COMMISSIONER OF INCOME TAX Vs. RAM KRISHNA TEKRIWAL

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following questions of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as the Act), for opinion to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in taking the view that reopening of the assessment by the ITO was not legal or permissible ?"

(2.) The present reference relates to the asst. yr. 1973-74. The respondent-assessee is a partner in the firm M/s Vijay Picture Palace, Gorakhpur, in the capacity of Karta of his HUF. His wife, Smt. Chameli Devi, is also a partner in the firm. In the original assessment order the income derived by the wife of the respondent-assessee from the firm was not included in the hands of the respondent-assessee. The AO initiated proceedings under Section 147/148 of the Act. He recorded the following reasons for reopening of the assessment in the case of Sri Indu Kumar Tekriwal. The reasons for reopening the assessment in the present case is also similar. "28th March, 1978. The assessee is a partner in the status of an individual in the registered firm M/s Hari Narain Ram Krishan. He is also a partner in the status of an HUF in registered firm M/s Vijay Picture Palace, wherein his wife Smt. Lalita Devi is also a partner. As such, the income of the assessee's wife Smt. Lalita Devi, should have handled in the hands of Shri Indu Kumar Tekriwal as Individual. Under Section 64 of the IT Act, which has escaped assessment. Issue notice under Section 148 at once."

(3.) In response to the notice issued under Section 148 of the Act, the respondent-assessee filed his return under protest disclosing an income of Rs. 17,580 with remark in part III of the report to the effect that the share income of the wife from M/s Vijay Picture Palace, Gorakhpur, at Rs. 6,009 was not legally includible in his hands under Section 64 of the Act and the proceedings were illegal. It was also stated that the share income had already been assessed in the individual assessment of the spouse and as such the addition of this income in his hands would amount to double taxation, which is illegal. It was further contended that the reassessment amounted to a change of opinion. The ITO did not accept any of the objections raised by the respondent-assessee and held that it was a case where there was an omission to include the share income of the spouse under Section 64(1)(i) of the Act.