TMI Blog1969 (3) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961. These writ petitions were thereupon filed for the issue of writs of prohibition, prohibiting the respondent from taking any proceedings instituted by him under section 147(a) of the Income-tax Act, 1961, by the issue of notice under section 148 dated March 13, 1964. The assessments for the assessment years 1955-56, 1956-57, 1957-58, and 1958-59 were completed on March 18, 1958, March 19, 1958, July 26, 1958, and March 28, 1961, respectively. The Income-tax Act, 1961, came into force on April 1, 1962. The four assessments thus came to be made under the earlier Income-tax Act, 1922. When the respondent issued notices to the petitioner under section 148 of the 1961 Act, the petitioner's authorised representatives, M/s. S. G. Dastagir Co., Chartered Accountants, wrote to the respondent, by their letter dated March 17, 1964, requesting him to state the reasons for re-opening the assessments already completed. By his reply dated April 1, 1964, the respondent informed the chartered accountants that action was taken under section 147(a) of the 1961 Act for the said four assessment years, and that reasons for reopening the assessments would be intimated after the filing of the ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the incomes disclosed in those returns. The question of the status of the three ladies and their children arose by reason of other provisions in the Act, viz., section 16(3). The question, therefore, is whether those three ladies were the legally wedded wives of the petitioner and their children were his legitimate children. It is not as if that the respondent did not seek clarification in respect of the status of these persons, before the assessments for these four years were completed. In fact, he sought information from the petitioner about the status of these persons. In reply to that query, Sri Taraporewala, the financial adviser and general power of attorney agent of the petitioner, filed a statement dated September 9, 1957, before the respondent. Therein it was stated that the essential requisites of a valid marriage under the Mohammadan law such as proposal, acceptance, witnesses, mehar, etc., did not exist in the case of the three ladies in question. They were merely received into the palace of the petitioner as ladies of rank and position. They were referred to as wives only by way of courtesy in the several trust deeds executed by the petitioner. In fact, in some of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment for any year, or have been under-assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act, or that excessive loss or depreciation allowance has been computed, he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section:.. " It will be seen that if the escapement arose by reason of any omission or failure on the part of an assessee, clause (a) of sub-section (1) applies. But, if income escaped assessment for reasons other than omission or failure on the part of the assessee, then clause (b) applies. In cases coming under clause (a), re-opening of the assessment can be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no dispute that the petitioner had filed full returns of his own total incomes. The question then is whether an assessee is required to disclose and include incomes other than his own, and which are includible in his assessment under the other provisions of the Act, including section 16(3). Section 22 does not warrant any such requirement. Sub-section (1) of section 22, which is the material portion, is in the following terms: "The Income-tax Officer shall, on or before the 1st day of May in each year, give notice, by publication in the press and by publication in the prescribed manner, requiring every person whose total income during the previous year exceeded the maximum amount which is not chargeable to income-tax to furnish, within such period not being less than sixty days as may be specified in the notice, a return, in the prercribed form and verified in the prescribed manner, setting forth (along with such other particulars as may be required by the notice) his total income and total world income during that year:......" What is required to be disclosed in the return is only the total income and the total world income of the assessee derived during the year under ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the petitioner, their incomes from the assets transferred to them by the petitioner would be includible in the total income of the petitioner under sub-clause (iv). But, the point is whether these details which are covered by section 16 are required to be shown in the return that the petitioner had to file under section 22. There is nothing in the Act which would warrant such a supposition. Section 16 cannot be read into section 22. Section 59 of the Act empowers the Board of Revenue to make rules and to provide for any matter, which by the Act has to be prescribed. In exercise of these powers, the Central Board of Revenue prescribed the Rules. Rule 19 of those Rules provides that the return of the total income and total world income for individuals, Hindu undivided families, etc., required under sub-sections (1) and (2) of section 22, shall be in the prescribed form and shall be verified in the manner indicated therein. There is nothing either in these Rules or in the form prescribed, making it obligatory on the part of the assessee to include in the return of his total income, the income of his wife and minor children. The absence of any such requirement in the form is fairly c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is his duty to include the income contemplated by section 16. There is no further obligation laid on the assessee." The Madras High Court, however, took a different view in VD. M. RM. M. RM. Muthiah Chettiar v. Commissioner of Income-tax. In that case the assessee had