Law:

Section:

Section 176 of the Income-tax Act, 1961 [Corresponding to section 25 of the Indian Income-tax Act, 1922] - Business discontinued - Assessment year 1948-49 - Whether where petitioner had not made a claim for relief under section 25(4) of 1922 Act within a period of one year specified in section 25(5) of 1922 Act, ITO was not bound to give relief even if he was in possession of all necessary information which entitled petitioner to make claim - Held, yes FACTS The petitioner's father who carried on a tobacco business was an assessee under the Income-tax Act, 1918, and for the assessment year 1948-49, he was assessed as an individual. There was a partition of the joint Hindu family consisting of the father and four sons on 25-2-1948 whereby the four sons became entitled to the business as a firm. The petitioner informed the ITO about the partition and the estimated total income of the business for the broken period 1-1-1948 to 25-2-1948, at Rs. 8,050. By his letter dated 22-6-1948, the ITO wrote to the petitioner that the family should file an estimate till the question of partition was disposed of and that if the assessee considered that there had been a partition, he might submit a nil return for the family. Accordingly the petitioner filed a nil return on 3-7-1948. there was nothing however in the letter accompanying the return to indicate that consequent upon the discontinuance of the business there was also succession thereto by virtue of the partition. The petitioner and his brother as the representatives of their father did not also make any claim under section 25(4) until after the expiry of the period of one year prescribed by section 25(5). The ITO, therefore, rejected the claim subsequently made. On writ : HELD The contention of the petitioner that as the ITO was in possession of all the necessary information which entitled the petitioner to make the claim and as he was bound by the circulars of the Central Board of Revenue to apprise the assessee of his rights, it must be deemed that he was bound to give the relief which the petitioner later claimed, could not be accepted. Under section 25(4), he was only entitled to make a claim. It is possible to…

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