SHAM NARAIN Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS petition under Art. 226 of the Constitution of India seeks the quashing of the notices issued under S. 147/148 of the INCOME TAX ACT, 1961, calling upon the petitioners to submit returns for reassessment of the escaped and underassessed income for the asst. yrs. 1955 -56, 1956 -57 and 1957 -58.

(2.) THE facts are these : In or about the year 1875, the great grandfather of the petitioners Munshi Tulsi Dhar, who was at that time practising as a pleader in Meerut Courts and had his residence both at Delhi and Meerut, purchased a portion of agricultural land near village Mauza Malikpur Chhaoni on Karnal Road, Delhi. Another portion of the agricultural land near the said village was purchased by Shri Girdhari Lal, another practising lawyer, in or about the year 1908. After the death of Munshi Tulsi Dhar, the said lands owned by him were inherited by his sons, Shri Salig Ram, Shri Raghbar Dayal and Shri Pannu Lal. Thereafter, upon partition of the family property between the three brothers, Shri Salig Ram received a portion of the said agricultural lands in Mauza Malikpur Chhaoni as his share in the property inherited from his father and continued to use the lands for agricultural purposes. After the death of Shri Salig Ram, his portion of the said agricultural land devolved upon his four sons, namely, S/Shri Suraj Narain, Chand Narain, Radhika Narain and Kirpa Narain, who continued to hold the same. In the year 1949, the owners of the said lands desired to sell off the same and M/s Delhi Land & Finance Ltd., a limited joint stock company having its registered office at "F" Block, Connaught Place, New Delhi (for short D. L. F.) offered to act as agents for selling the same. An agreement for this purpose appointing D. L. F. as agents to sell the lands was entered into with D. L. F. of the one part and S/Shri Suraj Narain, Chand Narain, Radhika Narain, Kirpa Narain, Lala Shri Narain, Lal Rangi Lal, Lala Jagan Nath, Lala Murli Dhar and Lala Raghbar Dayal of the other part, under which the agricultural lands in Mauza Malikpur Chhaoni inherited by Shri Suraj Narain as well as the lands of the other owners were to be sold by D. L. F. According to the terms of the said agreement, Shri Suraj Narain received payments from D. L. F. against the sale proceeds of the said lands. Details of payments received by Shri Suraj Narain and after his death by the petitioners, who are sons of late Shri Suraj Narain are detailed in the statement annexed with the writ petition. A sum of Rs. 2,426 -8 -0 was received in the asst. yr. 1955 -56, Rs. 2,449 in the asst. year 1956 -57 and Rs. 14,425 -1 -3 in the asst. year 1957 -58.

(3.) ALLEGATIONS have been made in the writ petition that for the asst. yrs. 1955 -56, 1956 -57 and 1957 -58, similar returns were filed along with the certificate of payment received from D. L. F. and the copies of the agreement with D. L. F. A note was also put in the returns in the same words as the note in the return for the asst. year 1953 -54. The ITO made the original assessment by not including the amount received by the assessee towards the sale of lands. The ITO in his order of assessment accepted the claim made by the assessee in his returns and framed the assessments accordingly by treating the payment received from the sale of lands as converting the possession into cash not amounting to business activity. By the impugned notices, the ITO called upon the petitioners to submit fresh returns for reassessment of the escaped and underassessed income for the assessment years. These notices have been issued under S. 147/148 of the INCOME TAX ACT, 1961.