K. N. Saikia, J. - In compliance with the directions of this Honble Court the ITAT, Gauhati (hereinafter referred to as 'The Tribunal') has referred the following question :
'Whether on the facts and in the circumstances of the case, and on a proper construction of Section 64, Section 139 and Section 147(a) of the IT Act. 1961, and also on a proper construction of r. 12 of the IT Rules, 1962, and the forms prescribed thereunder, the Tribunal is justified in annulling the assessments holding that the assessee is not obliged under the law to file a return of income in respect of which he is assessable by virtue of special provision like that contained in Section 64 ?'
The relevant facts stated are :
The assessee, Shri Narendra Singh Kothari, was assessed in the status of an individual in the asst. yrs. 1962-63 and 1963-64 resorting to the provisions of Section 147(a) of the IT Act 1961 (hereinafter referred to as 'the Act) on the ground that he had failed to file any return of income for those two years u/s 139(1) of the Act, in respect of the income arising from properties transferred by him to one Narendra Trust, which was includible in his total income u/s 64 of the Act. The assessees appeals therefrom were rejected by the AAC. Aggrieved, he filed ITA Nos. 160 (Gau) and 161 (Gau) of 1972-73 before the Tribunal. It was argued before the Tribunal that the assessee was the Karta of his HUF and all properties owned by him were ancestral properties; that he received two vacant plots of land, in Gauhati under a will of his uncle; that there was no income from the two plots until about the asst. yr. 1953-54 whereafter there was some income; that construction on the plots started sometime in 1951 with the aid of family funds; that the land and the buildings constructed thereon were settled by the assessee in he said Narendra Trust for the benefit of his wife and three minor sons, his father and his wife being the Trustees; and that the income of the Trust had been separately assessed in the hands of the Trust in the status of an association of persons for the asst. yr. 1955-56. It was pointed out that the income of the trust properties was for the first time sought to be included in the assessment of the HUF of which the assessee was the Karta, by invoking the provisions of Section 16(3)(b) of the IT Act of 1922 (hereinafter the old Act) and the appeal therefrom was unsuccessful before the AAC; but on further appeal the Tribunal by its order dated 13-7-73 in I.T.A. No. 1372 (Gau) of 1971-72 deleted the inclusion on the ground that the provisions of Section 16(3) would be inapplicable to the case of the HUF but would be applicable only in the case of an individual. Following the above finding relating to the asst. yr. 1955-56 of the HUF, the present proceedings were initiated for the years 1962-63 & 1963-64 in the case of the assessee u/s 147 (1) read with Section 64 of the Act to assess the income of the trust properties in his hands by assessment order dt. 22-3-71 which was confirmed by the AAC. The Tribunal, however, for the reasons discussed in paras 3 and 4 of its order dated 30-8-73 in ITA No. 160 (Gau) and 161 (Gau) of 1972-73, applying : 74ITR183(SC) and : 82ITR247(Cal) , and relying on the order of the Tribunal in I.T.A. 1372 (Gau) of 1971-72, came to a finding that the assessee was not obliged to file any return in respect of income which had been assessed on him by virtue of special provisions of Section 64, and therefore, there was no failure on his part to submit the return u/s 139 (1). Accordingly, it held that Section 147(a) of the Act was not applicable in the case of the assessee and it annulled the assessment for both the asst. yrs. Hence the above question.
2. Mr. G.K. Talukdar, ld. Counsel for Revenue, fairly submits that if the ratio of the decisions in Muthiah Chettiar v. CIT, Madras decided under the old Act, which was applied in Radheshyam Ladia v. ITO under the Act (1961) is followed, the question has to be answered in the affirmative. But, submits the Counsel, the nature and extent of liability of an assessee to submit return of his total income u/s 139(1) read with Section 64 of the Act is wider than the corresponding liability under the old Act.
3. Under Section 22 of the old Act the ITO had to issue a general notice u/sub-s. (1) and personal notice to the assessee u/sub-s. (2) requiring him to furnish a return in the prescribed form and verified in the prescribed manner, while Section 139 of the Act requires every person, whose total income exceeds the maximum exempted from tax to file a return of his income within the time specified in the section in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. Rule 12 requires the return of income to be in the prescribed form, which contained the following Note :-
'If the income of any other person is includible in your total income under the provisions of ss. 60, 61, 62, 63 or 64 of the IT Act, 1961 such income should also be shown separately in the return under the appropriate heads.'
It is admitted, however, that there was no separate head for showing such income in the Form prescribed at the relevant time.
4. The contention of Mr. Talukdar was raised in Radheshyam Ladias case (supra) and was negatived on the grounds stated by the Supreme Court in Muthiah Chettiars case (supra) and further holding that Section 139 of the Act does not contemplate that an assessee should file one return including therein not only his own total income but also the total income of any other person in respect of which he is assessable. The Supreme Court in Muthias case referring to instructions in the Manual observed that even assuming that there were instructions printed in the Forms of return in the relevant years, in the absence of any head under which the income could be shown the assessee could not be deemed to have failed or omitted to disclose fully and truly all material facts necessary for his assessment. Considering 'the very definite view' taken by the Supreme Court the Calcutta High Court in Ladias case, accepting the arguments that the position had not changed, held that there had been no failure on the part of the assessee, and assumption of jurisdiction u/s. 147(a) was not justified. Our present case stands on the same footing and the same reasons apply.
5. While following the above decisions in this particular, case, we are aware that there has since been a trend towards imposing more and more responsibility on the assessee in respect of submission of his return of total income and payment of advance tax on voluntary basis. The Rules and the forms too are gradually being perfected consistently with such a trend, so that, thereunder, liability may even be implied.
In the instant case, on proper constructions of the relevant provisions of ss. 64, 139 and 147(a) of the Act, the r. 12 of the IT Rules and the form prescribed at the relevant time, the decision of the Tribunal appears to be unassailable.
The Tribunal was, therefore, justified in annulling the assessments holding that the assessee was not obliged under the law at the relevant time to file a return of income in respect of which he was assessable by virtue of special provisions like those contained in Section 64. The question is accordingly answered in the affirmative, in favour of the assessee and against Revenue. Under the circumstances, parties are to pay and bear their own cost.
D. Pathak, Actg. C.J. - I agree.