 11-2-1974. Though the original assessments for the assessment years 1974-75 and 1975-76 were made on 15-11-1975 and 25-5-1975 after the date of the Supreme Court decision, because these reassessments are opened by the WTO by recording the reasons for his belief that the assessment of wealth has escaped on the same date, i.e., on 7-10-1977. Therefore, it is clear to us that no sooner, the WTO came to know about the aforesaid decision of the Supreme Court, than on the basis of it he reopened the assessments ; and as such, it cannot be said that the reopening of the assessments for the assessment years 1974-75 and 1975-76 is bad in law since the decision of the Supreme Court was there on 12-11-1974, as subsequent and preceding decisions of the High Court and the Supreme Court are immaterial, because the assessment can be reopened where the information as to the true and correct state of law derived from the relevant judicial decisions is there. 14. In view of our above discussion and on the totality of the facts and circumstances of the case, we hold that the reopening of the assessment by the WTO is justified and the status of the assessee is rightly taken by the WTO as that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17(1)(b) is necessary. Issue notice." The assessee objected to the action under section 17(1)(b) on the ground that his status was that of a HUF as the properties acquired by him were on partition of a HUF. Further, it was contended by him at the assessment stage before the WTO that the status as declared by him was considered and verified at the time of the original assessment and, hence, no action under section 17 could be taken now. The WTO, however, overruled the assessee's objection on the basis of the Supreme Court's decision in the case of Krishna Prasad and held that the proper status of the assessee was of an individual till the assessee got married. 3. On an appeal by the assessee before the AAC, the AAC agreed with the WTO that the proper status should be that of a HUF because the assessee had neither a wife nor any family. He, therefore, upheld all the three assessments under section 17(1)(b). 4. The assessee has, therefore, filed these appeals objecting to the assessments being reopened under section 17(1)(b) and the status being taken as that of a HUF. 5. At the time of the hearing, no appearance has been put in on behalf of the assessee. On behalf of revenue, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he arguments of these appeals before the Tribunal (as it was the case of revenue), that the WTO physically came to be aware of the Supreme Court's decision after the original assessments for these two assessment years were made. The only argument advanced on behalf of revenue was that the WTO's original assessments were erroneous in the light of the Supreme Court decision and, therefore, the assessments were liable to be reopened under section 17(1)(b) within the time laid down under that section. Apart from the arguments on behalf of revenue, on a perusal of the date of the decision of the Supreme Court in the case of Krishna Prasad, i.e., 12-11-1974, and the reference made by the WTO in his note reopening the assessment, it would be found that he has apparently derived knowledge of this decision from the Income-tax Reports of 1974, i.e., before 31-12-1974. Therefore, it cannot be said that the WTO derived knowledge of the Supreme Court decision after the original assessments were made on 15-1-1975 and 25-11-1975, respectively. Further, the provisions of section 57(1) of the Indian Evidence Act stand in the way. Therefore, in my opinion, the WTO could not have reopened these asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs for two years under section 17(1)(b). "Assessee was married on 2-5-1976. Hence for this assessment year his correct status is an individual. He has been wrongly assessed in the status of HUF and assessment was filed as N.A. Issue notice under section 17(1)(b) as the assessee failed to file return in the status of individual. In view of the Supreme Court decision in the case of C. Krishna Prasad v. CIT [1974] 97 ITR 493 till his marriage assessee's correct status would be that of ndividual. Action under section 17(1)(b) is necessary. Issue notice." 3. There is no dispute that the correct status of the assessee for the two years under appeal is individual in view of the Supreme Court decision in the case of Krishna Prasad. There is also no dispute that the wealth of the assessee can be said to have escaped assessment in the sense that it has been assessed as HUF wrongly. However the dispute centres round the fact that the Supreme Court's decision in Krishna Prasad as a result of which the proceedings herein are reopened was pronounced and reported on 12-11-1974, i.e., long before the assessments were completed, so much so that it should not be said that the assessments herein we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, the fact that the succeeding WTO was aware of the Supreme Court's decision and found that the completion of the assessments in the status of HUF in the case of the assessee was wrong on the basis thereof was of no consequence. On the other hand, the departmental representative contended that the WTO who completed the assessments originally was not aware of the Supreme Court's decision, can be reasonably inferred from the fact that if he was aware of it, he would not have completed the assessments in the status of HUF. According to him, there was no necessity for a positive material. 6. While Shri Thakar, learned counsel for the assessee, strongly relied on the Supreme Court's decision in the case of Bankipur Club Ltd. v. CIT [1971] 82 ITR 831, the departmental representative also relied on some of the observations in that very case and the other decisions of the Supreme Court in the case of Kalyanji, Indian & Eastern Newspaper Society v. CIT [1979] 119 ITR 996, of the Allahabad High Court in the cases of Asghar Ali Mohammad Ali v. CIT [1964] 52 ITR 962, Thakur Das Tej Prakash v. ITO [1970] 75 ITR 523 and of the Madras High Court in the cases of CIT v. Rathinasabapathy M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material (and no more) does not give him that power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC), CIT v. A. Raman & Co, [1968] 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC) and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji & Co. v. CIT [1976] 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay down the correct law." As I understand from the above decision, an error discovered on a reconsideration of the same material (and no more) does not give the ITOs a power to reopen the proceedings under section 34(1)(b). The decision of the Supreme Court in Kalyanji has been overruled to this extent only, as it is clear from the other observations (above), viz., the view taken by the Court in other cases, including the case of A. Raman has not undergone a change. In this connection, the observations of their Lordships in the case of A. Raman may be usefully quoted : "Jurisdiction of the ITO to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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