KAMAL SINGH RAMPURIA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) : This is a reference under s. 66(1) of the IT Act, 1922, hereinafter referred to as "the Act". The facts as appearing in the case are as follows :

(2.) THE assessee, Kamal Singh Rampuria, was born in December, 1935. His mother died within a week after his birth. Before her death she had executed a will, by which she disposed of Rs. 5,00,000 received by her as a gift previously from her husband, Hulash Chand Rampuria. She bequeathed by this will Rs. 1,00,000 to her daughter, Rs. 1,00,000 made up of various sums to charity, and the balance of Rs. 3,00,000 was bequeathed to her son, the assessee. This sum of Rs. 3,00,000 was invested in the firm of Hazarimal Hiralal and earned interest. Besides, the deceased owned one-sixth share in the firm of Bikanir Trading Co., and this also came to the assessee. In the several returns made during his minority by his father, the said Hulash Chand Rampuria, since deceased, showed the income from the firm till 1944-45 in his son's account. THE interest payments to the assessee, although shown in his son's account, were, however, assessed against the father under s. 16(3)(a)(i) of the Act. THE said Hulash Chand Rampuria was dissatisfied with the order of the ITO in dealing with the interest income under the aforesaid section in respect of the year 1940-41 and referred this matter to the High Court under s. 66(1). In respect of the assessment year, which is 1945-46, the return of the income of the minor assessee submitted by his father included the share income from Bikanir Trading Company but the interest income as aforesaid was shown in the account of the father. THE share income alone was therefore, assessed on 28th Feb., 1950.

(3.) MR. Tarun Basu, the learned counsel appearing for the assessee, contends that, although the interest income was all along shown up to 1944-45 as the income of the son, it was treated as the income of the father under s. 16(3) and, in such circumstances, if the return regarding the interest income was filed by the father for the asst. yr. 1945-46 as his own income, it cannot be said that there has been no disclosure as to material facts. Further, it is argued that these facts were already known to ITO and all the materials being present for his consideration, the provisions of s. 34 (1) (a) ought not to have been invoked by the ITO. The relevant ingredients of s. 34(1)(a), for the purpose of deciding this case, are as follows : (a) Income, profits or gains chargeable to income-tax should have escaped assessment for the relevant year. (b) The ITO should have reason to believe that income has escaped assessment or full assessment, by reason of the omission or failure on the part of the assessee-- (1) to make a return of his income under s. 22, or (2) to disclose fully and truly all necessary facts for the year.