TaxTMI 
TaxTMI 
1969 (2) TMI 16
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....ah separated from the family taking his 1/5th share in the M. RM. S. Firm. On April 13, 1951, the status of the family became completely disrupted and the three sons of Muthiah took in equal shares the remaining 2/5th share--the grandfather, Ramanathan, taking no share in the M. RM.S. Firm. For the assessment year 1952-53 Muthiah submitted a return of his income as an individual and stated under the head "business income". " Kindly ascertain his (assessee's) share of profit and remittances from the Income-tax Officer, Second Additional Circle-I, Karaikudi, in F. 6098-m/1952-53 ". In Part III of the return Muthiah supplied the following information about his partners : Name and address of the firm &nbs....
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.... Income-tax Officer, Fifth Additional, Karaikudi, in F. 6098. " In Part III of the return he set out the names of the partners as were mentioned in the return for 1952-53. Against the names of Ramanathan Chettiar, Alagappan Chettiar and Annamalai Chettiar it was not disclosed that they were minors. For the assessment year 1954-55 at the foot of page 1 of the return Muthiah stated : " The assessee has a remittance of Rs. 6,188-12-0 from R. RM. S. Firm, Seramban. His share of income may be taken from the firm's file.", and in Part III the names of seven partners as mentioned in 1952-53 return were set out-Ramanathan, Alagappan, and Annamalai were not shown as minors. Ramanathan, Alagappan and Annamalai--the three minor sons of Muthiah-r....
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....should have been included under section 16(3)(a)(ii) of the Income-tax Act had escaped assessment in Muthiah's hands and he brought that income to tax. The Appellate Assistant Commissioner confirmed the order made by the Income-tax Officer. In appeal to the Tribunal it was contended by Muthiah that he had fully and truly disclosed all the particulars he was required to disclose in the returns of his income for the three years in question, and "section 34(1)(a) had no application to the assessment years 1952-53 and 1953-54 and for 1954-55 the re-opening was based only on a change of opinion." Muthiah also contended that section 40 of the Income-tax Act was mandatory and since the Income-tax Officer had made separate assessments on the mino....
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....3 the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually was charged to tax for that year in accordance with, and subject to the provisions of, the Act at any rate or rates prescribed by the Finance Act. "Total income" was defined in section 2(15) as meaning "total amount of income, profits and gains referred to in sub-section (1) of section 4 computed in the manner laid down in this Act." Section 4(1) set out the method of computation of total income ; it enacted : " (1) Subject to the provisions of this Act, the total income of any previous year of any pers....
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....nd the Rules accordingly imposed no obligation upon the assessee to disclose to the Income-tax Officer in his return information relating to income of any other person by law taxable in his hands. But section 16, sub-section (3), provided that in computing the total income of any individual for the purpose of assessment there shall be included the classes of income mentioned in clauses (a) and (b). Sub-section (3)(a)(ii), in so far as it is material, provided : " In computing the total income of any individual for the purpose of assessment, there shall be included-- (a) so much of the income of a wife or minor child of such individual as arises directly or indirectly--... (ii) from the admission of the minor to the benefits of partn....
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.... 345 in the 10th edition published in 1950. But in the 11th edition of the Manual published in 1954 no such instructions were printed. About the date on which the instructions were deleted counsel for the Commissioner was unable to give any information. Assuming that there were instructions printed in the Forms of return in the relevant years, in the absence of any head under which the income of the wife or minor child of a partner whose wife or a minor child was a partner in the same firm, could be shown, by not showing that income the taxpayer cannot be deemed to have failed or omitted to disclose fully and truly all material facts necessary for his assess ment. Section 16(3) imposes an obligation upon the Income-tax Officer to compute th....