Andhra HC (Pre-Telangana)
Commissioner Of Income-Tax vs Gudivada Ramachandra Rao on 6 January, 2003
Equivalent citations: (2004)187CTR(AP)543, [2004]265ITR668(AP), AIRONLINE 2003 AP 3
Author: B. Sudershan Reddy
Bench: B. Sudershan Reddy, N.V. Ramana
JUDGMENT B. Sudershan Reddy, J.
1. The Income-tax Appellate Tribunal referred the following questions of law arising out of the order of the Tribunal dated September 25, 1990, in I.T.A. Nos. 1359 and 1360/Hyd of 1987 to this court for its opinion :
"1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in cancelling the penalty by holding that the ratio of the Supreme Court decision in the case of CIT v. P. Kochammu Amma , was not applicable ?
2. Whether, on the facts and circumstances of the case, the Tribunal was justified in holding and had materials to hold that the assessee was under a bona fide belief that he was not liable to include the share income of his wife from the firm in which he was a partner, even though the assessee had failed to give the information as required by column 13 of the return of income and annexure E of the return of income ?"
2. Before adverting to the question that arises for consideration, it may be necessary to briefly notice the relevant facts.
3. As is evident from the statement of the case of the reference, one Smt. G. Hemalatha, the wife of the assessee, was a partner in the firm, M/s. Sri Mahalakshmi Boiled Rice and Groundnut Oil Mill Company, Machilipatnam, along with the assessee. The assessee in his income did not include the share of income of his wife, Smt. G. Hemalatha, for the relevant years 1982-83 and 1983-84. Having noticed the same, the assessment was reopened and in the reassessment order, the wife's income was also included under Section 64(1) of the Income-tax Act, 1961 (for short "the Act"). The Income-tax Officer took the view that non-inclusion of the income of the assessee's wife under Section 64(1) of the Act amounted to concealment within the meaning of Section 271(1)(c) of the Act. The Income-tax Officer accordingly initiated penalty proceedings under Section 271(1)(c) of the Act for the relevant assessment years.
4. In response to the said notices, the assessee contended that there was no act of concealment of income and he was under the bona fide belief and impression that the share of his wife is liable to be included only in her returns. It was brought to the notice of the Income-tax Officer that his wife submitted her return at Vijayawada whereas he submitted his return at Machilipatnam. Both of them are represented by two different auditors. Shorn of all the details, it was specifically contended that there was no conscious disregard of the legal provisions. The Income-tax Officer did not accept the plea put forth by the assessee and accordingly held that the omission to disclose the income under Section 64(1) of the Act amounts to concealment. Thus the penalty was levied.
5. The Income-tax Appellate Tribunal vide its order dated September 25, 1990, in I.T.A. Nos. 1359 and 1360/Hyd of 1987 took the view that there is no concealment as such on the part of the assessee since there is no direct attempt to hide any item of income or portion thereof from the knowledge of the income-tax authorities. In the result, the Appellate Tribunal came to the conclusion that there is no deliberate act on the part of the assessee. The Appellate Tribunal referred to the meaning of concealment in various dictionaries in the process of arriving at its conclusion. The Appellate Tribunal also took the view that the return filed by the assessee cannot be termed as false return inviting imposition of penalty. The Tribunal also observed that there is no deliberate attempt on the part of the assessee in concealing any part or portion of the income.
6. The question that falls for our consideration is not res integra but is squarely covered by an authoritative pronouncement of the Supreme Court in CIT v. P.K. Kochammu Ammu . The Supreme Court held (page 628) "that the words 'his income' in Section 139, Sub-section (1), must include every item of income which goes to make up his total income assessable under the Act. The amounts representing the shares of the spouse and minor child in the profits of the partnership firm would be part of 'his income' for the purpose of assessment of tax and would have to be shown in the return of income filed by him."
7. The Supreme Court, while referring to the decision in V.D.M. RM. M. RM. Muthiah Chettiar v. CIT , observed that (page 629) "it was held in this case that even if there were any printed instructions in the form of the return requiring the assessee to disclose the income received by his wife and minor child from a firm of which the assessee was a partner, there was, in the absence in the return of any head under which the income of the wife or minor child could be shown, no obligation on the assessee to disclose this item of income, and the assessee could not be deemed to have failed or omitted to disclose fully and truly all material facts necessary for his assessment within the meaning of Section 34(1)(a) of the Indian Income-tax Act, 1922."
8. The Supreme Court further observed (page 630) : "We do not think, for reasons already discussed, that this decision lays down the correct law on the subject and had it not been for the fact that since July 1, 1972, the form of the return prescribed by Rule 12 has been amended and since then, there is a separate column providing that 'income arising to spouse/minor child or any other person as referred to in Chapter V of the Act' should be shown separately under that column and consequently there is no longer any scope for arguing that the assessee is not bound to disclose such income in the return to be furnished by him . .." Having said so, the Supreme Court observed that the question has become academic in view of the amendment in the form of the return carried out with effect from July 1, 1972.
9. In the instant case, we are concerned with the reference submitted by the assessee for the assessment years 1982-83 and 1983-84. There is no dispute whatsoever that since July 1, 1972, the form of the return prescribed by Rule 12 has been amended. It is the requirement in law since then that the income arising to spouse/minor child or any other person is required to be shown separately under the column provided in the form. The contents of the return in the form of return themselves are prescribed by Rule 12 of the rules that have come into force with effect from July 1, 1972. Therefore, the form itself has a statutory basis. The contents so prescribed in the said form cannot be characterised as a formal one.
10. The decision in P.K. Kochammu Amma's case , is the complete answer in the matter. The view taken by the Appellate Tribunal is an erroneous one. There need not be any deliberate attempt on the part of an assessee in refusing to comply with the requirements as prescribed under Rule 12 of the Rules referred to hereinabove. Therefore, the first question referred for our opinion is answered in favour of the Revenue. The Tribunal was not justified in setting aside the penalty by holding that the ratio of the Supreme Court's decision in the case of P.K. Kochammu Amma's case is not applicable. The decision in all its force applies to the facts on hand.
11. The second question is also answered in favour of the Revenue. The Tribunal was not justified in holding that the assessee was under a bona fide belief that he was not liable to include the share income of the wife from the firm in which he was a partner. The requirement in law is that the assessee should furnish the share of income of his wife as is required after July 1, 1972. Both the questions referred for our opinion are answered in favour of the Revenue. No costs.