Reassessment and full disclosure rules: omission to disclose spouse or minor child income did not justify reopening under section 147(a).

Reassessment under section 147(a) could not be sustained where the alleged omission concerned income of the assessee's wife and minor child, because the statutory scheme then in force did not require disclosure of income not belonging to the assessee and assessable only by operation of law. On that basis, non-disclosure of such income was not a failure to disclose fully and truly all material facts necessary for assessment, so the reassessment notices were invalid. The later decision in Kochammu Amma was treated as reaffirming the binding effect of the earlier three-judge ruling, and no reference to a larger Bench was made.

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Issues: Whether notices for reassessment under section 147(a) of the Income-tax Act, 1961 could be sustained on the footing that the assessee had failed to disclose income relating to his wife and minor child, and whether such omission amounted to failure to disclose fully and truly all material facts necessary for assessment.

Analysis: The controlling principle was taken from earlier decisions holding that, under the return forms and the statutory scheme then in force, the assessee was not obliged to disclose income which was not his own and which was liable to be assessed in his hands only by operation of law. Those decisions further held that non-disclosure of such income did not amount to omission or failure to disclose fully and truly all material facts so as to justify reassessment. The later decision in Kochammu Amma was accepted as reaffirming the binding effect of the earlier three-judge ruling and the court declined to refer the matter to a larger Bench.

Conclusion: The reassessment notices were not sustainable; the omission attributed to the assessee did not justify action under section 147(a). The appeal by the Revenue failed.

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