Lakshminarayan vs Commissioner of Income Tax and Another

S. Obul Reddi, C.J.—This petition under art. 226 of the Constitution is filed by the assessee, Lakshminarayan, questioning the validity of the order of the Commissioner of Income Tax, Hyderabad, u/s 264 of the I.T. Act, 1961.

The facts giving rise to this petition are these : The petitioner filed his return in the status of an individual for the assessment year 1973-74 (accounting year ending November 5, 1972). He did not pay advance tax on the share income of his minor son who was also a partner along with him in the firm of Messrs. Lakshminarayari Kamal Kishore. As he did not pay advance tax on the share income of the minor sort, the ITO charged interest of Rs. 3,290 u/s 217(1A). That led to the petitioner preferring a revision before the CIT u/s 264 of the Act, challenging the levy of interest on the ground that there was no statutory obligation on his part to make an estimate of the income u/s 212(3A) so as to include the share income of his minor son. The CIT negatived his contention and dismissed the revision. Hence this petition.

Mr. Ramachandra Rao, the learned counsel, strenuously contended that advance tax is payable only on the petitioner''s estimated income and he is not bound to include the share income of his minor son for the purpose of payment of advance tax.

To appreciate the contention of the learned counsel, we may refer to the relevant provisions of the Act. Section 2, Clause (45), defines "total income "as meaning the total amount of income referred to in Section 5, computed in the manner laid down, in the Act. Section 5 deals with the scope of total income. Section 5, to the extent relevant, says :

"(1) Subject to the provisions of this Act, the total income of any previous year of a person who is a resident includes all income from whatever source derived which--

(a) is received or is deemed to be received in India in such year by or on behalf of such person ; or

(b) accrues or arises or is deemed to accrue or arise to him in India during such year ;....."

Section 64 provides for inclusion of the income of spouse, minor child, etc., in the income of an individual and Section 64, Clause (iii), says:

"In computing the total income of any individual, there shall be included all such income as arises directly or indirectly--...

(iii) to a minor child of such individual from the admission of the minor to the benefits of partnership in a firm."

The aforesaid provisions make it manifest that the income of the minor son of the petitioner derived from the partnership firm in which the petitioner is a partner is deemed to be the income of the individual and it thus forms part of the total income of the assessee. Section 212(3A) says :

"In the case of any assessee who is required to pay advance tax by an order u/s 210, if, by reason of the current income being likely to be greater than the income on which the advance tax payable by him u/s 210 has been computed or for any other reason, the amount of advance tax computed in the manner laid down in Section 209 on the current income (which shall be estimated by the assessee) exceeds the amount of advance tax demanded from him u/s 210 by more than 33 1/3 per cent. of the latter amount, he shall, at any time before the date on which the last instalment of advance tax is due from him, send to the Income Tax Officer an estimate of--(i) the current income, and

(ii) the advance tax payable by him on the current income calculated in the manner laid down in Section 209,

and shall pay such amount of advance tax as accords with his estimate on such of the dates applicable in his case u/s 211 as have not expired, by instalments which may be revised according to subsection (2)....."

This provision makes it obligatory on the part of the assessee to pay advance tax as provided therein. While paying advance tax on his own income, he failed to pay advance tax on the total income which included the share income of his minor son who was admitted to the benefits of the partnership in the firm in which he was a partner. When there is failure to comply with the statutory requirements of Section 212(3A), interest is payable by the assessee u/s 217(1A) and it was found at the time of regular assessment by the ITO that the assessee had not sent an estimate of the income referred to in Section 212(3A).

The learned counsel, Mr. Ramachandra Rao, invited our attention to a decision of the Supreme Court in V.D.M.R.M.M.R.M. Muthiah Chettiar Vs. Commissioner of Income Tax, Madras, to contend that when the form prescribed, viz.. Form 29, does not provide for a column to enter the share income of the minor son, it is not open to the Income Tax authorities to say that that income has not been added to the total income of the assessee and advance tax has not been paid on the total income. That was a case where on the ground that the assessee had failed to include the income of his wife or minor child''s share, the Income Tax authorities reopened assessment proceedings. It is in that context that the learned judges referred to the form prescribed for filing the return and said that for failure or omission to disclose the share income of the minor, proceedings for reassessment cannot be initiated u/s 34(1)(a) of the 1922 Act. They made it clear that Section 22(5) of the old Act only required the assessee to furnish particulars of the names and shares of the partners, but did not impose any obligation to mention or set out the income of the nature mentioned in Section 16(3), which corresponds to the present Section 64, Therefore, that decision can have no application to the question involved in this petition. The learned judges there were not concerned with the payment of advance tax on the total income of the assessee. When once the share income u/s 64 comes within the ambit of the total income of the assessee, he is liable to pay advance tax on that total income as required u/s 212(3A) of the Act. "Current income" referred to in Section 212(3A) is referable only to the total income of the assessee as defined in Section 2(45) of the Act.

We, therefore, see no merits in this writ petition. It is accordingly dismissed with costs. Advocate''s fee Rs. 250.