K.S. Hegde, J.
1. This is a reference under section 66(1) of the Indian Income-tax Act, 1922, which, for convenience sake, hereinafter will be referred to as the 'Act'.
2. The Income-tax Appellate Tribunal, Madras Bench, has submitted the question 'whether the assessments made under section 34(1) (a) of the 'Act' are valid for the opinion of this court as a question of law arising from its consolidated order made on November 13, 1962, in I. T. As. Nos. 9978 to 9981 of 1961-62 on its file.
3. On February 24, 1954, the assessee and six others started a new firm known as Murthy Silk House. Out of the seven partners of the firm, two, namely, Shantamma and Shivamma, are his wives, one was his father-in-law, another his step-sister and yet another his maternal aunt. In the deed of partnership, Shantamma and Shivamma were not described as wives of the assessee. On the other hand, they were described as daughters of Venkataramaniah and Puttashamiah, respectively. For the assessment years 1955-56 to 1958-59, the assessee furnished returns of his income, wherein the included only his share of income from Murthy Weaving Factory as well as from Murthy Silk House. The assessee was a partner in Murthy Weaving Factory, which firm was dissolved on April 1, 1954. Thereafter, the assessee took over that factory as his individual concern. In the return for the assessment year 1955-56, the assessee had given the names of the partners of Murthy Silk House but omitted to give any address of theirs except saying 'Bangalore.' Even that detail was not furnished during the three succeeding years. In the returns submitted by the assessee for the assessment years 1955-56 to 1958-59, he did not disclose the profits realised by his two wives in Murthy Silk House. Even otherwise, he did not bring to the notice of the Income-tax Officer that his two wives are the partners in Murthy Silk House. The Income-tax Officer proceeded to assess the assessee without taking into consideration the profits realised by his wives in Murthy Silk House. Subsequently, he came to know that Shantamma and Shivamma, two of the partners in Murthy Silk House, are the wives of the assessee. Hence, after issuing necessary notices under section 34(1) of the 'Act', he proceeded to reassess the assessee after taking into consideration the profits realised by Shantamma and Shivamma from Murthy Silk House in the respective assessment years after treating those profits as income that had escaped assessment. The notices under section 34 having been issued more than four years after the assessments in question, admittedly the department can get no assistance from section 34(1) (b) of the 'Act'. It is not denied that if the provisions of section 34(1) (a) are attracted to the facts of the case, the reassessment is within time. Therefore, the only question for decision is whether, on the facts found by the Tribunal, application of section 34(1) (a) is justifiable under law. It is not denied that in view of section 16(3) of the 'Act', while arriving at the total income of the assessee for the purpose of assessment, the profits earned by his wives, as partners in a firm in which he is a partner, has to be included in his income. It is also not denied that in his return the assessee did not include the profits realised by his wives from Murthy Silk House.
4. It was contended on behalf of the assessee that neither under section 22 nor under any other provision of law a duty is cast on the assessee to include in his return the income of his wives howsoever arising. Therefore, it was said that the assessee's failure to include the income of his wives, with which we are concerned in these cases, is insufficient to attract the provisions of section 34(1) (a). The contention that there was no duty cast on the assessee to include the income of his wives falling under section 16(3) in his return was accepted by the Tribunal. His contention in this regard receives support from the decision of the Bombay High Court in D. R. Dhanwate v. Commissioner of Income-tax. In view of the fact that the Tribunal has accepted that contention and the department has not challenged that conclusion, we need not go into the same.
5. But the Tribunal has found as a fact that the assessee had failed to disclose fully and truly all material facts necessary for his assessment for the assessment years in question. The finding of the Tribunal on this point is a finding of fact. The Tribunal has given good reasons in support of that finding. Therefore, the correctness of that finding is not open to examination by this court. The Tribunal had found that at the time of the assessment, the Income-tax Officer was not aware of the fact that Shantamma and Shivamma are the wives of the assessee. It has further come to the conclusion that no material was placed before the Income-tax Officer from which he could have concluded that they were the wives of the assessee. Therefore, if we are to come to the conclusion that the assessee had a duty to disclose fully and truly all material facts necessary for his assessment, then there can be no doubt that the assessments under section 34(1) (a) of the 'Act' are valid. Therefore, the only question that arises for decision is whether the assessee had a duty to disclose to the Income-tax Officer that Shantamma and Shivamma are his wives.
6. We are unable to agree with Mr. K. Srinivasan, the learned counsel for the assessee, that no duty was cast on his client to disclose the fact that Shantamma and Shivamma, the two partners of Murthy Sil House, are his wives. Section 34(1) (a) of the 'Act' presupposes that every assessee has a duty to disclose fully and truly all material facts necessary for his assessment. The Income-tax Officer could not have included in the total income of the assessee the profits earned by Shantamma and Shivamma in Murthy Silk House, unless he had the knowledge that those persons are the wives of the assessee. Hence, the information that they are the wives of the assessee was material information necessary for the assessee's assessment. It was the duty of the assessee to place that information before the Income-tax Officer. In Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta, the Supreme Court laid down that to confer jurisdiction under section 34 to issue notice in respect of assessments beyond the period of four years, but within a period of 8 years, from the end of the relevant year, two conditions had to be satisfied; the first was that the Income-tax Officer must have reason to believe that income, profits and gains chargeable to income-tax had been under-assessed; the second was that he must have also reason to believe that such 'under-assessment' had occurred by reason of either omission or failure on the part of an assessee to make a return of his income under section 22, or omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year; both those conditions were conditions precedent to be satisfied before the Income-tax Officer could have jurisdiction to issue a notice for the assessment or reassessment beyond the period of four years but within the period of eight years, from the end of the year in question. The court further ruled that the words 'omission or failure to disclose fully and truly all material facts necessary for his assessment for that year', used in section 34, postulate a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. In view of that decision, it is no more open to contend that the assessee had no duty to disclose to the Income-tax Officer the fact that Shantamma and Shivamma are his wives.
7. The decision of the Kerala High Court in Income-tax Officer, Alleppey v. S. Veeriah Reddiar, in our opinion does not lend any support to the contention advanced by Mr. Srinivasan. The writ prayed for in that case was granted by that court solely on the ground that it was not the case of the Income-tax Officer that by reason of the assessee's omission to disclose material facts necessary for his assessment his income had escaped assessment. That is not the position here.
8. In the course of his arguments, Mr. Srinivasan pointed out that the Income-tax Officer took action under section 34 of the 'Act', as could be seen from his order, on the ground that the assessee in his return of income filed on January 10, 1956, failed to disclose the shares of his two wives in Murthy Silk House, whereas the Tribunal justified the assessments in question on the ground that the assessee failed to disclose to the Income-tax Officer the material facts necessary for his assessment. According to Mr. Srinivasan, such a course is impermissible as what is relevant under section 34 of the 'Act' is the reason which prompted the Income-tax Officer to take action thereunder and not any other reason that may justify his action. It is unnecessary to examine the correctness of this contention as that contention does not arise from the question of law referred to this court, read with the statement of the case. That contention does not appear to have been taken before the Tribunal even at the time a reference under section 66(1) of the 'Act' was asked for. The facts necessary for deciding that contention are not available from the records of the case. We do not have notice or notices issued under section 34 nor the report submitted by the Income-tax Officer to the Commissioner of Income-tax.
9. For the reasons mentioned above, our answer to the question submitted is that the assessments made under section 34(1) (a) of the 'Act' are valid. The assessee to pay the costs of the department in this reference. Advocate's fee Rs. 250.