TMI Blog1982 (9) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 3,58,314 as income from undisclosed sources. The ITO in the reassessment proceedings held the status of the assessee as " Resident but not ordinarily resident ", as against the status of " non-resident " assigned in the original assessment proceedings and further included a sum of Rs. 40,000 which was brought by the assessee at the time of his arrival in India from Africa in January, 1946, under the provisions of s. 4(1)(b)(iii) of the Act. The ITO completed, the assessment on a total income of Rs. 4,17,464. Dissatisfied with the order of the ITO, the assessee preferred an appeal. One of the points agitated was that the status of the assessee could not be changed from " non-resident " to " resident but not ordinarily resident ". The AAC on a consideration of the matter on this point, found that the status of the assessee could not be changed from " non-resident " to " resident but not ordinarily resident ". Consequently, the addition of Rs. 40,000 was deleted. Aggrieved by the aforesaid finding of the AAC, the Department filed an appeal before the Income-tax Appellate Tribunal. On review of the whole matter, the Tribunal held that the correct residential status of the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he was not a " non-resident ", that under the law, the assessee was required to state correctly, whether he was a resident and ordinarily resident, or resident but not ordinarily resident, or non-resident, that intentionally with a view to escape assessment he wrongly described himself as non-resident, and that, in the circumstances of the case, the ITO had jurisdiction to initiate proceedings under s. 34 of the Act. After giving my thoughtful consideration to the entire matter, I find sufficient merit in the contention of the learned counsel for the Revenue. The original assessment in the case of the assessee for 1946-47, relevant to the accounting period ending on 31 st March, 1946, was made on a total income of Rs. 31,444. Later on, it came to the notice of the ITO that during the relevant period the assessee had made huge investments by way of fixed deposits in banks, purchase of agricultural land, purchase of house property, etc., which were not disclosed at the time of the original assessment. In other words, as the assessee had failed to disclose fully and truly all material facts, action under s. 34 of the Act, after obtaining the approval of the Commissioner, was ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the conclusion that there was a nondisclosure of material facts would not be open for the court's investigation. In other words, all that is necessary to give this special jurisdiction is that the Income-tax Officer had when he assumed jurisdiction some prima facie grounds for thinking that there had been some non-disclosure of material facts. Clearly, it is the duty of the assessee who wants the court to hold that jurisdiction was lacking, to establish that the Income-tax Officer had no material at all before him for believing that there had been such non-disclosure." Keeping in view the aforesaid observations, if the facts of the present case are seen, then it becomes crystal clear that the assessee did not disclose at the time of the original assessment that he had made huge investments in banks and in the purchase of other assets. It is true that the assessee came to India in January 1946, from Africa and his affairs were being looked after by his authorised agent and father, late S. Narain Singh. At the same time, it was the duty of the assessee to bring to the notice of the ITO the various fixed deposits and other investments which were made in the name of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue was true on which we do not express any opinion and the fact of the continuance of the joint Hindu family was kept back from the knowledge of the Income-tax Officer, it would be clear case of the said family escaping assessment during the relevant year. If that be so, section 34(1) would immediately be attracted and the notice issued would be good." Reference may also be made to a recent judgment of the Calcutta High Court in Rajinder Mohan Bhandari v. ITO [1978] 111 ITR 407, wherein it has been observed thus (p. 409): " Counsel for the assessee contended that, on the facts, it cannot be said that the income has escaped assessment. It was argued that income had been assessed in the hands of the Hindu undivided family. The selfsame income is being sought to be assessed in the hands of the individual. Therefore, it was argued that it could not be urged that income had escaped assessment in terms of clause (a) of section 147 of the Income -tax Act. It was secondly urged that escapement, if there has been any, that was by reason of not the omission or failure on the part of the assessee to make a return in this case or to disclose fully or truly the material or relevant facts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment; that the case in hand is not one of drawing inference only on the basis of all the facts fully and truly disclosed by the assessee and that the question of status could certainly be determined in reassessment proceedings if on account of the non-disclosure of the facts fully and truly, there has been escapement of income. This brings us to question No. 2. In the view we have taken on question No. 1, the answer to this question has to be against the assessee as in the event of his being a " resident but not ordinarily resident " the sum of Rs. 40,000 brought by him from East Africa in January, 1946 was assessable in the assessment year 1946-47. The Tribunal has dealt with this matter thus: " Now, in the present case, the assessee did not disclose at the time of original assessment, that he had made huge investments in banks and in the purchase of other assets. It is true that the assessee came to India in January, 1946, from Africa and his affairs were being looked after by his authorised agent and father, late Sardar Narain Singh. At the same time, it was the duty of the assessee to bring to the notice of the Income-tax Officer about the various fixed deposits and other i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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