S. Ranganathan J.
1. These references under section 256(1) of the Income-tax Act, 1961, relate to the assessment of Shri Sohan Singh for the assessment years 1963-64 to 1969-70. The relevant previous years are the financial years 1962-63 to 1968-69. Two common questions on law have been referred for the opinion of this court. They arise out of the same set of facts. These references can, thereforee, be disposed of by a common order.
2. The assessments of Shri Sohan Singh for the assessment years 1963-64 to 1969-70 were originally completed by taking into account his income by way of salary from two private limited companies, his income from dealing in shares and also his income by way of interest, the full details of which are not relevant for our present purposes. These assessments have since been reopened under section 147(a) of the Income-tax Act, 1961, and reassessments have been made by including in the total income of the above assessed, the income ostensibly earned by a firm known as Preetpal Singh and Company. It is the correctness of these reassessments that is being challenged in these references.
3. Preetpal Singh & Co. was constituted as a firm under a partnership deed dated December 7, 1961. The partners were said to be Smt. Satwant Kaur (mother of Shri Sohan Singh), Shri Preetpal Singh, Shri Harvinder Pal Singh and Km. Kamal Anand (minor children of Shri Sohan Singh) and Shri Surinder Singh Kohli. Under the instrument of partnership, Shri Surinder Singh Kohli was entitled to a 10% share in the profits and losses of the firm. The balance of 90% was to be shared equally by Smt. Satwant Kaur and the minor children admitted to the benefits of the partnership when there were profits, but to be borne entirely by Smt. Satwant Kaur in the event of the firm making losses. The business of the firm was to deal in shares and other commodities on forward transactions or otherwise as agreed to between the partners. On February 27, 1967, Smt. Satwant Kaur died. The firm was thereafter reconstituted under an instrument of partnership dated May 25, 1967. By this time, Shri Preetpal Singh and Shri Harvinder Pal Singh had become majors and the partnership was now said to consist of Shri Surinder Singh Kohli, Shri Preetpal Singh and Shri Harvinder Pal Singh with Km. Kamal Anand, the minor, admitted to the benefits of the partnership. As before, Shri Surinder Singh Kohli was entitled to a share of 10% in the profits and losses and the balance was to be shared among the other three partners, when there were profits in the ratio of 35 : 35 : 20, but in case there were losses, they were to be borne equally by the two adult partners.
4. The first assessment of the firm constituted as above came up for consideration before the Income-tax Officer, District VIII-B (Addl.), New Delhi, for the assessment year 1963-64. In the course of these proceedings, the above Income-tax Officer summoned Shri Surinder Singh Kohli and examined him at length on March 28, 1968. The officer came to the conclusion, for reasons which were set out in the assessment order, that the income of the firm known as Preetpal Singh and Company in fact belonged to Shri Sohan Singh and not to a firm as claimed. However, he also proceeded to frame a protective assessment on the firm in respect of the income shown by it and in the light of this, he also passed an order granting registration to the firm under section 185 of the Income-tax Act, 1961. Similar assessments of a protective nature on the firm as a registered firm were apparently made for the other assessment years with which we are here concerned.
5. The above information was communicated by the Income-tax Officer, District VIII-B (Addl.), to the Income-tax Officer who as in-charge of the assessments of Shri Sohan Singh. On receipt of this information and on examining the assessment order passed in the case of the firm, the Income-tax Officer assessing Shri Sohan Singh had reason to believe that the assessed had concealed the full particulars of his income in the original returns inasmuch as the income of the firm styled Preetpal Singh and Company really appeared to belong to his assessed, Shri Sohan Singh. He, thereforee, reopened the assessments of Shri Sohan Singh under section 147(a) with the approval of the Commissioner of Income-tax. In the course of further proceedings before him, he examined the partnership deeds, recorded statements from Shri Sohan Singh, Shri Gurbachan Singh (the brother of Shri Sohan Singh) and certain brokers Shri Bhagwan Dass Gupta, Shri P. S. Khambate & Co. and Shri H. P. Mehta. He also recorded a statement of Shri Hindpal Singh, an employee of Shri Sohan Singh. Ultimately, he came to the conclusion, for the reasons set out in a deed order passed in relation to the assessment year 1963-64, that Preetpal Singh and Company was only benami concern of Shri Sohan Singh himself and that Shri Sohan Singh was the beneficial owner of the income said to have been earned by the firm. He, thereforee, included the income which had been assessed (protectively) in the name of Preetpal Singh and Company by the officer assessing the firm in the total income of Shri Sohan Singh. Similar orders were passed in relation to the assessment years 1964-65 to 1969-70. The appeals of Shri Sohan Singh against these assessment orders having been rejected by the Appellate Assistant Commissioner as well as the Appellate Tribunal, the following two questions of law have been referred to this court at the instance of the present assessed, Shri Sohan Singh :
'1. Whether, on the facts and in the circumstances of the case, the Tribunal erred in holding that the Income-tax Officer validly assumed jurisdiction in initiating proceedings for reopening the assessment, under section 147 of the Income-tax Act, 1961
2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that a registered firm could also be held as a benami concern of an individual who was not a partner of that firm ?'
