9911796707
TMI Blog1975 (1) TMI 13X X X X Extracts X X X X X X X X Extracts X X X X ..... us year he performed his daughter's marriage on September 2, 1960, in which a sum of Rs. 86,923 was incurred as expenditure. Out of the said sum Rs. 25,631 was spent by him and Rs. 61,292 was spent by his four divided sons. The Expenditure-tax Officer, completed the assessment for this year on December 19, 1962, and in the course of the said assessment he considered the question as to whether the expenses incurred by the sons could be included in the taxable expenditure of the petitioner under section 4(i) of the Act. That provision may be extracted and it runs as follows : " 4. Amount to be included in taxable expenditure.--Unless otherwise provided in section 5, the following amounts shall be included in computing the expenditure of an assessee liable to tax under this Act, namely :-- (i) any expenditure incurred, whether directly or indirectly by any person other than the assessee in respect of any obligation or personal requirement of the assessee or any of his dependants to the extent to which the amount of all such expenditure in the aggregate exceeds Rs. 5,000 in any year ; (ii) where the assessee is an individual, any expenditure incurred by any dependant of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x, who under section 25(i) of the Act, could file an application for reference. The Commissioner accepted the Tribunal's decisions and in a memorandum dated May 24, 1965, a copy of which was communicated to the Expenditure-tax Officer, observed as follows : " The Expenditure-tax Officer will please take action under section 16 of the Expenditure-tax Act for the assessment year 1961-62, to include the expenditure incurred by the assessee's minor sons in connection with their sister's marriage in the taxable expenditure of the assessee under section 4(ii) of the Act. The Expenditure-tax Officer's attention is also invited to the decision of the Andhra Pradesh High Court in His Highness Prince Azam Jah v. Expenditure-tax Officer . A report may please be sent after the proceedings are initiated ". On July 15, 1965, the Expenditure-tax Officer issued a notice under section 16 of the Act requiring the petitioner to submit a return within 30 days from the date of the service of the notice. The petitioner in reply referred to the earlier proceedings relating to the same assessment year and contended in his letter dated August 14, 1965, that the expenditure of the sons was not include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer to reopen the assessment in accordance with the terms of section 16(b) of the Act. In other words, the finality attributed to the Tribunal's order and the power to reopen under section 16 of the Act were said to be distinct and separate. We shall first consider the point stressed by the learned counsel for the petitioner regarding the finality attached to the Tribunal's order as affecting the scope of the powers of the Income-tax Officer under section 16(b) of the Act. In Commissioner of Income-tax v. Rao Thakur Narayan Singh, the Supreme Court had to deal with a rather unusual case. For the assessment year 1942-43, the Income-tax Officer made a reassessment in July, 1945, by applying section 34 of the Indian income-tax Act, 1922, and brought to tax forest income and interest income. At the time of this assessment the assessee contended that his forest income was not taxable. The Income-tax Officer did not accept this objection of the assessee, and the matter eventually reached the Appellate Tribunal. Before the Tribunal the assessee did not raise any dispute regarding the interest income, but objected to the forest income being taxed and also to section 34 being invoked. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he decision clearly shows that the Income-tax Officer cannot reopen the assessment on the same facts over again. The last sentence in the above extract, however, points out that the position of the Income-tax Officer having new information before him, which he did not have at the time of the Tribunal's order, would be different. The attempt of the revenue in this case was to show that the Expenditure-tax Officer had new information, which he got from the Commissioner and that the present case is thus within the scope of the reservation made by the Supreme Court. We consider that there is substance in the contention of the revenue in this case. We may now examine the question as to whether the Expenditure-tax Officer had " information " which justified the reopening of the assessment under section 16(b) of the Act. Section 16 of the Act has its parallel in the Income-tax Act, namely, section 34 of the Indian Income-tax Act, 1922, and section 147 of the Income-tax Act, 1961. The scope of those provisions have been the subject of several decisions by the Supreme Court. In Commissioner of Income-tax v. A. Raman and Co. the Supreme Court was considering an appeal from the proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax Officer, which would come within the scope of section 16(b) of the Act. It was submitted that the Commissioner could not give directions to reopen the assessment to the Expenditure-tax Officer in the manner done by him in his memorandum dated May 24, 1965. We consider that the Expenditure-tax Officer treated this memorandum only as a piece of information. Whether the Commissioner could give directions to the Expenditure-tax Officer to reopen the assessment under section 16(b) of the Act, is not a matter which can be raised in the present proceedings. As the Commissioner is not the respondent before us and the memorandum dated May 25, 1965, is not really the subject-matter of the present writ proceedings, it is unnecessary to go into this aspect further. The point now before us appears to be covered by the decision of the Supreme Court in Maharaj Kumar Kamal Singh v. Commissioner of Income-tax. In that case, for the assessment year 1945-46, the Income-tax Officer considered the question as to whether a sum of Rs. 93,604 received by the assessee on account of interest on arrears of agricultural rent due to him was liable to tax under the Indian Income-tax Act. