TMI Blog2002 (11) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent, A.S. Rukmani Ammal (hereinafter referred to as "the assessee") executed a will by which his property was bequeathed in her favour and his two minor children, namely, Sowdeswari and Ganesan. A.S. Savadappa Gounder appointed his cousin brother, A. Savadappan as an executor to administer his properties in terms of the will, and the executor accordingly continued the business of the estate. He has also invested a sum of Rs. 7,500 each as capital of the two minors in the firms, K. Nallaya Gounder and A. Savadappa Gounder. The two minors were admitted to the benefits of partnership. The share income of the two minors was included in the income of estate of the late A.S. Savadappa Gounder, but the executor Savadappan objected to the same claiming that the share income belonged to the minors individually and should not be included in the hands of the estate. The Appellate Tribunal, in the appeal preferred by the estate, upheld the objection raised by the executor and held that the share income could not be considered as income of the estate. The order of the Appellate Tribunal was the subject matter of consideration before this court in CIT v. A. Savudappan [2000] 244 ITR 620 (in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the merits of the case and dismissed the appeals. The assessee preferred further appeals before the Income-tax Appellate Tribunal. The Appellate Tribunal held that the reopening of the assessment under section 147(a) of the Income-tax Act was without jurisdiction on the ground that the share income of the minors had been assessed in their hands individually by the Assessing Officer under section 143(1)(a) of the Income-tax Act and once the assessments were made in the hands of the minors, the failure to disclose the income could not be attributed to the assessee. The Appellate Tribunal therefore held that there was no failure on the part of the assessee as the income had already been assessed in the hands of the minors and the reopening of assessments under section 147(a) was without jurisdiction. The Appellate Tribunal did not go into the merits of the case, but allowed the appeals preferred by the assessee. The Appellate Tribunal, on the basis of the directions of this court, has stated a case and referred the following common question of law for all the assessment years in question: "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is cor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tted that section 64 of the Income-tax Act is not a deeming provision as the income of the mother is different from the share income of the minors and they are separate and only by operation of section 64 of the Income-tax Act, the share income of the minors is included in the hands of the mother and when necessary facts relating to the share income of the minors were present before the Income-tax Officer at the time of completion of assessment of the estate of the deceased, it is not open to the Income-tax Officer to reopen the assessment of the assessee to include the share income of the minors by applying the provisions of section 64(1)(iii) of the Income-tax Act. We are unable to accept the submission of learned counsel for the assessee. There is no finding by the Appellate Tribunal that all primary facts necessary for the completion of assessment were present before the Income-tax Officer as the assessee did not file returns at all in her individual capacity. Therefore, the fact that the share income was considered in the assessment of the estate or was assessed in the hands of the minors under section 143(1)(a) of the Income-tax Act is not of much relevance in considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess the income in the hands of the assessee. In this connection, he relied upon the decision of the Supreme Court in CIT v. Hemchandra Kar [1970] 77 ITR 1. We have carefully gone through the decision of the Supreme Court. The decision of the Supreme Court has no application as in the case before the Supreme Court, the assessment was made in the hands of a Hindu undivided family. It is also seen that five members of the family had encashed notes of the value of Rs. 1,10,000 and the Income-tax Officer reopened the assessment of the Hindu undivided family and of the five members and included the amount encashed by the family in the hands of the family and included the amount encashed by the members of the family in their individual assessments. Thereafter another notice was issued by the Income-tax Officer within a few days to reopen the assessment of the family to include the amount of high denomination notes encashed separately by the members. It was also found as a matter of fact by the Appellate Assistant Commissioner that the five members merely acted as name lenders of the Hindu undivided family and in spite of knowledge about the existence of the fact that the five members acte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Tribunal also gave a finding that all the facts were disclosed by the assessee at the time of original assessment and, hence, this court held that the reassessment initiated to include the share income of the minors in the hands of the assessee was not proper. However, there is no such finding at all by the Appellate Tribunal in the present case. In N. Ramakrishnan's case [1986] 160 ITR 625 (Mad) all the primary facts were before the Income-tax Officer at the time of completion of assessment, but in the present case, the assessee has not filed the returns and there was no original assessment made in the hands of the assessee. Learned counsel for the assessee also relied upon the decision of this court in Gordon Woodroffe and Co. Ltd. v. ITO [1964] 51 ITR 12. The decision hardly helps the assessee as in Gordon Woodroffe and Co. Ltd.'s case [1964] 51 ITR 12 (Mad), there was a return of income of a foreign company represented by its Indian agent and after considering all the materials placed before him, the Income-tax Officer completed the assessment and after the order of assessment, the Income-tax Officer initiated reassessment proceedings for inclusion of amounts on the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x Act. The principle laid down by the Supreme Court in P. K. Kochammu Amma's case [1980] 125 ITR 624 is that the income of the assessee should include all kinds of income to be returned and the primary fact, namely, the minors were admitted to the benefits of partnership required the assessee to include the share income of the minors in the return to be filed by the assessee. The assessee did not file any return for the assessment years in question and there was a failure on the part of the assessee to disclose fully and truly the material facts as to the share income of the minors assessable under the Income-tax Act. We therefore hold that there was a failure on the part of the assessee to disclose fully and truly the material facts for the purpose of assessment of her income. The Appellate Tribunal proceeded only on the basis that the minors' share income was assessed under section 143(1)(a) of the Income-tax Act and therefore there was no failure on the part of the assessee in disclosing the income. We are unable to subscribe to the view of the Appellate Tribunal. The assessment of the minors under section 143(1)(a) is different and the question that arises is whether the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustainable. One other submission was also made by learned counsel for the assessee. He referred to the decision of this court in CIT v. A. Savudappan [2000] 244 ITR 620 and submitted that before this court, learned counsel for the Revenue submitted that it was not a case falling within the scope of section 64 of the Income-tax Act, but it was a case falling under section 168(1) of the Income-tax Act, and therefore the provisions of section 64 of the Income-tax Act are not applicable. We are unable to accept the submission of learned counsel for the assessee. The said submission of learned counsel for the Revenue was then made in the context of inclusion of income of the estate and learned counsel for the Revenue there submitted that he was not going to resort to section 64 of the Income-tax Act to include the share income in the hands of the minors. It does not mean that the Revenue is precluded from invoking the provisions of section 64 of the Income-tax Act against the assessee who is the mother of the minors. We hold that the finding of the Appellate Tribunal that merely because the assessments were made in the hands of the minors, there is no escapement of income is not sus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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