Law:

Section:

Section 147 of the Income-tax Act, 1961 [Corresponding to section 34(1)(a) of the Indian Income-tax Act, 1922] - Income escaping assessment - Position prior to 1-4-1969 - Assessment years 1949-50 and 1950-51 - Assessee was a member of a HUF - In 1926 a partnership firm was constituted and business carried on by HUF was taken over by firm - Share income from firm was assessed in hands of HUF - For assessment year 1943-44, assessee claimed that he was owner of share in firm and that share profits received therefrom, should be treated as his individual income - Claim of assessee was rejected and share was included in assessment of family - However, for assessment year 1951-52, ITO accepted assessee's claim that he was separate from family and consequently included assessee's share in profits of firm in his individual income - Later, ITO issued a notice under section 34 of 1922 Act, to assessee for each of relevant assessment years and assessed him in respect of share income from firm - Whether since assessee had made it clear in his return that he was holder of share and had not said that he was not liable to tax in respect of it, assessee had disclosed all material facts necessary for assessment and, therefore, ITO had no jurisdiction to reopen assessment under section 34(1)(a) of 1922 Act - Held, yes FACTS The assessee was a member of a HUF. In 1926, a partnership firm was constituted and the business carried on by the HUF was taken over by the firm. The share of profits in the firm allocated to the assessee was assessed in the hands of the family ever since the assessment year 1929-30. In the assessment proceedings for the assessment year 1943-44, however, the assessee contended that he was the owner of the share in the firm and the consequent share of the profits received from that firm could not be included in the total income of the HUF. This was not accepted by the ITO, and the share was included in the assessment of the family. For the assessment years 1949-50 and 1950-51, the assessee filed returns in the status of an individual. However, the ITO assessed the share of income from the firm in the hands of the HUF. The family proceeded in appeal against…

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