Law:

Section:

Section 147 of the Income-tax Act, 1961 - Income escaping assessment - General - Assessment year 1958-59 - Previous year adopted by firm as well as petitioner, who was a partner in said firm was year ending 31st October - Two amounts were found to be credited in books of firm in personal account of assessee - Petitioner showed one of amounts as capital receipt but ITO treated it as income from other sources and assessed it - On appeal, AAC directed as said income was treated as income from other sources it fell to be assessed on financial year basis - While giving effect to AAC's order, ITO left one of amounts to be assessed in assessment year 1958-59 - Thereafter ITO issued a notice under section 147(a) on 15-5-1964 - Whether it could be said that ITO allowed to lapse statutory period due to his ignorance, inadvertance or error of law and, therefore, notices issued under section 147(a) were without jurisdiction - Held, yes FACTS The petitioner was one of the partners of the firm. Two amounts of Rs. 6,380 and Rs. 5,936 were found credited in the books of the firm in the personal account of the petitioner on the 22-2-1957, and on the 1-11-1957 within the previous years relevant to the assessment years 1958-59 and 1959-60, respectively. The petitioner in respect of his personal assessment adopted the previous year. In the return for 1958-59, the petitioner showed the amount of Rs. 6,380 in the return and claimed that this sum represented the sale of ornaments and was therefore a capital receipt. The sum of Rs. 5,936, was not, however, shown in the return filed for the assessment year 1959-60. The assessee's explanation was disbelieved and the sum of Rs. 6,380 was brought to assessment in the assessment year1958-59. Before, however, the sum of Rs. 5,936 could similarly be brought to the assessment year 1959-60, the appeal for 1958-59 had been heard by the AAC who considered that, as this income was treated as income from an undisclosed source, it fell to be assessed on the basis of the financial year and not on the basis of the assessee's previous year. A direction was, therefore, given in respect of the sum of Rs. 6,380 that it be assessed for the assessment year…

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