KESHRIMAL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THE decision rendered in this writ shall also govern disposal of other writ being WP No. 1019/1987 (renumbered as WP 3638/1997) as both these writs involve identical issues and relates to same petitioner except the difference being the present petition arise out of IT Act and the other one arise out of WT Act.

(2.) BY filing this writ under Article 226/227 of Constitution of India, the petitioner seeks to challenge the notices issued under Section 147(a) of the IT Act (for short hereinafter referred to as 'Act'), dt. 17th Nov., 1986, for the asst. yrs. 1983 -84, 1984 -85, and 1985 -86 (Annexures P/16. P/17 and P/18). The reasoning for seeking to reopen the assessment for the years in question and which is communicated to the petitioner along with impugned notices reads as under: fnukad 21&10&1979 dks fgUnw vfHkoDrdqMwEc dk vkaf'kd caVokjk ;k le

(3.) FOR the asst. yr. 1980 -81, the Assessing Officer (AO) made assessment of the petitioner under Section 143(3) of the Act. In this assessment, the petitioner had set up one document styled as family agreement settlement, dt. 21st Oct., 1979, (Annexure P/3). By this family agreement, the petitioner claimed that a sum of Rs. 1,25,112 has gone out of the hands of HUF and hence cannot now be taxed as an income of HUF. In other words, the contention of petitioner on the basis of the said family settlement was that on and after 21st Oct., 1979, (the date of family settlement), the amount of Rs. 1,25,112 will no longer be available for being taxed as HUF property and hence it be not accordingly treated as an income/assets of the HUF. It is this issue which was gone into by the AO in the assessment proceedings initiated under Section 143(3) ibid for the year 1980 -81 and by his order, dt. 25th Oct., 1982 (Annexure P/2) the (AO) accepted the claim of the petitioner and accordingly granted benefit of the said sum i.e., Rs. 1,25,112 to the petitioner for the year 1980 -81. However, the Commissioner of Income -tax (CIT) then invoked the powers conferred under Section 263 of the Act and questioned the correctness of the finding recorded by the AO in his order, dt. 25th Oct., 1982, when he granted benefit to petitioner of Rs. 1,25,112 on the basis of alleged family settlement. In the opinion of CIT the order of ITO was prejudicial to the interest of Revenue inasmuch as it wrongly relied upon the alleged family settlement for giving benefit to the petitioner to the extent of Rs. 1,25,112. The petitioner was thus afforded an opportunity of hearing in the suo motu exercise of powers by the CIT under Section 263 ibid and eventually by order dt. 5th Oct., 1984, (Annexure P/9), the CIT set aside the order of ITO insofar as it related to grant of benefit to petitioner of an amount of Rs. 1,25,112 on the basis of family settlement. It is stated that the order of CIT still holds the field.