Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment – Illustrations - Assessment years 1966-67 and 1970-71 to 1973-74 - Whether where income from property belonging to individual was assessed as that of HUF, ITO was justified in reopening assessment to assess income as that of individual – Held, yes FACTS The HUF filed returns in respect of income from house property. The ITO made protective assessment on HUF. Subsequently, the ITO found that the properties in question were exchanged with the properties in Pakistan, that in Pakistan properties were registered in the name of individual and that there was no proof that the said properties were constructed with the funds of HUF. Therefore, the ITO reopened the assessment to assess the income in the hands of the individual. On writ, it was contended that the escapement, if any, was due to the failure of the ITO to determine the correct status at the time of assessment, and, therefore, reopening of the assessment was not valid. HELD The contention of the assessee could not be accepted. If the individual income really belonged to the individual, the income of that individual had escaped assessment and furthermore that individual had failed to file any return which it was his duty to file. The fact that the income might have been assessed in the hands of a different entity about whom more information was now available did not detract from the decision that the income had escaped assessment. Furthermore, as it is evident that the income if it properly belonged to any individual would have bean subjected to tax, portion of which might have earned the benefit of exemption in the case of HUF because the exemption limits of a HUF are a little higher for the purpose, if the income has been assessed wrongly at the hands of an assessable unit to which it did not belong, that does not prevent from properly assessing in the hands of a unit to which it belonged by process of reopening under section 148. For the reasons recorded by the ITO, it could not be said that, prima facie, there was no material for thinking that there was escapement of income due to failure on the part of the assessee to file return in the…

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