Law:

Section:

Section 147 read with section 12 of the Income-tax Act, 1961 - Income escaping assessment - Illustrations - Assessment year 1964-65 - Petitioner trust received voluntary contribution from another trust for charitable purpose - Said fact had been disclosed to ITO who held that amount did not constitute income of trust - Whether reassessment proceedings initiated on ground that said amount had escaped assessment was valid - Held, no FACTS The petitioner was a public religious trust. It had its head office at Ladnu and a branch at Calcutta. In 1961, a public water supply scheme was mooted for the town of Ladnu by the Government of Rajasthan. It was estimated to cost about Rs. 10 lakhs. The State Government agreed to provide water to the town if the public contributed about Rs. 3 lakhs, and the balance amount was to be borne by the State Government. The petitioner-trust was interested in the scheme as it would provide water facilities to the town situated in a desert area which was one of the several charitable objects for which the trust was established. The petitioner-trust opened a water supply scheme account in its books at Ladnu. Accordingly, it contributed to the scheme and also invited contributions from the public amongst others. Pursuant to such invitation a Calcutta trust contributed certain amount towards the water supply scheme. For the relevant assessment year, the petitioner filed its return of income. Along with the return, the petitioner-trust filed copies of the income and expenditure accounts and balance-sheets of both the head office and the branch office at Calcutta. The ITO after detailed examination of the donation from Calcutta trust, came to the conclusion that it could not be treated as income of the petitioner-trust. The ITO passed the assessment order accordingly. Subsequently, the ITO issued notice under section 148 on the ground that the petitioner failed to disclose the voluntary contribution received from Calcutta Trust in the total income. On writ : HELD Following the decision in Sukhdeo Charity Estate v. CIT [1984] 149 ITR 470 (Raj.), the notice issued under section 148 was to be quashed. Note : The case was decided in favour of the…

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