TaxTMI 
TaxTMI 
1984 (2) TMI 28
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....ns of section 27(1) read with section 64(iv) of the Income-tax Act, 1961, did not apply to the transfer of property made by the assessee ? (3) Whether, on the facts and in the circumstances of the case, the expression 'an individual' occurring in section 64(iv) of the Income-tax Act, 1961, would include a female ? (4) Whether the Tribunal was right in holding that the provisions of section 64(iv) of the Income-tax Act, 1961, are retrospective in character so as to include the income of the minors (other than house property) in respect of transfer made prior to April 1, 1961 ? (5) Whether, on the facts and in the circumstances of the case, the Tribunal was right in not giving a direction that credit be given for tax paid by the minors for the assessment years 1962-63 to 1966-67 ? " The assessee, Mrs. Ayodhya Kumari, transferred her house property on March 31, 1956. She transferred a fixed deposit of Rs. 5,000 with the National Motors on December 29, 1956. She also transferred ten shares of City Light Theatres (P.) Ltd., on August 24, 1960, to her minor son, Sunil Kumar. One the same day, i.e., August 24, 1960, she transferred seventeen shares of City Light Theatres (P.) Ltd. to ....
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.... because the Income-tax Officer wrongly applied the provisions of section 147(a) to the facts of the case and the Appellate Assistant Commissioner was not competent to invoke the provisions of section 147(b) of the Act to legalise the assessments for these three years. (b) Though the assessee is a female, yet, in view of the charging sections 4 and 5 read with sections 60 to 64 along with the Explanation thereto, income from fixed deposits and income from shares earned by the minor sons are to be included in the total income of the assessee for the assessment years 1965-66 and 1966-67. (c) Income from property which belonged to the minor sons cannot be clubbed with the income of the assessee in view of the provisions of section 27 read with section 64 of the Act." Five applications were filed by the Commissioner of Income-tax (CIT) requiring the Tribunal to refer the questions of law arising out of its orders dated June 25, 1970. It has referred the abovementioned questions for answer to this court. Learned counsel for the respondents filed typed copies of the notice dated May 1, 1965, in respect of the assessment years 1962-63, 1963-64 and 1964-65, and also typed copies of rep....
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....ed. It is not necessary that the notice under s. 148 calling for a return should specify the item of income which has escaped assessment or source of such income or indicate whether it issued under cl. (a) or cl. (b) of s. 147. In this connection, reference may be made to Kantamani Venkata Narayana & Sons v. First Addl. ITO [1967] 63 ITR 638 (SC). Section 34 and its first proviso of the old Act has been replaced by s. 147, s. 148, s. 149(1) and s. 151 of the Act. So also s. 34(1), second proviso, s. 34(1), third proviso, and s. 34(i), Explanation, have now been replaced by s. 149(3), s. 152(1) and s. 147, Expl. 2, of the Act respectively. Having noticed the relevant provisions of the Act, we proceed to notice the case law bearing on this question. Learned counsel for the Revenue as well as of the assessee have referred to various decisions mentioned hereinbelow in support of their respective submissions. While considering s. 34(1) of the old Act, it was observed in Mukherjee v. CIT [1956] 30 ITR 535 (Cal) as follows (p. 546): " The statute does not prescribe any form in which the notice contemplated by section 34 should be issued. The principal fact in both clause (a) and clause ....
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....ant country who may die leaving to the assessee under his will a house property situated within the taxable territories. The Income-tax Officer may come to know of the legacy and if he finds that the income from that property was not included in the return, he may issue a notice under section 34 and let me assume that he specifies in the notice clause (a) as the clause under which it is being issued. It is quite possible that, when appearing before him in compliance with such a notice, the assessee may satisfy the Income-tax Officer that he was totally unaware that any legacy had been left to him by his relative and he could not possibly have disclosed an income accruing to him of which he did not know. The Income-tax Officer may well accept that explanation. Can it be said that in such a case as that, if the explanation is accepted, the Income-tax Officer will be prevented from making an assessment on the basis that the case comes under clause (b) of section 34(1) provided he is within time for the purposes of that clause ? Whether or not there had been an omission or failure to disclose the income, the fact that the income had escaped assessment will remain and if income which ou....
