JOSE T MOOKEN Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ONE Shri M.O. Thomakutty was carrying on business as sole proprietor in the name and style of Mooken Devassy Ouseph & Sons during the accounting years relevant to the assessment years 1950-51 and 1951-52. During that time, he was working a salt factory taken on lease from the Government of Cochin. For these assessment years, Shri Thomakutty claimed as revenue expenditure amounts of Rs. 51,499.76 and Rs. 60,000, respectively. These amounts were said to have been expended for the maintenance, etc., of the salt factory concerned. The ITO disallowed these claims for deduction. The disallowance was based on certain information received from the State Government which, it would appear, had not been properly disclosed to the assessee. The matter ultimately came up in reference before this court. By judgment dated June 12, 1958, this court held the assessments to be invalid. In the meanwhile, Thomakutty had paid the tax due as per the assessments for these two years. Consequently, on the order of this court the tax so paid became refundable. On a petition by the assessee, the CIT granted the refund and also passed an order under Section 66(7) of the Indian I.T. Act, 1922, sanctioning payment of simple interest at 4% per annum on the amount of refund from the date of payment till date of repayment. The amounts so paid as interest during the accounting year ended March 31, 1960, came to Rs. 12,353.

(2.) BEFORE this refund had been received Shri Thomakutty had converted his proprietary business into a partnership with his three sons to carry on the business in the same name and style of Mooken Devassy Ouseph & Sons. Clause 4 of the partnership deed which is dated April 1, 1957, is as follows :

(3.) THE Tribunal said that in the circumstances of the case it was quite reasonable for the ITO bona fide to believe that only Shri Jose T. Mooken was the legal representative, and, therefore, the notice was served on him to make the assessment. Shri Jose T. Mooken represented the estate and the other legal representatives impliedly by his representation. THE Tribunal also accepted the contentions of the department that there was omission or failure on the part of the assessee to disclose fully and truly all the material facts relevant for the assessment in respect of the concerned period and the fact that the income-tax department allowed the interest was not relevant as far as proceedings for reopening were concerned. In support of this, they relied on the decision of the Supreme Court in Malegaon Electricity Co. P. Ltd. v. CIT [1970] 78 ITR 466, 471 (SC). THE Supreme Court had observed therein :