6. From the questions referred by the Tribunal, it will be seen that the basic question whether the income said to have been earned by Preetpal Singh and Company belonged to that firm or whether that firm was a dummy or benami for the assessed is no longer in issue before us. The question whether the firm was only a benamidar or a dummy for the assessed is primarily one of fact. The Income-tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal have all given detailed reasons for coming to the conclusion that Preetpal Singh and Company was only a benamidar for the assessed and this finding has become conclusive inasmuch as no question has been referred to us regarding the correctness or otherwise of this conclusion. The only two questions which have been referred to us are pure questions of law.
7. The first is whether the Income-tax Officer validly assumed jurisdiction in initiating proceedings for reopening the assessment under section 147 of the Income-tax Act, 1961. Learned counsel for the assessed explained that the objection on behalf of the assessed was that the assessments could have been reopened, if at all, only under section 147(b) but not under section 147(a). It is submitted that the reopening of the assessments by the Income-tax Officer assessing Shri Sohan Singh was as a result of the information received from the Income-tax Officer who had assessed the firm and that where escapement of assessment is detected on the basis of information received by the Income-tax Officer subsequent to the original assessment, the proper provision to apply would only be clause (b) of section 147 and not clause (a). We are unable to accept this contention. As we have already pointed out, the finding of the Tribunal that the income earned purportedly by the firm is really the income of the present assessed has now become final. That being so, it is clear that the present assessed, not having disclosed the income from the business which was allegedly carried on by the firm but which really belonged to him, had not disclosed fully and truly all material facts necessary for his assessment for the years in question. No doubt, the Income-tax Officer assessing the present assessed acted on the information provided to him by the Income-tax Officer assessing the firm, but this information, the details set out in the assessment order, as well as the evidence recorded by the said officer led the Income-tax Officer assessing Shri Sohan Singh to believe that the income had escaped assessment by reason of the omission or failure on the part of Shri Sohan Singh to disclose fully and truly the material facts necessary for his assessment for the years in question. The information provided to the Income-tax Officer clearly led him to believe that the income in question was that of Shri Sohan Singh and since Shri Sohan Singh had not disclosed either the existence of the business or the details of the income there from, he had withheld material facts necessary for his assessments. As pointed out by the Tribunal, this is a case of the type considered by the Supreme Court in the case of Malegaon Electrical Co. P. Ltd. v. CIT : 78ITR466(SC) . The conclusion in the reassessment on merits is a very material aspect relevant to determine the competence of the Income-tax Officer to initiate proceedings under section 147(a). Learned counsel for the assessed referred to the decisions in Samiur Rahman and Brothers v. CIT : 66ITR22(Patna) , CIT v. Narainji Manji Rathore : 66ITR322(Patna) and Ishverlal & Bros. v. N.N. Seth, ITO : 85ITR414(Guj) , in support of his contention. The facts of those cases are clearly distinguishable. In all those cases, the Income-tax Officer who completed the original assessment had been furnished the full primary facts necessary for the assessment but had reached a conclusion which he later on purported to revise on the basis of another assessment by another officer. In the present case, the assessed had not disclosed to the Income-tax Officer his connection with the business carried on in the name of Preetpal Singh & Company. If this business did not belong to the assessed, he was under no obligation to furnish details regarding the same to the Income-tax Officer. However, in the light of the information received by him, the Income-tax Officer had reason to believe that this business belonged to the assessed and as such he had also reason to believe that the income there from had escaped assessment in the hands of the assessed by reason of the omission or failure on the part of the assessed to disclose facts relating to business in the course of the assessment proceedings. The eventual conclusion which has become final also lends support to the inference that there had been a failure on the part of the assessed to disclose primary facts necessary for his assessment. We are, thereforee, of the opinion that in the circumstances of the case, the provisions of section 147(a) were attracted and that the assessments were appropriately reopened and the reassessments appropriately completed by recourse to clause (a) of section 147. The first question is, thereforee, answered in the negative and in favor of the Revenue.
