COMMISSIONER OF INCOME-TAX Vs. SHAM LAL

JUDGEMENT

(1.) THE assessee is an individual. The previous years relevant to the assessment years under consideration ended on 31st March, 1958, and 31st March, 1959, respectively. The assessee had not been assessed before the back assessment proceedings for the said two years were initiated against him. In response to the notices regarding income having escaped assessment, the assessee filed returns showing salary income of Rs. 1,880 in each return. Further, amounts of Rs. 24,999 and Rs. 28,503, respectively, had been shown by the assessee in the two returns, but the same were claimed as not taxable. The ITO disallowed the assessee's claim regarding non-taxability of the said share incomes and completed the assessments on 20th March, 1971, and 30th April, 1971, respectively.

(2.) THE assessee went in appeal to the AAC. The learned AAC by his common order dated 17th May, 1972, annulled the said two assessments. The learned AAC took the view that the assessee was not a partner in the said firm and that he was only an employee thereof. He also noticed that the ITO had, for coming to the conclusion that the assessee was a partner in the firm, M/s. Bhim Singh Sham Lal, relied on certain pieces of evidence, which had not been put to the assessee.

(3.) THE revenue felt aggrieved by the AAC's order and went in appeal to the Income-tax Appellate Tribunal, Chandigarh Bench (hereinafter referred to as "the Tribunal" ). The revenue pleaded that, on the facts and in the circumstances of the case, the AAC was not justified in cancelling the assessments. The assessee also filed cross-objections before the Tribunal contending that the assessee had no share income from the firm in question and that the initiation of back assessment proceedings for the year under consideration was illegal. The Tribunal dismissed the revenue's appeal as also the assessee's cross-objections. The Tribunal observed that if the ITO did not place the material relied upon by him before the assessee to enable him to meet the said material and that the ITO's order being one against the principles of natural justice, the same could not be sustained. On facts, the Tribunal affirmed the findings recorded by the AAC that there was no material on record to indicate or establish that Shri Sham Lal was a partner in the firm in question.