HARI SWARUP,J. - (1.) THE question of law referred for our opinion by the Tribunal at the instance of the assessee is: "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the ITO acquired valid jurisdiction under S. 147 of the IT Act, 1961 ?"
(2.) THE assessment year in question is 1957-58. The facts found by the Tribunal are that the assessee, Raj Bahadur Bhatnagar, was a partner in the firm styled, M/s Bhatnagar Brothers. In the year relevant to the asst. yr. 1957-58 the assessee brought a sum of Rs. 13,000 in the firm as his capital. The ITO thinking that this amount of Rs. 13,000 had been introduced by the assessee on behalf of the HUF of which the partner was a junior member proceeded to assess the HUF by issuing a notice to it under S. 147(a) of the IT Act, 1961. Ultimately, the Tribunal deleted this amount from the assessment of the HUF. The Tribunal felt that although there was a possibility of the amount coming from the HUF there was not sufficient evidence to establish it as a fact. It observed in the order that no pronouncement was being made as to whether the sum of Rs. 13,000 had been satisfactorily explained by the firm, Bhatnagar Brothers, or not. Thereafter, the ITO issued a notice to the present assessee as an individual under S. 147(a) of the IT Act, 1961, and included in his assessment the sum of Rs. 13,000 along with the income got by him as his share in the partnership. The assessee challenged the order before the AAC on the ground that the conditions precedent for the issue of the notice under S. 147(a) did not exist. The AAC accepted the assessee's plea and set aside the assessment. The CIT went up in appeal against that order before the Tribunal and the Tribunal allowed the appeal and held that the ITO had jurisdiction to proceed under S. 147(a) of the Act. The assessee feeling aggrieved has got the present question referred to this Court for opinion. The Tribunal has held that the circumstance that the assessee had introduced Rs. 13,000 in the partnership as his capital was sufficient reason for the ITO to believe that the income of the assessee chargeable to tax had escaped assessment. It further held that the assessee had not filed any return of his income and thus the second condition of cl. (a) of S. 147 of the Act regarding omission or failure on the part of the assessee to make the return was also present.
(3.) LEARNED counsel for the assessee has raised three contentions : (1) that there existed no reason for the ITO to believe that any income chargeable to tax had escaped assessment ; (2) that the ITO had no right to change his opinion and proceed under S. 147 after he had first come to believe on the same facts that the amount represented the income of the HUF and not the present assessee ; and (3) that it was not a case of any omission or failure to file a return by the assessee.;