ZIABANU MALAK Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is reference under s. 256(1) of the IT Act, 1961 (`the Act'), at the behest of the assessee on the following two questions :

(2.) THE assessee M.D. Malak (deceased) was a partner in a partnership firm "Mehdi Bagh Shop". His two minor sons were admitted to the benefits of the partnership. On noticing that shares of profits allotted to those minor sons were not included in the return of income by the assessee for the asst. yrs. 1962-63 to 1964-65 the assessments were reopened under s. 147(a) of the IT Act, 1961 (`the Act') and the share of profit added in the income of the assessee in those assessment years. THE AAC quashed the reassessment on the ground that having regard to the statutory form of return of income for the respective years, the assessee cannot be deemed to have failed or omitted to disclose fully and truly all the material facts necessary for his assessment. In coming to that conclusion, the AAC relied upon the ratio of the case of V.D.M.RM.M.RM. Muthiah Chettiar vs. CIT (1969) 74 ITR 183 (SC). THE Tribunal reversed the order of the AAC and restored the order of ITO holding that the ratio of the above Supreme Court decision does not apply since (unlike that form of return of income in that case) the Forms for the assessment years made it obligatory to declare such share of income.

(3.) WE may mention that ss. 16(3)(a)(ii), 22 and 34 of the 1922 Act are respectively, equivalent to ss. 64(1)(iii), 139 and 147(a) of the 1961 Act, as it stood at the material time. No doubt, the assessments in question were under the new Act and the assessments in the Supreme Court were under the 1922 Act. But that factor makes no difference upon the application of the ratio of the decision of the Supreme Court, because, it is a common ground that the prescribed Form of return even for the material assessment years did not specify the head in which such income could be shown by the assessee.