An assessee is not required to disclose the income from a house property standing in his wife's name in his own return.

1. - This is a reference application under s. 256(2) of the I.T. Act, 1961, by the Department for giving a direction to the Income-tax Appellate Tribunal. Jaipur Bench, Jaipur, for stating the case and refer the following question of law:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was no escapement of income on account of failure on the part of the assessee to disclose income fully and truly and thus initiation of proceedings under section 147(a)/148 of the Income-tax Act, 1961, was without any jurisdiction.?"

2. The ITO gave a notice under s. 147(a) to the assessee and in pursuance of that notice the ITO finally held that a house property known as "Devi Asha" belonged to the assessee up to 1939 and was transferred by him to his wife without adequate consideration. The ITO as such clubbed the income from the house in the total income of the assessee. Aggrieved against the order of the ITO, the assessee Went up in appeal to the AAC. Learned AAC found that in order to confer jurisdiction under s. 147(a) two conditions were to be satisfied, firstly that the ITO must have reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, and, secondly, he must have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to make a return of his income, or (ii) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment for that assessment year. Learned AAC thus found that, in the facts and circumstances of the case, the assessee had disclosed in his return the income Which bad accrued to him and it was not necessary to have disclosed the income arising from the house property standing in the name of his wife. Smt. Kamala Kumari The AAC as such allowed the appeal and annulled the assessment order passed by the ITO. The Department aggrieved against the order of the AAC filed an appeal before the income-tax Appellate Tribunal. The Tribunal, after taking into consideration the facts and circumstances of the case, held that there was no material on record to show that since 1939 till the assessment year under consideration, the assessee was ever shown as an owner of the house property in question. Admittedly, Kamala Kumari had come into possession of the property in 1939. In the Municipal records the property had been recorded in the name of Smt. Kamala Kumari and even the fact of selling the property by Kamala Kumari in the year 1970 showed that she was the owner of the property and in that capacity she transferred the same. According to the Tribunal any averment made in the sale deed was not material and, as such, the averments did not confer any title in favour of a third person. The Tribunal thus held that there should have been some reason to believe, and not reason to suspect only, by the TO before resorting to take action under s. 147(a)/148 of the I.T. Act. The Tribunal further found that from the evidence on record it was clear that Smt. Kamala Kumari had been in possession of the property for more than 12 years. She was also in possession of the property as owner in 1950 when the I.T. Act came into force for the first time in the State of Rajasthan. It was further observed by the Tribunal that the assessee had also been accepting Smt. Kamala Kumari as the owner of the property. In the above circumstances, the Tribunal found that it was proved that Smt. Kamala Kumari had been the owner and in possession of the property in question and as such the assessee was not under any obligation to disclose the income from the said property in his own return and as there was no escapement of income on account of failure on the part of the assessee to disclose income fully and truly, initiation of proceedings under s. 147(a)/148 of the I.T. Act, 1961. Were without any jurisdiction. The Tribunal thus dismissed