SANTHANAM T S Vs. EXPENDITURE TAX OFFICER

JUDGEMENT

(1.) THE petitioner is aggrieved by the notice issued by the respondent under Section 15(4) read with Section 16 of the Expenditure-tax Act, 1957, and seeks a writ of prohibition preventing the respondent from making a revised assessment on the petitioner. THE petitioner and his four sons constitute a joint Hindu family. THEre was a partition in the family in June, 1957. After the partition, the petitioner claims that he has been returning his income and his wealth as an individual and was assessed as such. He performed his daughter's marriage on September 2, 1960, and spent a sum of Rs. 25,631 in connection with it. In addition to such an expenditure incurred by him, his four sons spent from the assets allotted to them a total sum of Rs. 61,292 for the said marriage. During the assessment proceedings under the Expenditure-tax Act, the petitioner's case is that every available material was placed before the assessing officer and it was contended that only a sum of Rs. 25,631 incurred by the petitioner in connection with the marriage of his daughter should be taken into account for purpose of assessment under the Expenditure-tax Act. THE Expenditure-tax Officer, however, was of the view that the expenses incurred by the sons from the assets allotted to them in the partition during the accounting year ending March 3, 1961, were also includible in the taxable expenditure of the assessee. In these circumstances the total taxable expenditure was determined at Rs. 70,851 and the expenditure-tax payable thereon at Rs. 41,851. On appeal, the petitioner was successful. THE department preferred a further appeal to the Income-tax Appellate Tribunal, Madras. THE Tribunal confirmed the Appellate Assistant Commissioner's order and gave relief to the assessee. THE Tribunal's view was that the expenditure incurred by the assessee's sons was under their own obligation and not in respect of any obligation towards the assessee. T'he Tribunal's order dated March 3, 1965, remained Unchallenged. On July 15, 1965, the Expenditure-tax Officer proposed to reopen the assessment for the assessment year 1961-62, purporting to act under Section 16 of the said Act and purported to include the expenditure incurred by the assessee's sons in connection with the marriage of the assessee's daughter as a taxable expenditure in the hands of the assessee. THE petitioner submitted his objections to the proposal and desired that such a reopening may not be undertaken. But the assessing officer, by his letter dated September 16, 1967, once again in exercise of his powers under Section 16 of the Act, intimated the assessee that he had the jurisdiction to reopen the assessment and called upon the assessee to file a return under Section 15(4) of the Act. Aggrieved by this notice, the petitioner has come up to this court for the issue of a writ of prohibition.

(2.) IN the counter-affidavit it is stated that the original assessing officer acted under and applied Section 4(i) of the Act and that the later opinion held by the appellate authority and the Tribunal were effectually, a refusal to exercise jurisdiction when they were obliged to do so in law. As the expenditure incurred by the petitioner's sons who were his dependants in the eye of law, which fact is not seriously disputed, fell squarely within the provisions of Section 4(ii) of the Act, the department had to bring to tax the escaped turnover. No doubt, the reopening was on information obtained by the assessing, officer from the Commissioner of INcome-tax. The department's case is that the respondent considered the position in the light of Section 4(ii) of the Act and arrived at the reasonable belief that the expenditure which ought to have been included in the petitioner's assessment had escaped assessment. IN the earlier proceedings the applicability of Section 4(i) of the Act was in issue, whereas the subject-matter of the present intended proceedings is altogether different and it is one considered in the light of Section 4(ii) of the Act. The rule of finality urged by the petitioner is not applicable to the instant case. As a reasonable belief has been entertained that there has been an escapement of tax in not appreciating the correct content of Section 4(ii) and as such a reasonable belief and information can be the basis for reopening proceedings under Section 16, the "claim is that there is no basis for the request for the issue of a rule of prohibition.

(3.) THE case of the petitioner is that, as the earlier proceedings which concluded in a final order of assessment proceeded on the footing that it was Section 4(i) that was applicable and as the department also based its contentions on the said basis, the consequential order of the Income-tax Appellate Tribunal passed in 1965 has become final and, therefore, the same subject-matter cannot be seen once again for purposes of re-adjudication as it is prohibited on the principle of res judicata. Reliance is placed upon the decision in Commissioner of Income-tax v. Rao Thakur Narayan Singh, . That was a case where the Supreme Court said that the taxing officers cannot reopen final decisions made against the revenue in respect of questions that, directly arose for decision in earlier proceedings. In those circumstances, the court said :