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Commissioner of Income-tax Vs. Lt. Gen. Umrao Singh - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtRajasthan High Court
Decided On
Case NumberD.B. Income-tax Reference Application No. 127 of 1981
Judge
Reported in[1983]142ITR253(Raj)
ActsIncome Tax Act, 1961 - Sections 147, 148, 256(1) and 256(2)
AppellantCommissioner of Income-tax
RespondentLt. Gen. Umrao Singh
Advocates: R.V. Agrawal, Adv.
Excerpt:
.....satisfied, firstly, that the ito must have reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, and, secondly, he must have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to make a return of his income, or (ii) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment for that assessment year. kamala kumari had been the owner and in possession of the property in question and as such the assessee was not under any obligation to disclose the income from the said property in his own return and as there was no escapement of income on account of failure on the part of the assessee to disclose income fully..........have disclosed the income arising from the house property standing in the name of his wife, smt. kamala kumari. theaac as such allowed the appeal and annulled the assessment order passed by the ito. the department aggrieved against the order of the aac filed an appeal before the income-tax appellate tribunal. the tribunal, after taking into consideration the facts and circumstances of the case, held that there was no material on record to show that since 1939 till the assessment year under consideration, the assessee was ever shown as an owner of the house property in question. admittedly, kamala kumari had come into possession of the property in 1939. in the municipal records the property had been recorded in the name of smt. kamala kumari and even the fact of selling the property by.....
Judgment:

Kasliwal, J.

1. This is a reference application under Section 256(2) of the I.T. Act, 1961, by the Department for giving a direction to the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, for stating the case and refer the following question of law :

' Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was no escapement of income on account of failure on the part of the assesses to disclose income fully and truly and thus initiation of proceedings under Section 147(a)/148 of the Income-tax Act, 1961, was without any jurisdiction.? '

2. The ITO gave a notice under Section 147(a) to the assessee and in pursuance of that notice the ITO finally held that a house property known as ' Devi Asha ' belonged to the assessee up to 1939 and was transferred by him to his wife without adequate consideration. The ITO as such clubbed the income from the house in the total income of the assessee. Aggrieved against the order of the ITO, the assessee went up in appeal to the AAC. Learned AAC found that in order to confer jurisdiction under Section 147(a) two conditions were to be satisfied, firstly, that the ITO must have reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, and, secondly, he must have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to make a return of his income, or (ii) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment for that assessment year. Learned AAC thus found that, in the facts and circumstances of the case, the assessee had disclosed in his return the income which had accrued to him and it was not necessary to have disclosed the income arising from the house property standing in the name of his wife, Smt. Kamala Kumari. TheAAC as such allowed the appeal and annulled the assessment order passed by the ITO. The Department aggrieved against the order of the AAC filed an appeal before the Income-tax Appellate Tribunal. The Tribunal, after taking into consideration the facts and circumstances of the case, held that there was no material on record to show that since 1939 till the assessment year under consideration, the assessee was ever shown as an owner of the house property in question. Admittedly, Kamala Kumari had come into possession of the property in 1939. In the Municipal records the property had been recorded in the name of Smt. Kamala Kumari and even the fact of selling the property by Kamala Kumari in the year 1970 showed that she was the owner of the property and in that capacity she transferred the same. According to the Tribunal any averment made in the sale deed was not material and, as such, the averments did not confer any title in favour of a third person. The Tribunal thus held that there should have been some reason to believe, and not reason to suspect only, by the ITO before resorting to take action under Section 147(a)/148 of the I.T. Act. The Tribunal further found that from the evidence on record it was clear that Smt. Kamala Kumari had been in possession of the property for more than 12 years. She was also in possession of the property as owner in 1950 when the IT. Act came into force for the first time in the State of Rajasthan. It was further observed by the Tribunal that the assessee had also been accepting Smt. Kamala Kumari as the owner of the property. In the above circumstances, the Tribunal found that it was proved that Smt. Kamala Kumari had been the owner and in possession of the property in question and as such the assessee was not under any obligation to disclose the income from the said property in his own return and as there was no escapement of income on account of failure on the part of the assessee to disclose income fully and truly, initiation of proceedings under Section 147(a)/148 of the I.T. Act, 1961, were without any jurisdiction. The Tribunal thus dismissed the appeal filed by the Department and upheld the order of the AAC. The Department then submitted an application to the Tribunal for referring the question of law mentioned above to this court for its opinion. The Tribunal, by order dated February 2, 1981, held that no question of law arose in the case and dismissed the application filed by the Department. In these circumstances, the Department has filed this reference application under Section 256(2) of the I.T. Act to this court. It is contended by the learned counsel for the Department that from the sale deed made by Smt. Kamala Kumari in 1970 itself it was proved that the property belonged to the assessee, Lt. Gen. Umrao Singh, and no transfer had been made in her favour by any registered document as required under the law. It is thus contended that the Tribunal committed a clear error of law and a question of law clearly arosefor the opinion of this court. We do not find any force in the argument of the learned counsel for the Department.

3. The Tribunal, in the facts and circumstances of the case and on the material available on record, have clearly arrived at the conclusion that Smt. Kamala Kumari had come into possession of the property in question in 1939. Thereafter, the property was being shown in her ownership even in the Municipal records and the assessee had never challenged the ownership of Smt. Kamala Kumari at any time. In these circumstances, it was found that the assessee had not committed any error in not mentioning the income of this property in his own return and no proceedings for escaped assessment could have been taken under Section 147(a)/148 of the I.T. Act, 1961. In view of the above finding of fact, found proved in favour of the assessee by the Tribunal that the house property belonged to Smt. Kamala Kumari long before the assessment in question, in our opinion, no question of law arises for determination by this court.

4. The application for reference as such is dismissed.


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