COMMISSIONER OF INCOME TAX POONA Vs. SUNDERLAL N DAGA

JUDGEMENT

(1.) THIS is a reference under section 66 (1) of the Income-tax Act, 1922. The assessment year relevant to this reference is 1947-48, the corresponding previous year being the year which ended on Diwali of 1946.

(2.) ONE Sodradevi, widow of Narsingdas Daga, and her three major sons constituted certain partnerships and her three minor sons are Gowardhandad, Hiralal an Sunderlal. On 3rd January, 1949, each of the three minor sons made a voluntary return of income for the above assessment year. The return was signed by Dwarkadas. The return showed the income received by the minor as his share of profits in the said partnerships. The Income-tax Officer, however, has passed no order whatever on that return. He, however, included the income of the 3 minors shown in the returns in the assessment of their mother, Sodradevi, treting the same as being includible under the provisions of section 16 (3) (a) (ii ).

(3.) SODRADEVI filed an appeal to the Appellate Assistant Commissioner against the inclusion of the income of the minors in her assessment. The Appellate Assistant Commissioner upheld the Income-tax Officer's action. Sodradevi filed a second appeal to the Income-tax Appellate Tribunal, hereinafter referred to as "the Tribunal". By that time, however, the Nagpur High Court had decided in references filed by Sodradevi for earlier years that section 16 (3) (a) (ii) was applicable only to the father but not to the mother. Following the ratio of that judgment of the Nagpur High Court, the Tribunal deleted the income of the three minors from the assessment of Sodradevi's income. In order to bring to tax the income so deleted from the assessment of Sodradevi, the Income-tax Officer issued under section 34 (1) (b) a notice dated 1st August, 1960. In pursuance of this notice, all the three minor assessees filed their returns on 12th December, 1960, under protest raising an objection that the action taken was without jurisdiction and time-barred. On 30th December, 1960, the Income-tax Officer completed the assessments of the three minors under section 23 (3) read with section 34 (1) (b ). The Appellate Assistant Commissioner accepted the contention of the assessees and cancelled their assessments. In appeal, the Tribunal upheld the order of the Appellate Assitante Commissioner.