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Rani Rajendra Kumari Ba Vs. Income-tax Officer, B-ward - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberC.M. Writ Petition No. 350 of 1976
Judge
Reported in(1980)18CTR(All)261; [1981]130ITR708(All)
ActsIncome Tax Act, 1961 - Sections 64, 148, 150, 153, 250, 254, 263 and 264
AppellantRani Rajendra Kumari Ba
Respondentincome-tax Officer, B-ward
Appellant AdvocateV.P. Upadhya, Adv.
Respondent AdvocateR.K. Gulati and ;A. Gupta, Advs.
Excerpt:
- - the opening clause of explanation 3 is hence satisfied. by virtue of the fiction created by the deeming clause in the third explanation, such an exclusion on the finding that the income belongs to the wife would be deemed to be one made in consequence of a finding or direction, but the proviso has to be satisfied......each one of these years, the ito added the income of the petitioner from these two sources' in the total income of the petitioner's husband under section 64 of the i.t. act, 1961. the petitioner's husband went up in appeals and succeeded. the aac held that the income from the aforesaid two sources arose to the present petitioner and could not be clubbed with the total income of the husband. the appeals were allowed. the ito went up in appeal to the tribunal. the findings were confirmed and the tribunal held that the income arising to the assessee's wife from these two sources cannot be computed in the total income of the assessee under section 64(iii) of the i.t. act, 1961, for the assessment years under appeal. the orders under appeal were five, viz., for the assessment years 1964-65 to.....
Judgment:

Satish Chandra, C.J.

1. In this petition the validity of a notice dated 29th March, 1976, issued under Section 148 read with Section 147 of the I.T. Act for the assessment year 1967-68 is involved. It appears that the petitioner had disclosed income from royalty and Garraiya Bazar besides the share income for the assessment years 1964-65 to 1968-69. For each one of these years, the ITO added the income of the petitioner from these two sources' in the total income of the petitioner's husband under Section 64 of the I.T. Act, 1961. The petitioner's husband went up in appeals and succeeded. The AAC held that the income from the aforesaid two sources arose to the present petitioner and could not be clubbed with the total income of the husband. The appeals were allowed. The ITO went up in appeal to the Tribunal. The findings were confirmed and the Tribunal held that the income arising to the assessee's wife from these two sources cannot be computed in the total income of the assessee under Section 64(iii) of the I.T. Act, 1961, for the assessment years under appeal. The orders under appeal were five, viz., for the assessment years 1964-65 to 1968-69. The Tribunal rendered its judgment on 25th February, 1972. In consequence, the impugned notice was issued by the ITO on 29th' March, 1976, for the assessment year 1967-68 only.

2. The petitioner, who is the wife, challenges the validity of the notice on a variety of grounds. We need not deal with them because in our opinion one of the grounds is enough for the disposal of the writ petition and the ground that appeals: to us is that, contrary to the statutory provisions, the present petitioner was not given an opportunity of being heard before the Tribunal passed the order excluding the income from the aforesaid two sources from the total income of the husband and holding it to be the income of the wife.

3. The notice in dispute was beyond the prescribed period of limitation. Learned counsel for the revenue sought to bring the case within the purview of Section 150 to get rid of the bar of limitation. Section 150 applies where an assessment is sought to be done in consequence of or to give effect to any finding or direction contained in an order passed in an appeal. The third Explanation to Section 153 of the I.T. Act is relevant and material. It provides :

'Explanation 3.--Where, by an order referred to in Clause (ii) of Sub-section (3), any income is excluded from the total income of one person and held to be the income of another person, then, an assessment of such income on such other person shall, for the purposes of Section 150 and this section, be deemed to be one made in consequence of or to give effect to any finding or direction contained in the said order, provided such other person was given an opportunity of being heard before the said order was passed.'

4. Clause (2A) of Section 153 refers to an order passed under Section 250, 254, 263 or 264, etc. Here, the order in question was passed by the Tribunal in appeal under Section 254. The Tribunal's order excluded the income in dispute from the total income of the husband on the finding that it accrued to the wife. The opening clause of Explanation 3 is hence satisfied. By virtue of the fiction created by the deeming clause in the third Explanation, such an exclusion on the finding that the income belongs to the wife would be deemed to be one made in consequence of a finding or direction, but the proviso has to be satisfied. The proviso is that such other person shall be given an opportunity of being heard before the said order was passed. Such other person refers to the person whose income it is held to be. In the present case, the appeal was in relation to the husband's assessment. The finding was that the income accrued to the wife and it could not be computed in the husband's hands under Section 64. It is evident that, according to the proviso, the present petitioner, namely, the wife, had to be afforded an opportunity of hearing by the Tribunal before the passing of that order. In paragraph 23 of the writ petition, it has been asserted and there is no denial of the fact that neither the AAC nor the Tribunal afforded any opportunity of hearing to the present petitioner. Consequently, the exclusion from the total income of the husband on the finding that the income from the aforesaid two sources was of the wife will not fall within the purview of Section 150 by virtue of non-compliance of the third Explanation to Section 153. For this reason, Section 150 is not applicable though it is not disputed that the impugned notice was issued beyond the prescribed period of limitation.

5. In the result, the writ petition succeeds and is allowed. The impugned notice for the assessment year 1967-68 is quashed.

6. The petitioner would be entitled to costs.


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