Law:

Section:

Section 147 of the Income-tax Act, 1961 (corresponding to section 34(1) of the Indian Income-tax Act, 1922) - Income escaping assessment - Assessment year 1956-57 to 1957-58 - In 1923 assessee's further settled certain properties in a trust, in which a provision was also made for assessee - He died in 1927 and assessee's husband 'F' was appointed as a trustee - 'F' purchased a plot of land and constructed a building on it with funds borrowed from trust - In 1953 'F' conveyed aforesaid property in favour of his sons - One of daughters of 'F', filed a suit and a consent decree had been made in year 1960 - Whether since property in question had belonged to 'F' till settlement with his daughter, it could not be said that income from aforesaid property was assessable in hands of assessee which escaped assessment - Held, yes - Whether, therefore, proceedings initiated by ITO under section 34(1)(a) of 1922 Act for relevant assessment years were rightly set aside by Tribunal - Held, yes FACTS In 1923 the assessee's father settled certain properties in trust. The trustees were directed to collect all the rents and profits and to pay therefrom all the costs, incidental to the collection thereof and to pay the net income to the settlor for and during his lifetime and up to his death. Clauses 5 and 6 of the deed of settlement in fact made provision for the two daughters-The assessee and her sister. After his death, by a deed, dated 23-1-1928, the assessee's husband was appointed as trustee of the trust. The assessee's husband, 'F' purchased a property from one 'N' by a deed dated 10-4-1931. By another document dated 19-4-1933, the said 'F' took on assignment a piece of land from the Bombay Municipal Corporation which was adjacent to the property purchased by him from 'N'. F had also purchased a property from the trustees some time in the year 1932, but the conveyance was not immediately executed and it was executed only on 15-12-1949, by the then trustees of the trust. By the time this conveyance was executed, 'F' had already put up a building on the plot taken on assignment from the Municipal Corporation as also on that taken on assignment from the trustees. The cost of…

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