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TMI Blog1991 (1) TMI 100X X X X Extracts X X X X X X X X Extracts X X X X ..... 82, and April 17, 1982, declaring total incomes of Rs. 63,000 and Rs.55,040, respectively. The income declared by the trust was assessed to tax by assessment orders dated March 23, 1982, and April 26, 1982. Thereafter, a notice under section 148 of the Income-tax Act dated August 8, 1985, was served on the petitioner on August 23, 1.985, proposing to reopen her assessments for the assessment years 1981-82 and 1982-83 and she was called upon to file revised returns for the two years. These notices, annexures-F and G, are challenged in these writ petitions. The petitioner's main contention challenging the notices to reopen the assessments in her case is that there was no omission or failure on her part while filing the returns in her individual capacity assessments for the two years 1981-82 and 1982-83. It is also the case of the petitioner that she had disclosed in Part III of the returns for the two years, claiming exemption of the said income in her hands on the ground that the income of the eight minor beneficiaries under the trust had been subjected to assessment in the name of the trust. In Part III of the returns, it was stated thus: "Income arising to eight minor benefi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer in not considering the facts disclosed in the returns about the creation of the trust in favour of her eight minor grandchildren and the notices issued under section 148 which are impugned in the writ petitions are liable to be quashed as without jurisdiction. It is also the case of the petitioner that the assessment of the trust had been completed by the very same Income-tax Officer for both the years levying tax on the income of the trust and he cannot plead ignorance of the knowledge of the income accruing to the minors. It was argued on behalf of the Department by Sri Chanderkumar, learned senior standing counsel for the Income-tax Department, that from the facts of the case and the returns filed by the petitioner, it cannot be disputed that the petitioner had failed to disclose the income arising out of the assets transferred to her eight minor grandchildren who were the beneficiaries. It was argued that merely claiming exemption in Part III of the return will not absolve the petitioner of the statutory obligation to disclose the income that was includible in her assessment under section 64(1)(vi) of the Income-tax Act. It was also contended that the question of suff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] 119 ITR 996 (SC); Y. V. Anjaneyulu v. ITO [1990] 182 ITR 242 (AP). These two decisions were rendered under section 147(b) and, therefore, have no relevance. The other decisions relied upon by the petitioner are: Thanthi Trust v. ITO [1989] ] 177 ITR 307 (Mad); Murlidhar Bhagwandas and Co. v. CIT [1990] 181 ITR 319 (Bom) ; New Excelsior Theatre P. Ltd. v. M. B. Naik, ITO [1990] 185 ITR 158 (Bom); Technocraft Industries v. G. S. Tung, 2nd ITO [1990] 185 ITR 465 (Bom). In all these cases, the reassessment proceedings taken under section 147(a) were challenged. On the facts of each case, the High Court held that there was no basis for the plea that income had escaped assessment and further that there was no failure on the part of the assessee to disclose true and correct facts. In Technocraft Industries' case [1990] 185 ITR 465 (Bom), the appraisal report of the Assistant Director of Inspection that a number of creditors where mere name-lenders, was relied upon. It was observed by the Bombay High Court that the loans and confirmation letters from creditors were disclosed by the assessee along with the returns, and, therefore, there was no reason to hold the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that the conditions precedent were satisfied before the Income-tax Officer initiated action to reopen the assessment. The Supreme Court also observed that it would not be a matter for the court to examine whether the reasons on which the Income-tax Officer issued notices were sufficient to form a belief about the escapement and ruled that it is not a justiciable issue. The court further observed that the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. In the same case, the Supreme Court, however, held that it is open to the court to examine whether the reasons for the belief have a rational connection or relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. This is no doubt the law laid down by the Supreme Court explaining the jurisdiction of the High Court. But the said ratio has to be applied having regard to the facts of each case. I am of the opinion that on the facts, the Supreme Court held that there was sufficient reason for the Incometax Officer to form an opinion about the escapement in that case, and the notice issued under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment in her case for the two years in question. As already stated, the petitioner had stated in Part III of the returns that the income arising to eight minor beneficiaries in Madan Lal Sarda Family Trust was not liable to be included in her returns. The very same Income-tax Officer who completed the assessment in the case of the trust was also the Income-tax Officer who had jurisdiction to assess the petitioner in her individual capacity. What is required under section 147(a) of the Income-tax Act is that the assessee is required to furnish such particulars of income and all other material facts necessary for his/her assessment. This is not a case where the Income-tax Officer could find fault with the petitioner having regard to the fact that the petitioner had mentioned about the trust as well as the income arising to the minor beneficiaries in her returns and had also claimed exemption of that income in her hands in Part III of the returns. This information was sufficient to alert the Income-tax Officer to make further enquiries as to why the income arising to the minor beneficiaries should not be taxed in her hands under section 64(1)(vi) of the Incometax Act. The Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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