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 - Information - Position prior to 1-4-1989 - Assessment year 1952-53 - Deceased assessee created a trust in 1937 for benefit of his son and daughters and said trust was made irrevocable for period of seven years - Trust was accepted by authorities and income of assessee and his children was assessed separately - Assessment for assessment in question was completed - Later on, another ITO while completing assessments of beneficiaries of trust, noticed that period of seven years had expired and trust had become revocable and, therefore, entire income from trust property was assessable in hands of assessee - He informed concerned ITO, who issued notice under section 34(1)(b) of 1922 Act - Materials and relevant documents on record showed that concerned ITO knew while completing assessment of relevant assessment year that trust had become revocable - Whether, on facts, it could not be said that concerned ITO had received fresh information and, therefore, initiation of proceedings under section 34(1)(b) of the 1922 Act was not justified - Held, yes FACTS On 13-10-1939, the deceased assessee, who was represented by his wife, made a trust settling certain shares and securities for benefit of his son and daughters. Under the trust, it was directed that the income from the shares and securities settled on trust should be equally divided amongst his aforesaid three children. The trustees appointed under the trust were the settlor himself, his wife, and the bank and trustee company. By virtue of clause 13 of the trust deed, the trust was made irrevocable for a period of seven years. The authorities accepted the trust and three children of the assessee were separately assessed in respect of their share of income in the trust property, and assessee was separately assessed in respect of his income from other sources, and this state of affairs continued till the assessment year 1952-53. During the course of assessment for the assessment year 1952-53, the ITO who completed the assessment of beneficiaries noticed that the period of seven years…

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