COMMISSIONER OF INCOME TAX Vs. SARALA DEVI BIRLA

JUDGEMENT

(1.) In this reference under Section 256(2) of the Income-tax Act, 1961, the following questions of law have been referred to this court for the assessment year 1962-63 :

(2.) Shortly stated, the facts are that, originally, the assessment was completed under Section 143(3) on November 25, 1962, on a total income of Rs. 1,14,689. Subsequently, reassessment was made under Section 147(b) on February 29, 1968, on a total income of Rs. 1,65,169. The assessee has given a gift of Rs. 1,00,011 on October 7, 1959, to her minor daughter, Kumari Manjushree Birla, and this amount was invested in shares of Kesoram Industries and Cotton Mills Ltd. and Hindusthan Motors Ltd. The Income-tax Officer was of the view that the income arising from the assets transferred to the minor child was to be treated as the income of the individual under Section 64(4) and, therefore, such income had escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Since such income was not disclosed in the original return filed on August 29, 1962, the Income-tax Officer initiated reassessment proceedings under Section 147(a) and included capital gains arising on transfer of shares at Rs. 29,274 and dividend income from the shares at Rs. 5,983 in the total income of Rs. 1,65,169 already determined.

(3.) Being aggrieved, the assessee preferred an appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner held that the Income-tax Officer had no jurisdiction to reopen the assessment under Section 147(a) of the Income-tax Act, 1961. The Appellate Assistant Commissioner followed the decision of this court in Radheshyam Ladia v. ITO [1971] 82 ITR 247. Accordingly, he set aside the order of assessment.