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment. Can it be said that, because the matter was considered and decided on the merits in the light of the binding authority of the decision of the Patna High Court, no income has escaped assessment when the said Patna High Court decision has been subsequently reversed by the Privy Council ? We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted. In our opinion, even in a case where a return has been submitted, if the Income-tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of income has escaped assessment. The appellant's attempt to pay a very narrow and artificial limitation on the meaning of the word " escape " in section 34(1)(b) cannot therefore succeed. " In the above case, also the income assessed by the Income-tax Officer was deleted on appeal by the Appellate Assistant Commissioner. After the order of the Appellate Assistant Commissioner, the Income-tax Officer reopened the assessment. The income sought to be reassessed was the same. The reason for i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that case, for the assessment year 1949-50, the assessee-company disclosed a profit of 1.76 lakhs of rupees from a joint venture and claimed that half of it was paid to one Ratiram under an agreement dated October 7, 1948, for financing the transaction in the joint venture. The Income-tax Officer accepted this claim of the assessee and brought to tax only one half of the sum of Rs. 1,76,000. For the assessment year 1950-51, before the Income-tax Officer there was a similar claim. The matter was re-examined and it was held that the agreement of October 7, 1948, was a sham transaction, got up as a device to reduce profits. So, in the assessment for 1950-51, the assessee's claim for deduction was not accepted. The Income-tax Officer thereafter reopened the proceedings for 1949-50, under section 34(1)(a) of the Act of 1922, so as to bring to tax the other half which had been allowed as deduction. Dealing with the challenge to this reassessment, at page 612, the Supreme Court observed as follows : The Income-tax Officer had, in consequence of information in his possession that the agreement with Ratiram Tansukhrai was a sham transaction, reason to believe that income chargeable to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment years 1959-60 and 1960-61. There was a partition in the family of which the assessee in that case was the karta in December, 1959. The question that arose for consideration was whether the amount spent by the wife and children out of the properties allotted to them on partition was liable to be included in the assessment of the said assessee for those years.The assessee filed returns as an individual and also as karta of the family up to the date of partition for those years. In the returns filed as individual the assessee had not included the expenditure incurred by his wife and children. The Expenditure-tax Officer accepted the return as " individual " in so far as those items of expenditure are concerned. As regards Joint family, be considered the expenditure incurred by the wife and minor children, but ultimately, did not actually assess the join family thereon, because the expenditure was well within the exemption limit. He later on sought to take proceedings under section 16(b) of the Act against the individual, and the legality of the application under section 16(b) of the Act was challenged before this court. In the decision to which one of us was a party, this court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quently the Income-tax Officer had no jurisdiction to reopen the assessment. It was also held that having second thoughts on the same material did not warrant the initiation of proceedings under section 147. This decision would have applied to the facts of the present case, if the present proceedings had been taken under section 16(a) of the Expenditure-tax Act. The proceedings here are under section 16(b). The requirements of the two provisions are so different that it would not be proper to apply the decision rendered under one provision to the other. The learned counsel for the appellant submitted that the proper remedy for the Expenditure-tax Officer was to have taken the matter on reference to the High Court from the decision of the Tribunal. From the facts it appears that the Commissioner had ultimately no objection to the Tribunal's decision regarding section 4(i). He, however, found that there was a decision of the Andhra Pradesh High Court which would justify the application of section 4(ii). Even if he had filed an application for reference against the order of the Tribunal in respect of the earlier assessments, he could not have raised any question regarding the appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
