JAYARAM M R Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee in this income-tax reference was originally a partner of a registered firm called "Sri Venkateswara Bus Union". He had a 1/4th share in the firm. He retired from the partnership with effect from March 30, 1960. For the accounting year ended March 31, 1960, relevant to the assessment year 1960-61, the firm was subjected to assessment to income-tax. THE assessment on the firm was made on October 10, 1960, on a total income of Rs. 49,040. Following the assessment of the firm, the assessment on the assessee as an individual partner of the firm was also completed for the same assessment year 1960-61. In that assessment, the assessee's share income was included as part of his total income. THE amount included was Rs. 12,263.

(2.) SUBSEQUENT to the completion of this assessment, both on the firm and on the assessee as individual partner thereof, the income-tax authorities conducted a raid in the premises of the partnership firm and seized several documents therefrom. According to the Department, these documents indicated suppression of income by the partnership firm for the year ended March 31, 1960. Following the search and seizure as aforesaid, the ITO reopened the assessment of firm for the assessment year 1960-61 under s. 147 of the I.T. Act, 1961. A notice for reopening the assessment was issued under s. 148 of the Act on the remaining partners of the firm as well as on the assessee as retired partner thereof. In response to the notice under s. 148, the assessee represented that since he had ceased to be a partner and not in possession of any of the account books, papers or other materials of the partnership firm, he was not in a position to submit any return as called for the assessment year 1960-61 pursuant to the reopening of the proceedings under s. 147. He, accordingly, referred the ITO to seek for necessary materials from the other partners of the firm. As for the remaining partners, they participated in the reassessment proceedings. Ultimately the reassessment was made on the firm fixing the total income for the year ended March 31, 1960, as Rs. 85,049 as against Rs. 49,049 as originally assessed. As a necessary corollary of the supplemental assessment on the firm for the assessment year 1960-61, the allocation of the share incomes, as between the partners of the firm for the year ended March, 31, 1960 had also to be revised and enhanced. The ITO, accordingly, took proceedings under s. 155(1) of the Act. In the individual assessment of the assessee, the officer substituted in the place of the share income of Rs. 12,262 as originally assessed, the sum of Rs. 21,363 which was the correct share income on the basis of the firm's reassessment. The assessee objected to the revision of his individual assessment on two grounds. One was that he was not liable for the reassessment of his individual share income for the assessment year 1960-61 since it was made subsequent to his retirement. The other ground of objection was that the remaining partners of the firm who participated in the reassessment had compromised with the Income-tax Department for getting the assessment made on a total of Rs. 85,049 and such a compromise. These objections were overruled by the ITO who proceed to complete the individual assessment of the assessee in terms of s. 155(1) of the Act. On appeal, the assessment of the assessee was confirmed both by the AAC and the Appellate Tribunal.

(3.) MR. Balakrishnan's construction of the provision of the provision in s. 187 was the there is no mention made in the section of a reassessment proceeding on a form under s. 147 of the Act. Learned counsel submitted that in some other sections of the Act, special provision has been made for proceedings unders s. 147. He cited, or example, s. 159 wherein a special provision is made for assessment on legal representatives. Sub-s (2) of s. 159 makes provision not only for assessment in the regular course but also "reassessment or recomputation under section 147". Similar words, according to MR. Balakrishnan, are found lacking in s. 187.