Law: Income Tax Act, 1961

Section: 147,148

(a) Income-tax----Reassessment---Income escaping assessment---Failure to furnish returns--­Assessment under S.148 was valid---Indian Income Tax Act, 1961, S.147. (b) Income-tax--- .... Body of individuals---Muslim law---Death of partner who was a Muslim-­Widow admitted as a partner---Subsequently, when children of the deceased attained majority, agreement executed stating that share in firm belonged to all heirs in definite and ascertained portions under their personal law---Share in firm assessable in status of body of individuals---Indian Income Tax Act, 1961. One T, a Muslim, was a partner of a firm having a one-third share therein. On his death, on April 26, 1951, a fresh partnership deed was executed and B, wife of T, was taken in as a partner in the place of her deceased husband and was given her deceased husband's one-third share in the partnership. At the time of death of T, he had also left behind him two sons and three daughters and all the children were minors. When the sons and daughters of T attained majority on April 15, 1963, they entered into an agreement. It was stated in the agreement that the amounts in the capital and current account standing to the credit of B in the firm of A belonged always to the heirs in their definite and ascertained shares under the Muslim law; that B was entitled to a one-eighth share and that 'the two sons were each entitled to a one-fourth share and the three daughters were each entitled to a 7/56th share therein and that the amounts standing to the credit of Bin the books of A were paid by the firm, and that the amounts would be distributed and divided amongst all the heirs according to their shares. No returns were filed by B for the years 1972 to 1980. The Income-tax Officer, therefore, initiated reassessment proceedings and passed orders of assessment, one in the status of. unregistered ,firm and another in the status of body of individuals. The Appellate Assistant Commissioner, in the appeal, held that the action under section 148 had been validly taken. In separate proceedings the High Court held that the assessment-in the status of unregistered firm was untenable as the agreement between the widow and her…

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