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1966 (10) TMI 10

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..... years 1931-32 to 1935-36 did not show the status in which the firm was assessed. The next two assessments for the years 1936-37 and 1937-38 were made under section 23(4) of the Act in the status of a Hindu undivided family. It is, however, not clear as to how such status came to be determined. Thereafter, the assessee himself showed the status as Hindu undivided family and the assessments were also made in that status right up to the assessment year 1942-43. In the course of the assessment proceedings for the year 1942-43, the assessee claimed a partition under section 25A of the Act with effect from the 15th April, 1941. The assessee's claim under section 25A was accepted by the Income-tax Officer. The order under section 25A has neither been made a part of the case nor the contents thereof have been mentioned in the statement of the case. It is not clear as to why such an order under section 25A was sought and whether it was really a partition between the two brothers as joint owners of the business, or it was a real partition by metes and bounds of all assets of the Hindu undivided family. It is not known whether there were any other assets apart from the business. If the busin .....

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..... s and not joint family business and that the assets that each one of them held in that business were their own self-acquired properties in which their male issue had no right by birth, and, therefore, the firm was genuine and entitled to registration. The Income-tax Officer negatived these contentions, on the main ground, that for the assessment years 1936-37 to 1942-43, the assessee Radha Kishan and Sita Ram were assessed in the status of a Hindu undivided, family and that an order under section 25A was passed on the 15th March, 1943, and as such it was no longer open to say after the order under section 25A that the assets were not the assets of his smaller joint family. The Income-tax Officer, therefore, held that the assets in the firm, though standing in the name of Sita Ram, belonged in fact to his joint Hindu family and thus he was incompetent to make a gift to his sons or to form a partnership with his sons without first effecting. a partition between himself and the sons. The Income-tax Officer, consequently, refused registration to the assessee for both the relevant assessment years. On appeal, the Appellate Assistant Commissioner held that the weight of evidence clea .....

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..... the firm Radha Kishan Sita Ram did not belong to the smaller Hindu undivided family of Sita Ram, but solely to Sita Ram, and, therefore, he could not make a gift to his sons was wrong. It further went on to hold that the members of a Hindu undivided family could not have formed a partnership without first effecting partition of its assets. The Tribunal, therefore, set aside the order of the Appellate Assistant Commissioner and restored the order of the Income-tax Officer refusing registration to the assessee firm. The position under the Hindu law is well settled. Every coparcener has an interest in joint family or coparcenary property. If the property is joint family property then every male issue of the coparcener acquires an interest by birth. A property may belong to a joint family or it may become joint family property, but there is no presumption in law that property is joint family property. A Hindu, even if he is joint, may own separate property. Such property would belong to him exclusively and no other member of the coparcenary, not even his male issue, acquires any interest therein by birth. He may sell, gift or bequeath it. It is not liable to partition and upon his d .....

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..... is passed, the assessment will continue to be made in that status by a fiction of law. Section 25A(3) creates such a legal fiction in these words " Where such an order has not been passed in respect of a Hindu family hitherto assessed as undivided, such family shall be deemed, for the purpose of this Act, to continue to be a Hindu undivided family." Undoubtedly, assessments were made from 1936-37 to 1942-43 in the status of a Hindu undivided family in respect of the income from the business of Messrs. Radha Kishan Sita Ram, and, therefore, unless and until an order under section 25A was passed, the income therefrom would continue as a result of the legal fiction created by section 25A(3) to be treated as the income of the Hindu undivided family. It was, in all probability to get over this impediment that an order under section 25A was obtained. As already observed, no copy of the order under section 25A has been placed on the record, and, therefore, it has become necessary to see what the Income-tax Officer himself, who passed the said order under section 25A, did in the subsequent assessments of Sita Ram. He assessed the share income of Sita Ram from the said firm as his in .....

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..... e Court approved the view taken by this court in Himmat Bahadur v. Bhawani Kunwar. When dealing with the Madras decision, the Supreme Court went on to observe : " It is quite clear that the incidents of Hindu undivided family property cannot be lightly conferred upon any acquisitions made by two members of a family. " In the present case, what had to be established by the department in order to succeed in the appeal before the Tribunal was that there was in fact blending of property as understood in Hindu law. There is not an iota of evidence on the record to show, beyond the colourless and inconclusive circumstance that from 1936-37 to 1942-43 the assessment was allowed to be made in the status of a Hindu undivided family, that there was, in fact, any unequivocal throwing of the income so earned by Radha Kishan and Sita Ram into the hotchpot of their respective smaller Hindu families with the intention of abandoning all separate claims thereto. On the other hand, there is the conduct of the assessee for a period of over 12 years which was endorsed by the department and this leads to the irresistible conclusion that there was never any blending by him of his individual income w .....

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