three minor sons and they were entitled to the benefit of a partnership, in which the assessee was a partner. He submitted his return without disclosing the fact that the minors were his sons or that they had been admitted to the partnership. Separate returns were filed by the minor sons through the assessee's wife, as their guardian. The learned judges held that: " The relationship of the minors admitted to the benefits of the partnership in which the assessee was a partner was a primary fact, and as that primary fact was kept back from the knowledge of the assessing authority by the assessee, there was a failure to disclose material facts necessary for the assessment of the assessee, and proceedings for reassessment under section 34 were maintaintable." Apart from the fact that this case before the Madras High Court is distinguishable on the facts from the instant case, the decision of the Madras High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the names and shares of his partners, but imposed no obligation to mention or set out the income of the nature mentioned in section 16(3)...Section 34(1)(a) sets out conditions in which the power may be exercised. It did not give rise to an obligation to disclose information which enabled the Income-tax Officer to exercise the power under section 16(3)(a)(ii), nor had the use of the expression 'necessary for his assessment' in section 34(1)(a) that effect." In this view, the Supreme Court reversed the decision of the High Court in VD. M. RM. M. RM. Muthiah Chettiar v. Commissioner of Income-tax. Thus, the law on the point has been settled beyond any doubt by the Supreme Court itself. There is, therefore, no duty cast on the assessee to disclose, in his return filed under section 22, any particulars relating to the incomes that can be included in his total income under section 16(3). This takes us to the second contention raised by the learned counsel for the petitioner. Sri Ananta Babu, appearing for the revenue, however, argues that simply because the petitioner was not obliged to show the income includible under section 16(3), he is not absolved from the duty of disclosin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The three following queries were put to the petitioner: " (a) The rites and ceremonies attendant on legal marriages according to Muslim Law and how they were observed in the case of each of the four ladies, viz., Dulhan Pasha Begum Saheba; Mazharunnisa Begum Saheba; Laila Begum Saheba and Jani Begum Saheba. (b) What legal status is accorded to the children of Mazharunnisa Begum Saheba, Laila Begum Saheba and Jani Begum Saheba, vis-a-vis, the children of the late Dulhan Pasha Begum Saheba? (c) Any other factor from the point of view of religion which distinguished the status of late Dulhan Pasha Begum Saheba from the other three ladies." In reply to these queries, Sri C. B. Taraporewala, the financial adviser and general power of attorney agent of the petitioner, filed a statement before the Income-tax Officer, on September 9, 1957. It was stated therein that it was only with the late Dulhan Pasha Begum Saheba, the petitioner went through all the legal formalities of a marriage under Mohammedan law like a proposal, acceptance, witnesses and making provision for mehar. Without these formalities, it was stated, there was no valid marriage under Muslim law. The statement proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the petitioner on March 21, 1957, and December 5, 1957, respectively, wherein the ladies were referred to as "wives" and their children as the children of the petitioner. But, it should not be forgotten that the references to them in the earlier trust deeds were only continued in these two trust deeds also. A reading of the earlier trust deeds also shows not only that these three ladies were referred to as "wives" in some of them but also that their children were acknowledged as the children of the petitioner. There is nothing in the later trust deeds, which is in any way different from the earlier trust deeds, in so far as reference to the three ladies and their children are concerned. The petitioner's attitude and approach to them continued to be the same. The latter two trust deeds, on which strong reliance is placed by the department, does not disclose any new facts or circumstances, different from those that were available from the original trust deeds, which the department examined before it made the relevant assessments. Simply because the two trust deeds of March 21, 1957, and December 5, 1957, were not placed before the Income-tax Officer when he made the original asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ladies were only admitted into his palace from time to time. According to the customary practice prevailing in his family, he conferred positions on ladies thus admitted into the palace, solely depending upon the social status they enjoyed. Those who had respectable family background, were conferred the status of "ladies of position" and the other mistresses in the zenana were commonly referred to as khawasas. The three ladies in question, along with three other ladies, were conferred the special status as "ladies of position". Though Dulhan Pasha Begum was his only legitimate wife and that status was not enjoyed by any other lady in the palace, according to usual practice, he referred to the ladies of position as his "wives". But such refence was only as a matter of courtesy and to bestow special favours on the ladies concerned, and not because they were considered to be his wives in the legitimate sense. Far from giving any support to the department's opinions and suspicions in this regard, this solemn statement made by the petitioner completely belies all such suspicions. There is no reason why this sworn statement of the petitioner cannot be accepted. It should not be forgotten ..... 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