The jurisdiction and power of the ITO to reopen the assessment already made can be exercised by him if the necessary conditions laid down in clause (a) or clause (b) of section 147 are satisfied. The jurisdiction and power cannot be questioned if the conditions laid down in either of the two clauses are satisfied.

Headnote:
INCOME TAX - Reassessment - Jurisdiction and power of Income-tax Officer - Conditions precedent - Transfer of property - Income from assets transferred to minor child - Retrospective effect of section 64(iv) of the Income-tax Act, 1961.
Fact of the Case:

The assessee, Mrs. Ayodhya Kumari, transferred her house property on March 31, 1956. She transferred a fixed deposit of Rs. 5,000 with the National Motors on December 29, 1956. She also transferred ten shares of City Light Theatres (P.) Ltd., on August 24, 1960, to her minor son, Sunil Kumar. One the same day, i.e., August 24, 1960, she transferred seventeen shares of City Light Theatres (P.) Ltd. to her minor son, Akhil Kumar.
Finding of the Court:

1. The Tribunal was not right in holding that the AAC was wrong in legalising the assessment by converting the provisions of section 147(a) into section 147(b) of the Act. 2. The Tribunal was right in holding that in regard to the assessment years 1965-66 and 1966-67, the provisions of section 27(1) read with section 64(iv) of the Act do not apply to the transfer of property made by the assessee. 3. The Tribunal was right in holding that the expression " individual " in section 64(iv) of the Act includes " female ". 4. The Tribunal was not right in holding that the provisions of section 64(iv) are retrospective in character so as to include the income of the minors (other than from house property) in respect of transfers made prior to April 1, 1961.
Issues: 1. Whether the Tribunal was right in holding that the AAC was wrong in legalising the assessment for the assessment years 1962-63, 1963-64 and 1964-65, respectively, by converting the provisions of section 147(a) into those of section 147(b) of the Act of 1961 ? 2. Whether the Tribunal was right in holding that in respect of the assessment years 1965-66 and 1966-67, the provisions of section 27(1) read with section 64(iv) of the Income-tax Act, 1961, did not apply to the transfer of property made by the assessee ? 3. Whether the Tribunal was right in holding that the expression 'an individual' occurring in section 64(iv) of the Income-tax Act, 1961, would include a female ? 4. Whether the Tribunal was right in holding that the provisions of section 64(iv) of the Income-tax Act, 1961, are retrospective in character so as to include the income of the minors (other than house property) in respect of transfers made prior to April 1, 1961 ?
Ratio Decidendi: 1. The jurisdiction and power of the ITO to reopen the assessment already made can be exercised by him if the necessary conditions laid down in clause (a) or clause (b) of section 147 are satisfied. The jurisdiction and power cannot be questioned if the conditions laid down in either of the two clauses are satisfied. 2. Section 27(1) is a deeming provision and on the basis of that, a person becomes the owner of the house property. It deals with the vested right of a person and, as such, it is a substantive provision. According to it, the property vested in the wife or minor children would be considered to be the property owned by the husband or the father or the mother, as the case may be. The rights and liabilities of the wife or minor children are taken away and they become that of the husband or the parents, as the case may be. 3. The word " individual " in section 64 of the Act abundantly make it clear that the word " individual " there means both male and female of the species. 4. It is a well-settled rule of interpretation that unless the terms of a statute expressly so provide or necessarily require it, retrospective operation should not be given to a statute so as to take away or impair an existing right or create a new obligation or impose a new liability otherwise than as regards matters of procedure.
Final Decision: 1. Question No. 1 is answered in the negative, i.e., in favour of the Revenue and against the assessee. 2. Questions Nos. 2 and 3 are answered in the affirmative, in favour of the assessee and against the Revenue. 3. Question No. 4 is answered in the negative, i.e., in favour of the Revenue and against the assessee.

