Law:

Section:

Section 147(a) of the income-tax act, 1961-Reassessment-Non-disclosure of primary facts -Firm P had hotel business and also wine business-P had filed return in respect of both businesses-ITO assessed income from both businesses in status of AOP-However, as licence for wine business was held in the name of only one partner of p, partnership insofar as it relied to wine business was held to be illegal by high court and registration was granted to p only in respect of its hotel business-ITO passed consequential order assessing income of hotel business alone-Therefore, ITO reassessed wine business to bring to tax its income after bifurcation of hotel business and wine business following aforesaid high court decision-Whether reassessment of wine business could be held to be illegal as ito had already assessed hotel business and wine business in status of AOP-Held, on facts, no. Facts Firm P was running two activities, viz., a hotel business and a wine shop. For the assessment years 1962-63 to 1965-66, P filed the return showing the income from the hotel business as well as the wine business and the status claimed was that of a registered firm. The ITO noted that since the licence for running the wine business was in the name of one of the partners only, no legally constituted firm came into existence, because of rule 6 of the Excise Rules as framed by the Madhya Pradesh Government. The ITO, therefore, rejected the claim for registration of P and assessed the income from both the wine and hotel business in the status of an AOP. Eventually, the High Court held that the partnership in respect of wine business was illegal and that income of P from hotel business and wine business should be bifurcated and assessed separately. The ITO, accordingly, passed a consequential order and assessed P in respect of its hotel income in the status of a registered firm. Thereafter, the ITO reopened the assessment of the wine stores (the assessee), which came into existence as firm in 1965, for the aforesaid assessment years. The assessee claimed that in view of the earlier assessment of firm P in the status of an AOP, which included the income of wine store, reassessment of wine store…

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