COMMISSIONER OF INCOME TAX Vs. AYODHYA KUMARI

JUDGEMENT

(1.) THIS is a preference under Section 256(1) of the I.T. Act, 1961 (No. XLIII of 1961) (for short "the Act" herein), by the Income-tax Appellate Tribunal, Delhi Bench "A", which for the sake of brevity hereinafter will be referred to as the "the Tribunal". The Tribunal has referred the following questions of law for decision of this court :

(2.) THE assessee, Mrs. Ayodhya Kumari, transferred her house property on March 31, 1956. She transferred a fixed deposit of Rs. 5,000 with the National Motors on December 29, 1956. She also transferred ten shares of City Light THEatres (P.) Ltd., on August 24, 1960, to her minor son, Sunil Kumar. One the same day, i.e., August 24, 1960, she transferred seventeen shares of City Light THEatres (P.) Ltd. to her minor son, Akhil Kumar. THE incomes of these minor sons were not included in the total income of the assessee in her original assessments as according to the interpretation put by the Supreme Court on Section 16(3) of the Indian I.T. Act, 1922 (No. XI of 1922) (for short "the old Act"), that "an individual" occurring in Section 16 of the old Act would only include male species and not female species. According to the Income-tax Officer (ITO), there were changes in the provisions of Section 64 of the Act and according to Section 64(iv) of the Act, income of of the minor sons was to be included in the assessee's assessment. THE ITO started proceedings against the assessee under Section 147(a) of the Act in respect of the assessment years 1962-63, 1963-64 and 1964-65, and he included the income of the minor sons in the total income of the assessee. He also included the income of the minor sons from the assets transferred by her to them in the assessment of the assessee for the assessment years 1965-66 and 1966-67. THE assessee preferred appeals. THE Appellate Assistant Commissioner (AAC) held that, on the facts of the case, he can substitute application of the provisions of Section 147(b) for Section 147(a) of the Act. He further held that though the assets had been transferred by the assessee prior to the commencement of the Act, still the provisions of Section 64 of the Act were applicable to the case, for, the Act is not concerned with the date of transfer but with the income arising out of transfer and chargeable to income-tax and that Section 64(iv) of the Act is wide enough to include income derived by transfer before the passing of the Act. THE assessee filed second appeals before the Tribunal. THE five appeals were disposed of by a common order dated June 25, 1979. THE appeals related to the assessment years 1962-63, 1963-64, 1964-65, 1965-66 and 1966-67. THE three appeals relating to 1962-63, 1963-64 and 1964-65 arose out of the initiation of proceedings under Section 147(a) of the Act as the ITO included the income of the minor sons in the total income of the assessee. THE remaining two appeals were in respect of the assessment years 1965-66 and 1966-67, in which the income of the minor sons from the assets transferred by the assessee to them were included. THE Tribunal has summarised its conclusions as follows :

(3.) QUESTION No. 1: The AAC in his order dated September 18, 1968, passed in the appeals relating to the assessment years 1962-63, 1963-64 and 1964-65, came to the conclusion that Section 147(a) did not apply and that the initiation of the proceedings against the assessee could be under Section 147(b) of the Act. The Tribunal was, however, of the view that the AAC was not right in legalising the assessments by resorting to the provisions of Section 147(b). In other words, according to the Tribunal, the proceedings initiated under Section 147(a) could not be legalised by converting them into that of Section 147(b) of the Act.