JUDGMENT

1. - This is a reference under section 256(1) of the I.T. Act, 1961 (No. XLIII of 1961) (for short " the Act " herein), by the Income-tax Appellate Tribunal, Delhi Bench "A", which for the sake of brevity hereinafter will be referred to as the " the Tribunal ". The Tribunal has referred the following questions of law for decision of this court :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Appellate Assistant Commissioner was wrong is legalising the assessments for the assessment years 1962-63, 1963-64 and 1964-65, respectively, by converting the provisions of section 147(a) into those of section 147(b) of the Act of 1961 ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in respect of the assessment years 1965-66 and 1966-67, the provisions of section 27(1) read with section 64(iv) of the Income-tax Act, 1961, did not apply to the transfer of property made by the assessee ?

(3) Whether, on the facts and in the circumstances of the case, the expression 'an individual' occurring in section 64(iv) of the Income-tax Act, 1961, would include a female ?

(4) Whether the Tribunal was right in holding that the provisions of section 64(iv) of the Income-tax Act, 1961, are retrospective in character so as to include the income of the minors (other than house property) in respect of transfer made prior to April 1, 1961 ?

(5) Whether, on the facts and in the circumstances of the case, the Tribunal was right in not giving a direction that credit be given for tax paid by the minors for the assessment years 1962-63 to 1966-67 ? "

2. The assessee, Mrs. Ayodhya Kumari, transferred her house property on March 31, 1956. She transferred a fixed deposit of Rs. 5,000 with the National Motors on December 29, 1956. She also transferred ten shares of City Light Theatres (P.) Ltd., on August 24, 1960, to her minor son, Sunil Kumar. One the same day, i.e., August 24, 1960, she transferred seventeen shares of City Light Theatres (P.) Ltd. to her minor son, Akhil Kumar. The incomes of these minor sons were not included in the total income of the assessee in her original assessments as according to the interpretation put by the Supreme Court on section 16(3) of the Indian I.T. Act, 1922 (No. XI of 1922) (for short " the old Act "), that " an individual " occurring in section 16 of the old Act would only include male species and not female species. According to the Income-tax Officer (ITO), there were changes in the provisions of section 64 of the Act and according to section 64(iv) of the Act, income of the minor sons was to be included in the assessee's assessment. The ITO started proceedings against the assessee under section 147(a) of the Act in respect of the assessment years 1962-63, 1963-64 and 1964-65, and he included the income of the minor sons in the total income of the assessee. He also included the income of the minor sons from the assets transferred by her to them in the assessment of the assessee for the assessment years 1965-66 and 1966-67. The assessee preferred appeals. The Appellate Assistant Commissioner (AAC) held that, on the facts of the case, he can substitute application of the provisions of section 147(b) for section 147(a) of the Act. He further held that though the assets had been transferred by the assessee prior to the commencement of the Act, still the provisions of section 64 of the Act were applicable to the case, for, the Act is not concerned with the date of transfer but with the income arising out of transfer and chargeable to income-tax and that section 64(iv) of the Act is wide enough to include income derived by transfer before the passing of the Act. The assessee filed second appeals before the Tribunal. The five appeals were disposed of by a common order dated June 25, 1979. The appeals related to the assessment years 1962- 63, 1963-64, 1964-65, 1965-66 and 1966-67. The three appeals relating to 196

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1984 Supreme(Raj) 252

RAJASTHAN HIGH COURTS.K.Mal Lodha, K.Bhatnagar, JJ.Commissioner Of Income - AppellantVersusMrs. Ayodhyakumari - RespondentD.B. Income-tax Reference No. 29 of 1971.Decided On : 3-02-1984

Cases Referred (8)

RAJASTHAN HIGH COURT
S.K.Mal Lodha, K.Bhatnagar, JJ.
Commissioner Of Income - Appellant
Versus
Mrs. Ayodhyakumari - Respondent
D.B. Income-tax Reference No. 29 of 1971.
Decided On : 3-02-1984