8. The second question which is sought to be raised on behalf of the assessed is that since Preetpal Singh and Company had been treated as a registered firm, it was not open to the Department to treat it as a benami concern of Shri Sohan Singh who was not a partner of that firm. This objection, in our opinion, is untenable. In the first place, even assuming that the Income-tax Officer assessing Preetpal Singh & Co., had come to a conclusion that the said firm was a genuine firm and had completed an assessment on it as a registered firm, that conclusion cannot stop the Income-tax Officer assessing a different assessed, namely, Shri Sohan Singh, from reaching a conclusion on the facts before him that the income allegedly earned by the firm was really the income of Shri Sohan Singh, There can be no estoppel of one authority or officer consequent on conclusions on fact arrived at by another Officer. But that apart, in the present case, there is no basis at all for any claim of estoppel because even the Income-tax Officer assessing Preetpal Singh and Company did not really come to the conclusion that it was a genuine firm. In fact, he came to the conclusion on the materials before him that the firm was not genuine and that it had been merely put up to screen the profits of Shri Sohan Singh and to avoid proper assessments thereon. However, that the Income-tax Officer was assessing the firm and in spite of his conclusion that the income really belonged to Shri Sohan Singh he considered it necessary to make a protective assessment on the firm itself. Such a protective or precautionary assessment has the sanction of law, the only limitation being that the Department cannot recover tax on the same income from two different assesseds (see Lalji Haridas v. ITO : 43ITR387(SC) ). Such an assessment is made in order to safeguard the interests of the Revenue. Though the Income-tax Officer assessing the firm came to the conclusion that the income should be assessed in the hands of Shri Sohan Singh, he could not proceed to do so because Shri Sohan Singh was not an assessed in his charge. At the same time, he could not be sure that his conclusion would eventually be upheld and, thereforee, in the interests of the Revenue, he considered it prudent and proper to act on the basis of the return filed by the assessed-firm and to assess the firm. Such an assessment will ultimately stand only if the appellate authority reached the conclusion that the income belonged to the firm and not to Shri Sohan Singh. In that hypothesis, the assessment had necessarily to be completed on Preetpal Singh and Company as a registered firm. In the final event of the appellate authorities holding that Preetpal Singh and Company was a genuine firm, that assessment and the registration granted to the firm will stand. If on the other hand, as it has happened, the appellate authorities confirm the findings of the Income-Officer that the income belongs to Shri Sohan Singh and not to Preetpal Singh and Company, then the income can be assessed only in the hands of Shri Sohan Singh. In other words, the reassessments presently made will have to be confirmed. Consequently, the assessments made on Preetpal Singh & Company will have to be vacated and the taxes paid thereon, if any, will have to be refunded or adjusted in accordance with law. In this eventuality, the grant of registration to Preetpal Singh does not have any meaning whatsoever. In these circumstances, we are unable to agree with the contention that the mere fact that the Income-tax Officer assessing Preetpal Singh and Company granted registration to that firm or assessed it on the income returned by it cannot stand in the way of reassessments of Shri Sohan Singh on what has been found to be in truth and reality his income. The second question referred to us is, thereforee, answered in the affirmative and in favor of the Department.
9. The reference is answered accordingly. The assessed, who has failed, will pay the costs of the Department. Counsel's fee Rs. 500.