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 - General - Assessment years 1955-56 to 1958-59 - Assessee and his two wives 'X' and 'Y' were partners in a firm - However in deeds of partnership 'X' and 'Y' were not described as wives of assessee - In returns submitted for relevant years assessee did not disclose profits realized by his two wives in firm - ITO proceeded to assess assessee without taking into consideration profits realized by his wives in firm - Subsequently, ITO found that wives of assessee were also partners in firm and, therefore, he issued a notice under section 34(1) of 1922 Act and reassessed assessee after taking into consideration profits realized by wives of assessee - Whether information that 'X' and 'Y' were wives of assessee was material information necessary for assessee's assessment and it was duty of assessee to place that information before ITO - Held, yes - Whether, therefore, assessee had failed to disclose truly and fully all material facts necessary for assessment and, as such, assessments made under section 34(1) of 1922 Act were valid - Held, yes FACTS The assessee and six others started a new firm. Out of the seven partners of the firm, two 'X' and 'Y' were assessee's wives. In the deed of partnership, 'X' and 'Y' were not described as wives of the assessee. For the assessment years 1955-56 to 1958-59, the assessee furnished returns of his income, wherein he included only his share of income from the firm and did not disclose the profits realised by his two wives. Even otherwise, he did not bring to the notice of the Income-tax Officer that his two wives were the partners in firm. The ITO proceeded to assess the assessee without taking into consideration the profits realised by his wives, in firm. Subsequently, he came to know that 'X' and 'Y', two of the partners in firm were the wives of the assessee. Hence, he issued notices under section 34(1) of the 1922 Act and proceeded to reassess the assessee after taking into consideration the profits realized by 'X' and 'Y' from firm in the respective assessment years after treating those…

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