TaxTMI 
TaxTMI 
1981 (8) TMI 37
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....s, and 5. Shares of partners. " In the return filed by the assessee the name and address of the firm was given; the names of all the partners including the assessee was mentioned but without any indication as to whether Master Ravi Kumar, Master Raj Kumar and Kumari Renu were major partners or minors admitted to the benefits of the partnership; the residential address of all the partners was given as 7-A, Rajpur Road, Delhi; and the individual shares of the several partners were specified. But the column which required the assessee to state the relationship of the partners with the assessee was left bank. It appears that at the time of the assessment a copy of the partnership deed dated April 1, 1961, had also been filed before the ITO, Calcutta. The original assessment of the assessee for 1962-63 was completed on March 30, 1963, including in the assessment, her share income from the firm above mentioned. Earlier, on June 11, 1962, the assessee had filed a return in Delhi on behalf of Master Ravi Kumar as his guardian as he was a minor. In this return was shown the share income of the minor from the firm of M/s. Raj Motors for the financial year 1961-62. The ITO who comple....
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....refer certain questions of law for the opinion of this court. It is these circumstances that the I.T. Appellate Tribunal has made the present reference and referred the following, question of law for our opinion : " Whether, on the facts and in the circumstances of the case, the provisions of section 147(a) of the Act are applicable and have been rightly invoked ? " Before proceeding to discuss the arguments of the learned counsel for the assessee one factual position should be cleared up. In para. 3 of the statement of case it is stated: " On going through the assessment record it was observed that a copy of the partnership deed dated April 1, 1961, was filed before the Incometax Officer, Calcutta, showing the appellant as partner and admitting her three children to the benefits of partnership. Nowhere in the said deed the relationship of the appellant with Master Raj Kumar, Ravi Kumar, and Kumari Renu was mentioned nor their father's name was given." The first part of this sentence gives the impression that the partnership deed bad mentioned that the three children of the assessee had been admitted to the benefits of the partnership. At the same time the second senten....
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.... behalf of the assessee is that even assuming that the assessee had omitted to indicate the relationship between herself and the minor children that would not constitute a failure to disclosure fully and truly all material facts necessary for her assessment and in support of this contention reliance is placed on the decision of the Bombay High Court in D. R. Dhanwate v. CIT [1961] 42 ITR 253. . Thirdly, it is contended that even assuming that the assessee was bound to return the share income of the minors and had failed to do so and thus failed or omitted to disclose fully or truly all material facts it could not be said in the present case that the escapement of the share income of the minors from assessment was as a result of the assessee's failure or omission. It is suggested, relying on a decision of the Gujarat High Court in Ahmedabad Cotton Mfg. Co. Ltd. v. Union of India [1974] 95 ITR 639, that the escapement of the income from assessment, if any, was the result of a combined dereliction of duty partly on the part of the assessee and partly on the part of the ITO and that, therefore, it could not be said that income had escaped assessment by reason of the omission or failure....
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....any head under which the income of the wife or minor child of the partner whose wife or minor child was partner in the same firm could be shown, the taxpayer, by not showing that income, cannot be deemed to have failed or omitted to disclose fully and truly all material facts necessary for his assessment. The Supreme Court, therefore, held that the conditions set out in s. 34(1)(a) were not satisfied, and, therefore, the reassessments for 1952-53 and 1953-54 were set aside. The present case arises under the provisions of the 1961 Act. The learned counsel for the assessee submits that there is no material distinction in the relevant provisions between the 1922 Act and the 1961 Act. This contention is correct but only to a limited extent because, in our opinion, there is one material distinction to which we shall advert later. Learned counsel for the assessee, however, is right in pointing out that under s. 139 an assessee is required to furnish a return only of his total income or the total income of any other person in respect of which he is assessable under the Act. Though there are words in s. 139 to the effect that an assessee has to file a return of his income or " the incom....
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....ly when new form of return was prescribed under the 1961 Act, the contents of Part III were revised and, as already mentioned, Part III of the return which the assessee in this case filed before the ITO, contained a column in which the assessee was required to mention the relationship among the various persons shown as partners. The minor children were shown as partners (and this was correct because under the I.T. Act the definition of partner also includes the minor admitted to benefits of the partnership), but significantly the column regarding the relationship between the partners was not mentioned. There is, therefore, a fundamental difference between the position considered by the Supreme Court and the circumstances of the present case. Whereas, according to the form prescribed under the old Act, there was no place where the assessee could or should have shown the relationship between himself or herself and the other partners of the firm, there is in the form prescribed under the new Act a specific column to this effect. It is no doubt true that even under the new Act, until the amendment in 1972, there was no particular place in which an assessee could include the share incom....
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....e share income of her husband and minor daughter. The court came to the conclusion that the amounts representing the share of the husband and the minor daughter from the firm were part of the assessee's income for purposes of tax, and had to be shown in the return filed by her. Referring to a note in the form of return prescribed under the Act, the Supreme Court held that the respondent-assessee had failed to disclose those two amounts in the return submitted by her and there was plainly and manifestly a breach of the obligation imposed by s. 139(1) requiring the assessee to furnish a return of her income in the prescribed form and, in failing to do so, she was guilty of concealment of those amounts which attracted the applicability of s. 271(1)(c). The attention of the court was drawn to the earlier decision in Muthiah Chettiar's case [1969] 74 ITR 183 (SC) and their Lordships made the following observations in dealing with the above decisions (p. 629) ; " It is difficult to see how the note in the prescribed form of the return could be ignored by the assessee and she could contend that, despite the note, she was not liable to show in her return the amounts representing the sha....
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....erefore, follow this decision in Muthiah Chettiar's case [1969] 74 ITR 183 (SC), which being a decision of a Bench of three judges of this court, is binding upon us, and following that decision, we hold that the assessee could not be said to have concealed her income by not disclosing in the return filed by her the amounts representing the shares of her husband and minor daughter in the two partnership firms. " We are unable to agree with the learned counsel for the respondent that this decision of the Supreme Court (74 ITR 183), must be taken, to have overruled the earlier decision in Muthiah Chettiar's case [1965] 55 ITR 147 (Mad), for obvious reasons, though it is clear that their Lordships have doubted the correctness of the earlier decision. But, as we have already pointed out, for the purposes of this case, we are of the opinion that the position is entirely different from that which prevailed in Muthiah Chettiar's case for the reasons already mentioned and that the present case is not governed by the decision in that case. The second argument addressed by the learned counsel for the assessee was based on the decision of the Bombay High Court in D. R. Dhanwate's case [1961....
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....TO and not on account of dereliction of duty on the part of the assessee. It is pointed out that in Part III of the return the names of the minor children have been mentioned as Master Ravi Kumar, Master Raj Kumar and Kumari Renu and it was stated that this was sufficient for the ITO to take notice that these persons were minors. Further, it is stated that the residential addresses of all the partners had been given as 7-A, Rajpur Road, Delhi, and this, it is suggested, must have made the ITO aware that the minors must be the minor children of one of the other partners. Referring to the decision of the Gujarat High Court in Ahmedabad Cotton Mfg. Co. Ltd. v. Union of India [1974] 95 ITR 639, it is submitted that the escapement of the share income was attributable to the negligence of the ITO. We are unable to agree. The disclosures made in the return were not sufficient to make the ITO aware of the relationship between the assessee and the minor children. The use of the words " Master " and " Kumari " does not necessarily mean that they were minor children. But even assuming that this was so there was nothing to show that they were the minor children of one of the other partners. Th....