Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - Illustrations - Assessment years 1955-56 to 1958-59 - In year 1950, assessee executed three trust deeds for benefit of 'M', 'L' and 'J' and minor children of last two, describing three ladies as his wives and children were his children - In reply to ITO's queries, assessee explained that he had not gone through essential formalities of valid marriage with aforesaid three ladies and thus, in strict legal sense their description as 'wives' was not correct - ITO feeling satisfied with assessee's explanation, completed assessment - Subsequently, he issued notice seeking to reopen assessment under section 147(a) on ground that assessee had executed two trust deeds in year 1957 for benefit of 'J' and 'L' in which they were described as 'wives' - Thus, ITO opined that certain material facts were not disclosed to department resulting in under assessment of income - High Court, however, held notices to be invalid - Whether since three trust deeds of 1950 had contained same description of ladies and children, trust deeds executed in year 1957 though not produced at time of original assessment, they could not make any difference - Held, yes - Whether, therefore, non-disclosure of documents executed in year 1957 could not be regarded as non-disclosure of any material fact necessary for assessment of assessee for relevant assessment years - Held, yes - Whether, consequently, it could be concluded that ITO had no valid reasons for reopening of assessment - Held, yes FACTS In the year 1950, the assessee had executed three trust deeds for the benefit of 'M.L'. and 'J' and the minor children of the last two, describing the three ladies as his wives and the children were his children. In reply to queries on receipt of returns for the assessment years 1955-56 to 1958-59, the assessee stated that the late 'D' was the only legally wedded wife, that with the other three ladies he had not gone through the essential formalities of a valid marriage under Mohammadan law, that those ladies occupying high social position were received in his place as 'ladies of position' and in view of special favours bestowed upon…

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