Research › Search › Judgment

Patna High Court · body

2007 DIGILAW 820 (PAT)

M. K. Jha v. Income Tax Appellate Tribunal

2007-04-23

BARIN GHOSH, NAVANITI PRASAD SINGH

body2007
Judgment 1. During the subject assessment years, there is no dispute that the assessee filed his returns. Those returns were assessed. In those returns the assessee did hot disclose that he has made any investment in any immovable property. After those assessments were over, the Assessing Officer received an information to the effect that the assessee has concealed the fact that he has made investments in two immovable properties and incomes arising out of those imovable properties. Accordingly, notices were issued under Sec. 148 of the Income Tax Act seeking to make re-assessment of the income of the assessee for the assessment years 1988-89 to 1992-93 and also for the assessment years 1992-93 to 1994-95. In response to the notices uncjer Sec. 148 of the Act, the assessee disclosed before the Assessing Officer that he does not own any immovable property, but his wife owns two immovable properties and acquisition of those properties, source of fund for acquisition thereof as well as incomes derived therefrom have been accounted for by her in her separate returns filed during the relevant assessment years, which returns have been accepted by Income Tax Department. The Assessing Officer did not accept the contentions of the assessee and held that the subject immovable properties wore acquired by the assessee out of his own income and rents, issues and profits earned by those properties were incomes of the assessee. The Appellate Authority in relation to the assessment years 1989-90 to 1992-93 did not agree with the views of the Assessing Officer and held in favour of the assessee. The appellate authority took a different view in relation to the assessment years 1992-93 to 1994-95. "The Tribunal at the instance of the Department dealt with the assessments pertaining to the assessment years 1992-93 to 1994-95 first and held that what the Assessing Officer had done was correct. In doing so, it felt that the assessee has failed to prove the source of fund for acquisition of those immovable properties by his wife. The Tribunal thereupon clubbed the entire income of the wife for those assessment years, as disclosed by her in her income tax returns and as were accepted by the Department, with the income of the assessee treating them as income of the assessee and levied additional tax on such additional income less tax paid by the wife. The Tribunal thereupon clubbed the entire income of the wife for those assessment years, as disclosed by her in her income tax returns and as were accepted by the Department, with the income of the assessee treating them as income of the assessee and levied additional tax on such additional income less tax paid by the wife. At the instance of the assessee then the matter came up before this Court. While the matter was pending before this Court, at the instance of the appellant, the matter went before the Tribunal in relation to assessment years 1989-90 to 1992-93 and the Tribual held that it is impermissible to club disclosed income of an assessee as accepted by the Department in the income of yet another assessee without reopening the account of the assessee, whose income was, thus, to be clubbed with the income of the other assessee. This order of the Tribunal was brought on the record by the assessee in relation to the matter which was then pending in this Court pertaining to assessment years 1992-93 to 1994-95, together with the fact that challenge thrown to that order having been rejected by this Court was also rejected by the Hon ble Supreme Court. 2. While the matter was dealt with by this Court in relation to assessment years 1992-93 to 1994-95, the things that hap-, pened by reason of the order of the Tribunal followed by the orders of this Court and Hon ble Supreme Court pertaining to the assessment years 1989-90 to 1992-93 had not been taken note of and that appears to be the principle ground for review. 3. The issue in the appeal was whether income of an assessee as accepted by the Department could be clubbed with the income of another assessee without opening the assessment of the assessee, whose income was sought to be thus clubbed with the income of the other assessee. When the appeal was decided there was a view available, as aforesaid, that the same is not permissible in law and accordingly the notices under Sec. 148 of the Act for the previous assessment years were not sustainable. This was not addressed to at the time the judgment under review was rendered. 4. When the appeal was decided there was a view available, as aforesaid, that the same is not permissible in law and accordingly the notices under Sec. 148 of the Act for the previous assessment years were not sustainable. This was not addressed to at the time the judgment under review was rendered. 4. We wanted to know from the learned counsel appearing on behalf of the Department as to whether it is permissible under the Income Tax Act to club the income of an assessee with the income of another assessee without notice to the assessee whose income was sought to be clubbed. The learned counsel tried to impress us by placing reliance on a judgment of the Delhit High Court reported in 258 (2002) ITR 121; C.l.T. vs. Sujjan Singh Chadha (Delhi). This judgment does not help the Department. In that judgment an income disclosed by the wife under Section 24(3) of the Finance Act 1995, was disclosed as a credit in the return filed by the assessee. The genuineness or the source of that amount as credited in the books of the assessee was doubted. It was urged that in as much as appropriate tax has been paid on that amount by the wife, it is now not open to doubt the genuineness of the source of the said amount. That was repealed by the High Court on the principle that there is nothing in Sec. 24 of the said Act which prevents the Income Tax Officer, if he was not satisfied that the explanation of an assessee about the genuineness or source of an amount found credited in his books, inspite of it having already been made the subject matter of a declaration by the creditor under the scheme, from investigating the true nature and source of the amount. This judgment, therefore reiterates the basic logic of assessment of incomes in the hands of an assessee, i.e. he is required to explain each and every entry made in his books of accounts. This judgment does not proposes that income of one assessee accepted by the Department can be treated to be an income of yet another assessee when the returns or books of accounts of the assessee under assessment do not contain any entry pertaining to any income to be included. This judgment does not proposes that income of one assessee accepted by the Department can be treated to be an income of yet another assessee when the returns or books of accounts of the assessee under assessment do not contain any entry pertaining to any income to be included. The learned counsel cited yet another judgment reported in 247 (2001) ITR 819; C.I.T. vs. United Trading & Constructions Co. rendered by the Hon ble Supreme Court. The judgment so rendered by the Hon ble Supreme Court is the precursor of the judgment rendered by the Delhi High Court, referred to above, and on the same principle. These judgments do not, therefore, help the Department in upholding the judgment so rendered by the Tribunal. 5. Having regard to the fact that the assessments of the wife during the relevant years having not been re-opened, those could not be touched. There being no case of concealment of any income or investment by the assessee and, admittedly, all the incomes and investments sought to be projected as income of the assessee, having been disclosed in the returns filed by the wife and accepted by the Department, those incomes could not be treated as income of the assessee, when re-opening the assessments made in relation to the returns submitted by the assessee alone. 6. In those circumstances, upon reviewing the judgment and order passed by this Court on 10.1.2006, we recall the same and allow M.A. Nos. 33, 34 and 35 of 2002 by setting aside the judgment and order of the Tribunal and by restoring the judgment and order of the appellate authority, for the reasons, indicated above.