INCOME TAX OFFICER, INCOME TAX-CUM-WEALTH TAX CIRCLE II, HYDERABAD versus NAWAB MIR BARKAT ALI KHAN BAHADUR

Citation: [1975] 2 S.C.R. 464 · Decided: 16-10-1974 · Supreme Court of India · Bench: HANS RAJ KHANNA · Disposal: Dismissed
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Judgment (excerpt)

464 
INCOME TAX OFFICER, INCOME TAX-CUM-WEALTH TAX 
CIRCLE II, HYDERABAD 
v. 
NAWAB MIR BARKAT ALI KHAN BAHADUR 
October 16, 1974 
[H. R. KHANNA AND A. C. GUPTA, JJ.) 
Income taX Act, 1961, a. 141-Scope of-High Court's power of Interference 
under Art. 226. 
In 1950, the respondent had executed three trust deeds for the benefit of three 
ladies who were described as his wives, and himself, as the father of their min1~r 
children. After the returns in respect of the ass1:ssment year 1955-56, 1956-57, 1957· 
58 and 1958-59. were filed by the respondent, the Income-tax Officer, who had the 
three trust deeds before him called upon the respondent for information regarding 
his relationship to those three ladies as well as his relationship to a fourth lady, A 
statement was filed, on behalf of the respondent, before the Income-tax Offici:r, 
wherein it was stated that only the fourtb lady was his legally wedded wife, that the 
other three were merely referred to as the wives, and that their children wer1~ n1Jt 
the legitimate children of the r~ondent. The Income-tax Officer, in assessing the 
total income of the respondent did not include, under s. 16(3) of the 1922-Act, 
the income of those three ladies and their minor children arising out of the trust 
properties. In fact, he assessed them separately with respect to their income from 
the trust prope1ties. In 1964 the Income-tax Officer issued notices under s. 148 of 
the 1961-Act sedcing to re-open the assessments under s. 147 on the ground that there 
were two other trust deeds of 1957, which were not produced before the I. T. O. 
in which also two of the ladles were acknowledged as the wives of the respondent 
and their children as his children and that their marriage should be presumed because 
of the acknowl,edgement. The respondent there-upon challenged the validity of 
the proceedings and the High Court allowed his petitioll. 
Dismissing the appeal to this Court, 
HELD : (I) Section 147(a) provides that if the Income-tax Officer has reasc1n 
to believe that by reason of tho omission or failure on the part of the assessee to 
disclose fully a11d truly all material facts necessary for his assessment for any yoa.r, 
income chargeable to tax has escaped assessment for that year, he may assess llr 
re-assess such income for the assessment year concerned. The fact that the ladies 
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and their children had been described in the 1957 -documents as wives and children 
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of the respondent would have been material if the description were anything new 
that the Income-tax Officer happened to discover for the first time. But the 1950· 
deeds also contained the same description. The non-production of the 1957-doci~-
ments at the time of the original assessment cannot therefore be regarded as non-
disclosure of at)y material fact ner.essary for the assessment of the respondent for 
the relevant assessment years. Having second thoughts on the same material does 
not warrant the initiation of a proceeding under s, 147. [4670-H; 468B; D-E] 
(2) The law has not changed or since the original assessments were made a11d 
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it was open to the Income-tax Officer to have made the presumption that the ladi11S 
were the wives at the time when he made the 11sseS1ment. He cannot avail of s. 147 
to correct his mistake. [468F·O) 
(3) The expression 'reason to believp' oc:curring in s. 147 of the 1961-Act or 
the corresponding s. 34 of the 1922-Act, does not mean a purely subjective satis-
faction on the part of the Income-tax Officer. The reasons for tb,e belief must have a 
rational connection or relevant bearing to the formation of the belief. Therefore, 
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the High Court, under Art. 226, has power to se~ aside a notice under s. 147 of the 
1961 Act or s. :14 of the 1922-Act, if the condiuon precedent to the e:tercise of the 
jurisdiction under those sections did not exist. [469C-D] 
I.T.O. v. BARKAT ALI (Gupta, !.) 
465 
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1179-1782 
of 1970. 
From the Judgment & Order dated the 7th March, 1969 of the 
Andbra Pradesh High Court in Writ Petition Nos.1042-1045 of 1964. f, 
S. C. Manchanda, B. B. Ahuja and R. N. Sachthey, for the Appel· 
lam (In all the Appeals). 
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S. V. Gupte, Anwarulla Pasha, J. B. Dadachanji, A. Subba Rao and 
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Anjali K. Varma, for the Respondents (In all the Appeals). 
M. N. Phadke, A. V. Rangam, Gopal Nair and A. Subhashini, for 
the Interveners (In all the Appeals). 
The Judgment of the Court
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