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TMI Blog1989 (8) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... ted under section 143(3) on November 25, 1962, on a total income of Rs. 1,14,689. Subsequently, reassessment was made under section 147(b) on February 29, 1968, on a total income of Rs. 1,65,169. The assessee has given a gift of Rs. 1,00,011 on October 7, 1959, to her minor daughter, Kumari Manjushree Birla, and this amount was invested in shares of Kesoram Industries and Cotton Mills Ltd. and Hindusthan Motors Ltd. The Income-tax Officer was of the view that the income arising from the assets transferred to the minor child was to be treated as the income of the individual under section 64(4) and, therefore, such income had escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Since such income was not disclosed in the original return filed on August 29, 1962, the Income-tax Officer initiated reassessment proceedings under section 147(a) and included capital gains arising on transfer of shares at Rs. 29,274 and dividend income from the shares at Rs. 5,983 in the total income of Rs. 1,65,169 already determined. Being aggrieved, the assessee preferred an appeal before the Appellate Assistant Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the return submitted by her. The Supreme Court held (at page 627) : "There is a decision of this court which is directly in point and it concludes the determination of the question arising in this appeal against the Revenue but before we refer to that decision, we might first examine the question on principle as a matter of pure interpretative exercise. Section 271, sub-section (1), clause (c), provides for imposition of penalty on an assessee if it is found, inter alia, that the assessee has concealed the particulars of 'his income'. The question is what is the scope and content of the words 'his income' occurring in this penal provision. Do they refer only to the income of the assessee himself or do they also take in the income of others which is liable to be included in the computation of the total income of the assessee by reason of the relevant provisions of the Act, such as section 64, sub-section (1), clauses (i) and (iii) ? The answer to this question obviously depends upon as to what is 'his income' which the assessee is liable to disclose for the purpose of assessment, for, concealment can only be of that which one is bound to disclose and yet fails to do so. Section 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or minor child, it is liable to be included in computing the total income of the assessee, and it would be assessable to tax in the hands of the assessee. The total income of the assessee chargeable to tax would include the amounts representing the shares of the spouse and minor child in the profits of the partnership firm. If this be the correct legal position, there can be no doubt that the assessee must disclose in the return submitted by him, all amounts representing the shares of the spouse and minor child in the profits of the partnership film in which he is a partner, since they form part of his total income chargeable to tax. The words 'his income' in section 139, sub-section (1), must include every item of income which goes to make up his total income assessable under the Act. The amounts representing the shares of the spouse and minor child in the profits of the partnership firm would be part of 'his income' for the purpose of assessment to tax and would have to be shown in the return of income filed by him. The assessee then contended that the return of income which was required to be filed by her under section 139, sub-section (1), was a return in the prescribed form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order imposing penalty on the assessee would have been sustained but, in view of the decision of the Supreme Court in V.D.M.RM.M.RM. Muthiah Chettiar v. CIT [1969] 74 ITR 183, which is a larger Bench decision where a different view had been taken by a Bench of three judges of the Supreme Court, the contention of the assessee that imposition of penalty in this case is illegal had to be upheld. There, the Supreme Court proceeded to hold (at page 629 of 125 ITR): "It was held in this case (Muthiah Chettiar) that even if there were any printed instructions in the form of the return requiring the assessee to disclose the income received by his wife and minor child from a firm in which the assessee was a partner, there was, in the absence in the return of any head under which the income of the wife or minor child could be shown, no obligation on the assessee to disclose this item of income, and the assessee could not be deemed to have failed or omitted to disclose fully and truly all material facts necessary for his assessment within the meaning of section 34(1)(a) of the Indian Income-tax Act, 1922. With the greatest respect to the learned judges who decided this case, we do not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the principles laid down in the aforesaid decisions of the Supreme Court will govern this case as the assessment year involved in one of the decisions was 1962-63 and in the other 1964-65. This is, however, not relevant. The question is whether, at the material time, when the return was filed by the assessee, the form of return contained a separate column to include the income under section 64. The Supreme Court in Kochammu Amma [1980] 125 ITR 624 mentioned that the amendment in the form of return was carried out with effect from April 1, 1972, long after the original return was filed in this case. It appears that the Income-tax (Second Amendment) Rules, 1967, came into force with effect from April 1, 1967. Rule 12 of the Income-tax Rules has been amended by the said amendment which provides as follows : "12. Return of income.-(1) The return of income required to be furnished under sub-section (1) or sub-section (2) or sub-section (3) of section 139 shall, (a) in the case of a company, be in Form No. 1 and be verified in the manner indicated therein; (b) in the case of a person not being a company, be in Form No. 2 and be verified in the manner indicated therein ; Prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74 ITR 183 (SC), similar note was considered by the Supreme Court and it was held that, in the absence of any head under which the income of the wife or minor child of a partner whose wife or minor child was a partner in the same firm, could be shown, by not showing that income, the taxpayer cannot be deemed to have failed or omitted to disclose fully and truly all material facts necessary for his assessment ; it is only by the Income-tax (Second Amendment) Rules, 1972, which came into force on July 1, 1972, in the return form prescribed thereunder, a column has been added being column 12(b) where income arising to spouse/minor child or any other person as referred to in Chapter V of the Act is required to be shown. This amendment was noticed by the Supreme Court in Kochammu Amma [1980] 125 ITR 624. In our view, therefore, at the material time when the original return was filed by the assessee some time in 1962, the form of return in force did not provide for any separate column to disclose the income arising under section 64 of the Act. Even assuming that there was escapement in the subsequent return filed in 1968, in response to the notice under section 148 read with section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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