9911796707
TMI Blog1981 (9) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... c., 1973, 16th Dec., 1974, 24th Jan., 1976, 20th Dec., 1976 and 20th Sept., 1977. 3. Later on, the ITO being of the opinion that the assessee had failed to disclose fully and truly all the material facts necessary for his assessments for the years under consideration and so income chargeable to tax has escaped assessment, inasmuch as, the assessee in his returns for each of the years under consideration had not shown any income of his 1/4th share of the Cinema building used by the firm wherein he is a partner to the extent of 1/4th, issued notices under s. 148 r/w s. 147 (a) of the Act. Pursuant thereto, the assessee filed the returns. On the basis of these returns the ITO completed the reassessments, for the years under consideration and held that the income from the aforesaid cinema property was to be taxed in the hands of the assessee owner, though used by the partner in the firm of M/s Ganesh Talkies, Sriganganagar under the head "income from property" pursuant to s. 22 of the Act on the notional annual letting value basis. He accordingly computed that income of the share of the assessee at Rs. 3,750 (asst. yr. 1970-71), Rs. 9,180 (asst. yr. 1971-72), Rs. 9,210 (asst. yr. 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of which the assessment of the assessee for that year i.e. 1967-68 was completed. In the aforesaid profit and loss account r/w the capital account the assessee had clearly stated that he had purchased 1/4th share of Ganesh Talkies at Rs.40,000. Though that fact was disclosed, the ITO never taxed any income in respect of the share of the assessee in the said cinema hall under s. 22 of the Act on the notional annual letting value basis. It was on the above basis that the assessee for the years under consideration had not returned any income in respect of share in the cinema hall under s. 22 of the Act. Further the ITO' according to the ld. counsel for the assessee, Mr. Saraf was aware of the relevant clauses in the partnership deed of M/s Ganesh Talkies while assessing the said registered firm and the assessee for the asst. yrs. 1970-71 to 1977-78, the relevant extract of the partnership deeds in this respect dt. 30th April, 1966 and 10th Feb., 1972 are as under: "Partnership deed dt. 30th April, 1966. Cl. 9. That the parties to this deed and Sh. Ramanlal minor are equal owners (i.e. 1/4th share of ownership in building and machinery) of the cinema known as M/s Ganesh Tal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess such income or recompute the loss of the depreciation allowance, as the case may be, for the assessment year concerned." A perusal of the above provision shows that s. 147(1)(a) is satisfied if the following two conditions co-exist: (i) the ITO should have reason to believe that income chargeable to tax has escaped assessment or has been under assessed for the relevant year, and (ii) the ITO should have reason to believe that income has "escaped assessment" by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment in the matter. We have referred to the above provision of s. 147(a) of the Act because the completed assessments of the assessee for the years under consideration have been primarily reopened under s. 147(a) of the Act, as has been brought out in paragraph 3 above. To determine as to whether both the above conditions are satisfied in the present case or not it may be necessary at this stage to give a resume of adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terial facts necessary for his assessment for the year under consideration in respect of the said interest of the assessee in the said immovable property as sought to be made by the Rep. for the Deptt. in the course of the arguments. Rather the position being as stated above, the assessee had fully and truly disclosed all material facts necessary for his assessment for the years in respect of the said interest of his in the said immovable property. That being the position, one of the two conditions requisite for reopening of the assessment of the assessee under s. 147(a) of the Act is not satisfied in the present case, we may also add that the ITO assessing the assessee is also the ITO assessing the firm known as M/s Ganesh Talkies where the assessee is a partner. He is also the WTO of the assessee. In all these capacities, the ITO as ITO/WTO knew all along at the time of the original assessments of the assessee for the years under consideration fully the fact that the assessee was the owner of 1/4th of the aforesaid immovable property. The reopening of the original assessments of the assessee for the years under consideration under that provision i.e. s. 147(a) of the Act is inval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ikumar Narottam Morarji vs. CIT 27 ITR 69 (Bom) where it has been held that when a partnership carried on a business, each partner thereof carries on that business and that a partner does carry on the business although that business happens to be a partnership business. On the second question, the Gujarat High Court considered the contention of the Revenue that for the exemption in s. 22 of the Act to apply, the occupation of the property must be the occupation of the assessee owner in his capacity as the owner and not in any other capacity, since the entire basis of the liability of tax for the income from house property is that of ownership and not occupation or possession of the house property and held that the same could not be accepted, for that submission would require the addition of some words to the section or to re-write the exemption clause. The Gujarat High Court further held that the annual letting value of the property owned by the assessee and used for the business carried on by him in partnership was not liable to be included in his total income under s. 22 of the Act. 10. The facts in the present case are similar to that before the Gujarat High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
