Escaped Assessment: disclosed family income later reassessed is not treated as escaped assessment; fixed allowance is separate beneficiary income.

Whether income 'escaped assessment' under section 34 was answered by applying the disclosure/concealment principle: known or previously assessed family income subsequently set aside on objection does not constitute income that escaped assessment, and outcome favoured the assessee. Whether primogeniture and an arbitral award made the holder sole owner was decided by treating impartible estate character and survivorship as compatible with family or undivided property status; the holder was not treated as sole owner for tax purposes, outcome favoured the assessee. Whether a fixed allowance to a brother was deductible was decided by treating that allowance as the brother's separate income and not the head's taxable income, outcome favoured the assessee.

---

---

Issues: (i) Whether the assessee's income for assessment year 1929-30 can be said to have escaped assessment for the purposes of section 34 of the Income-tax Act, 1922; (ii) Whether, given the rule of primogeniture and the award, the assessee is the sole owner of the impartible estate and the family income was properly assessed on him as an individual; (iii) Whether the sum of Rs. 7,200 paid to the assessee's brother as maintenance is an admissible deduction from the assessee's income under the head of property.

Issue (i): Whether the income of the assessee for assessment year 1929-30 escaped assessment within the meaning of section 34 of the Income-tax Act, 1922.

Analysis: The assessment originally made for 1929-30 on the assessee as head of an undivided Hindu family included the sums in question and was known to the Income-tax authorities; no part of the income was concealed by the assessee. The subsequent setting aside of that assessment on objection does not transform known or disclosed income into income that 'escaped assessment' as contemplated by section 34, which addresses cases of omission or concealment or similar circumstances causing the taxing authority not to have taxed income.

Conclusion: The income cannot be said to have escaped assessment for the purposes of section 34; answer: in the negative (in favour of the assessee).

Issue (ii): Whether, in view of the rule of primogeniture and the arbitrator's award, the assessee is the sole owner of the impartible estate and the family income was rightly assessed on him as an individual (relevance to super-tax).

Analysis: Authorities and principles show that an impartible estate governed by custom of primogeniture may nevertheless be regarded as joint or family property for certain purposes and that the holder may be the occupant or manager without being sole owner to the exclusion of family character. The rule of primogeniture and impartibility do not automatically negate the existence of a Hindu undivided family or the possibility that the holder is the head or managing member; recognised case law permits survivorship and family character in impartible estates.

Conclusion: The assessee cannot be held to be sole owner of the impartible estate for the purpose contended; answer: in the negative (in favour of the assessee).

Issue (iii): Whether the Rs. 7,200 paid to the brother as maintenance is deductible from the assessee's income under the head of property.

Analysis: The allowance paid to the brother under the award is a fixed provision given in lieu of a share, constitutes the brother's separate income, is not a voluntary or variable payment tied to estate income, and the brother is separately assessed on it. The payment is not a charge that forms part of the assessee's income nor a payment to a coparcener within a partible joint family; the assessee acts as collector and payer on behalf of the brother.

Conclusion: The sum of Rs. 7,200 is not part of the assessee's income and is allowable as attributable to the brother; answer: in the affirmative (in favour of the assessee).

Final Conclusion: The Court answers issues (i) and (ii) in the negative and issue (iii) in the affirmative, resulting in a determination that favours the assessee on the substantive questions referred to the Court.

Ratio Decidendi: For section 34 purposes, income 'escaping assessment' requires nondisclosure or omission causing the tax authority's failure to assess; known or disclosed income later reassessed after cancellation does not satisfy section 34, and an allowance fixed by custom or award to a separate person in lieu of a share in an impartible estate constitutes that person's separate income and does not form part of the head's taxable family income.

---