COMMISSIONER OF INCOME TAX Vs. DAVID JOSEPH

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, under Section 256(1) of the Income-tax Act, 1961, has referred the following question :

(2.) FROM the statement placed before us, the short matrix is provided as below : The assessment year is 1980-81, ending on March 31, 1980. The assessee is the executor of a trust created by himself for the benefit of his two minor children, Pradeep George Joseph and Pramod John Joseph. The Income-tax Officer assessed the income of the property acting under Section 164(1) of the Income tax Act, 1961. The assessment was completed on February 18, 1983. It appeared that long before this assessment, the Income-tax Officer had already assessed the minor beneficiary, Pramod John Joseph, on December 31, 1980.

(3.) THE Tribunal has referred to three circulars dated February 24, 1967, December 26, 1974, and August 24, 1966. In the order of reference, the Tribunal has been careful to tell us the respective source of these circulars. THE Tribunal has also been cautious to make a reference that the Departmental Representative was not able to show any circular or instruction to the contrary. THEse circulars are to the effect that once the choice is made by the Department to tax either the trust or the beneficiary, it is no more open to the Department to go behind it and assess the other at the same time. THE Tribunal has placed reliance on the decision of the Gujarat High Court in Laxmichand Hirjibhai v. CIT [1981] 128 ITR 747 to the effect that the provisions of these circulars are to be followed by the Income-tax Officer for its own internal discipline. THE position that emerges would be a position for the application of the principle of finality. Once a beneficiary is assessed and his assessment is completed prior in point of time, and his assessment is an element of finality, it is a natural consequence flowing therefrom that the Department does not get any permission to go behind it for the purpose of scrutinising the procedure, for finding out faults in regard thereto, the sole object of which1 is to justify the subsequent action taken by the Department. THEse are in fact the normal consequences that flow from the principle of finality. This principle especially when emerged from three circulars and has established into a settled practice, any time a deviation therefrom cannot be permitted, even on the ground of a mistake with regard to the merits of the situation that received finality.