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....ned the sanction of the Central Board or the Commissioner, as the case may be, it is not open to the Appellate Tribunal to justify the proceedings taken by the ITO under s. 34(1)(a). In that case, the ITO proceeded on the basis of s. 34(1)(b) and the question was whether he can justify proceedings under s. 34(1)(a) of the Act. In Mriganka Mohan Sur v. CIT [1974] 95 ITR 503 (Cal) reassessment was made under s. 34(1)(a) of the old Act. It was set aside by the Tribunal. The question arose whether the Tribunal could treat it as one made under s. 34(1)(b) of the old Act. Sabyasachi Mukharji J., as he then was, with whom Hazra J. agreed, ruled that where a reassessment has been made under s. 34(1)(a) of the old Act and is set aside by the Appellate Tribunal, it is open to the Tribunal to treat the reassessment as one properly made under s. 34(1)(b) provided that on the material on record all the necessary conditions under s. 34(1)(b) are satisfied. In that case, Mukherjee's case [1956] 30 ITR 535 (Cal), Raghubar Dayal's case [1967] 63 ITR 572 (All) and Johrilal's case [1973] 88 ITR 439 (SC) were noticed. The learned judges agreed with the view taken by Manchanda J., in Raghubar Dayal's ....
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....sessee in respect of the assessment years 1965-66 and 1966-67. In order to judge the correctness of this finding, it is necessary to notice the relevant provisions of the Act. Section 27 occurs in Chap. IV which deals with computation of total income. Section 27 contains definitions for the purpose of assessment under the head " Income from house property ". Section 27 is for the purposes of ss. 22 to 26. Section 27(1) of the Act is as under: " 27. For the purposes of sections 22 to 26 (1) An individual who transfers otherwise than for adequate consideration any house property to his or her spouse, not being a transfer in connection with an agreement to live apart, or to a minor child not being married daughter shall be deemed to be the owner of the house property so transferred ; ........" Section 63 defines transfer and revocable transfer. Section 63 is also for the purposes of ss. 60, 61 and 62 of the Act. According to s. 63(b) " transfer " includes any settlement, trust, covenant, agreement or arrangement. Section 63 occurs in Chap. V of the Act. The object of this section is to defeat an individual's attempt to avoid or reduce incidence of tax by transferring assets, inter ....
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....ovision, the assessee could not be considered to be the owner of the property prior to the assessment year 1962-63. As stated above, s. 27 overrides s. 64 of the Act so far as inclusion of house property income is concerned and so the disputed income could not be included in the total income of the assessee under s. 64 of the Act. It, therefore, follows that the Tribunal was right in holding that in regard to the assessment years 1965-66 and 1966-67, the provisions of s. 27(1) read with s. 64(iv) do not apply to the transfer of property made by the assessee. Question No. 3 : The expression " such individual " has been used in s. 64(iv) of the Act and the question is whether this expression includes a " female ". The Tribunal has held that such individual in the circumstances of the case would include mother as the property has been transferred by the mother to the minor sons. The word "individual " in sub-cl. (a)(ii) of s. 16(3) of the Indian I.T. Act, 1922, was interpreted to mean only the male and not the female of the species. This was so held by the Supreme Court in CIT v. Sodra Devi [1957] 32 ITR 615. The words used in s. 64 of the Act abundantly make it clear that the word "....
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....ose a new liability otherwise than as regards matters of procedure. It was further held that if an enactment is expressed in a language which is fairly capable of either interpretation, it should be construed as prospective only. The Tribunal held that it cannot be held that s. 64 is retrospective in character divorced from the context of s. 60. Unlike s. 60, the expression " whether effected before or after the commencement of this Act " does not find mention in s. 64. There is nothing in s. 64(iv) to show that the provisions are retrospective. All laws are considered to be prospective except made retrospective by express words or by necessary intendment. It cannot be said that s. 64(iv) is retrospective. It is prospective only. The Tribunal was not right in holding that the provisions of s. 64(iv) are retrospective in character so as to include the income of the minors (other than from house property) in respect of transfers prior to April 1, 1961. Question No. 5 : It is not necessary to answer this question, for, the Tribunal has to pass appropriate orders as are necessary to dispose of the case in conformity with the answers given to questions Nos. 1 to 4. We, therefore, answ....