9911796707
TMI Blog1963 (9) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... daughter, Rs. 1,00,000 made up of various sums to charity, and the balance of Rs. 3,00,000 was bequeathed to her son, the assessee. This sum of Rs. 3,00,000 was invested in the firm of Messrs. Hazarimal Hiralal and earned interest. Besides, the deceased owned one-sixth share in the firm of Messrs. Bikanir Trading Co., and this also came to the assessee. In the several returns made during his minority by his father, the said Hulash Chand Rampuria, since deceased, showed the income from the firm till 1944-45 in his son's account. The interest payments to the assessee, although shown in his son's account, were, however, assessed against the father under section 16(3)(a)(i) of the Act. The said Hulash Chand Rampuria was dissatisfied with the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore that the Income-tax Officer knew that the income belonged to the minor, the assessee, but had chosen, nevertheless, to assess it in the hands of the father and, having done so, it was not open to him, when the High Court decision was passed, to initiate proceedings under section 34. The Tribunal, for the reasons given in its judgment, held that though there had been laches on the part of the department in taking action under section 34, the assessee had not discharged his duty to return his income at the proper time, and so the assessment came within the ambit of section 34(1)(a) of the Act. On these facts, the following question of law has arisen for opinion by this court : "Whether, on the facts and in the circumstances of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portions of the judgment, which have been relied up on by the learned counsel of both sides, are quoted below : Their Lordships have observed at page 199 as follows : "Before we proceed to consider the materials on record to see whether the appellant has succeeded in showing that the Income-tax Officer could have no reason, on the materials before him, to believe that there had been any omission to disclose material facts, as mentioned in the section, it is necessary to examine the precise scope of disclosure which the section demands. The words used are 'omission or failure to disclose fully and truly all material facts necessary for his assessment for that year'. It postulates a duty on every assessee to disclose fully and truly all ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 34(1) (a) as soon as he was appraised of the decision of the High Court. As soon as the decision was passed, the Income-tax Officer found that the interest income had escaped assessment and therefore resort to the provisions of section 34(1)(a) of the Act was justifiable. Prima facie this argument made by Mr. Balai Pal appears to be correct. But this reference has to be decided on the facts as disclosed before the taxing officer, and it must have to be found whether the Income-tax Officer could not have reason, on the materials before him, to believe that there had been any omission to disclose material facts. It will appear from page 5 top of the paper book that the Tribunal made the following finding of fact : "For the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is knowledge that the amount has been included in somebody else's assessment. On a consideration of this finding we are of opinion that the Appellate Assistant Commissioner proceeded on the footing that the Income-tax Officer had knowledge at the time of assessment for 1945-46 that the interest income should be assessed in the hands of the father and the amount was actually assessed in his account, still according to the Appellate Assistant Commissioner, the Income-tax Officer was justified in proceeding under section 34(1)(a). We are of opinion that when the Income-tax Officer had the aforesaid prima facie facts and materials before him it was for him to decide that such a state of affairs did not justify him to proceed under section 34( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e (the assessee's father) showed the interest income for the first time in his return as he had always been proceeded against under section 16(3), in spite of his showing the income in the return of his son. Although at his instance reference under section 66(1) was made to the High Court against the assessment order under section 16(3) in the assessment year 1940-41, he could not have foreseen in 1946 as to what the decision of the High Court would be, and as such he had compelling reasons to show the interest income as his own in the relevant year of assessment. These facts, in our opinion, do not warrant the inference that the conduct of the assessee was mala fide, and it was the duty of the assessee to show the income in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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