Decided on August 23,1982



U.T. Shah, Judicial Member - (1.) THE only point argued before us in this appeal pertains to the initiation of proceedings under Section 147 of the Income-tax Act, 1961 ('the Act').
(2.) The assessee is an individual and carries on business in selling empty tins. The assessment year is 1976-77 and the relevant previous year ended on 31-3-1976. Since according to the assessee, he had no taxable income, he did not file his return of income for the year under consideration. On enquiry from the assessee's wife, the ITO found that the assessee's minor son Shri Vinod Kumar was admitted to the benefit of partnership of a firm, named, Asharfilal & Co. and his mother was acting as his guardian. The minor's share of profit in the said firm was Rs. 8,494. The ITO, therefore, issued notice under Section 148 of the Act on the assessee calling upon him to file his return of income. The assessee filed his return of income on 10-12-1980 declaring a total income of Rs. 1,800. The ITO estimated the income from business at Rs. 5,000 as the assessee was not maintaining any books of account. Further, by invoking the provisions of Section 64 of the Act, the ITO clubbed the share of profit of the minor Shri Vinod Kumar in the total income of the assessee. In appeal before the AAC, the assessee submitted that since his total income was Rs. 1,800 only, he was not required to file his return of income and it was not obligatory on his part to show the share of profit of his minor son in the return of income. It was, therefore, urged that the ITO was not justified in initiating the proceedings under Section 148/147. The AAC, however, was not impressed by the submissions made on behalf of the assessee, more so in view ofcertain amendments brought in Section 64 with effect from 1-4-1976. He, therefore, confirmed the order of the ITO.
(3.) BEING aggrieved by the order of the AAC, the assessee has come up in appeal before the Tribunal. The learned counsel for the assessee reiterated the submissions which were made before the income-tax authorities and urged that on the facts and circumstances of the case, the ITO was not justified in issuing notice under Section 148/147. According to the learned counsel for the assessee, on proper interpretation of Section 64 the assessee is obliged to show share income of his minor only when his other income is taxable under the Act. Since in the instant case the assessee's business income was only Rs. 1,800 the share of profit of the minor could not have been clubbed with the income of the assessee. He, therefore urged that the assessment framed by the ITO should be cancelled. The learned representative for the department, on the other hand, strongly relied on the orders of the income-tax authorities and justified their action. Relying on a decision of the Hon'ble Supreme Court in the case of CIT v. Smt. P.K. Kochammu Amma [1980] 125 ITR 624, the learned representative for the department submitted that it was obligatory on the part of the assessee to show the share of profit of his minor in his total income. He further submitted that it is of no significance whether the assessee's own income was below or above the taxable limit. He, therefore, urged that we should uphold the order of the AAC.;

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