- (1.) This is the reference under Sec. of the Income Tax Act, 1961 at the instance of the revenue raising the following questions of law: (i) Whether on the facts and in the circumstances of the case, the learned Tribunal was legally justified in setting aside the assessment and holding that the Income Tax Officer was debarred from taking action under Sec. of the Act? (ii) Whether on the facts and in the circumstances of the case, the reassessment made under Sec. / was invalid (United Mercantile Co. Ltd. v/s. CIT Kerala : (1967) 64 ITR 218 (iii) Whether the note of the Audit Party was a valid information for initiation of proceedings under Sec. ? (Please see page 1004 in the case of Indian and Eastern Newspaper Society v/s. CIT : (1979) 119 ITR 996)? (iv) Whether on a mere technical omission on the part of the Income Tax Officer in not mentioning the source of information, the Tribunal was justified in holding that there was no escapement of income within the meaning of Sec. /? (v) Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the proceedings under Sec. of the Income Tax Act, 1961, for the assessment years 1975 -76 and 1976 -77 were initiated on mere change of opinion and were, therefore, not valid?
(2.) Brief facts of the case are that the Assessee and her husband are the partners in a firm in the name and style of M/s Basant Cinema. The dispute pertains to the assessment years 1975 -76 to 1976 -77, the relevant previous years ended on 30 -6 -1974 and 1975 respectively.
(3.) In the assessments originally framed, the Income Tax Officer had not considered the applicability of the provisions of Sec. of the Act even though all the material facts were before him. Thereafter, he initiated proceedings under Sec. / of the Act. The reasons recorded and the consequential effect taken by the Income Tax Officer are summarized by the Commissioner (Appeals) as under: The reasons recorded by the Income Tax Officer of coming to this decision for the year 1975 -76 reads as under: Sri Gulu Thadani and his wife Smt. Padmani Thadani both were partners in the Basant Cinema but their share incomes were not clubbed as required by Sec. in the assessment years 75 -76 and 76 -77. It is further noticed that the income enjoyed by Smt. Padmani Thadani being much more than that of Shri Gulu Thadani, in terms of Explanation 1 of the said Sec. the share income of Sri Gulu Thadani should have been clubbed in the hands of Smt. Padmani Thadani. The revenue impact of the omission is calculated as under: JUDGEMENT_323_LAWS(ALL)1_2010.jpg I have, therefore, reason to believe that taxable income has escaped assessment by default of the Assessee.;