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TMI Blog1963 (4) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... 1946-47 aggregated to Rs. 1,23,233-5-0. Nagappa did not pay the tax. The revenue authorities of the Province of Madras, at the instance of the income-tax department, attached 51 items of immovable property as belonging to the joint family of Nagappa and his sons and put up the same for sale under the Madras Revenue Recovery Act, II of 1864. Out of these, 38 items were sold and were purchased by certain persons. Kalwa Devadattam, Kalwa Devarayalu and Kalwa Nandi Sankarappa (sons of Nagappa)-hereinafter called collectively the plaintiffs-through their mother, acting as their next friend, commenced Suit No. 52 of 1950 in the Court of the Subordinate Judge, Kurnool, against the Union of India, the revenue authorities of the State of Madras, the purchasers of the properties at the auction, and Nagappa, claiming a decree declaring that the assessment orders made by the Income-tax Officer, Kurnool, for the years 1944-45, 1945-46 and 1946-47 were unenforceable against 51 items of property of the plaintiffs described in the schedule and sale of their property by the revenue authorities was " without jurisdiction, void and illegal ", and an order restraining the Union of India and the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng rise to the liability though speculative were not of a wagering character. The High Court passed a decree for Rs. 10,000 with interest at 6 per cent. from the date of suit and costs. This decree was soon followed by the execution of the deed of partition dated March 14, 1947, between Nagappa and the plaintiffs, by which the joint family estate valued approximately at Rs. 1,25,000 was divided into four shares. To Nagappa was allotted under that partition property of the value of Rs. 31,150 and he stood liable to satisfy debts of the value of Rs. 12,236-4-9. In execution of the decree in Suit No. 7 of 1944, Kumaji Sare Mal attached some of the properties that fell to the share of the plaintiffs under the deed of partition dated March 14, 1947. Objections to the attachment preferred under Order 21, rule 58, Code of Civil Procedure, by the plaintiffs were dismissed by the executing court on July 12, 1948. The plaintiffs then filed Suit No. 54 of 1949 for a decree setting aside the summary order passed in the execution proceeding, claiming that the debt incurred by Nagappa being avyavaharika, the plaintiffs were not liable to satisfy the debt, and that the firm of Kumaji Sare Mal was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... States Reorganization Act, 1956, held agreeing with the trial court that a suit to set aside the assessment of income-tax was not maintainable against the Union, and that in any event in the absence of an order under section 25A(1) of the Indian Income-tax Act, recording a partition, the income-tax authorities were bound to assess tax on the Hindu undivided family as if that status continued. The High Court also held that the partition set up by the plaintiffs was a transaction which was nominal and sham, and that the evidence established that items 46 to 51 were purchased with the aid of joint family funds and not with the funds supplied by Seshamma and, therefore, all the properties, items 1 to 51, were liable to satisfy the tax liability of the joint family, The High Court also held that the firm, Kumaji Sare Mal, was entitled to recover the debt due to them in execution proceeding, there being no real partition between Nagappa and the plaintiffs prior to the date of attachment. The High Court accordingly dismissed both the suits. We will reserve for separate consideration the common question which arose in these two appeals, namely, whether the partition by the deed dated Mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he conduct of the business and the property was joint family income, that the plaintiffs have filed this suit. Under section 25A of the Income-tax Act, if at the date when the liability to pay tax arose there was in existence a joint family which has subsequently disrupted, the tax will still be assessed on the joint family. The machinery for recovery of the tax, however, differs according as an order recording partition is made or not made. If the Income-tax Officer is satisfied on a claim made by a member of the family that the joint family property has, since the close of the year of account, been partitioned among the various members or groups of members in definite portions, he must record an order to that effect and thereupon notwithstanding anything contained in sub-section (1) of section 14 of the Act each member or group of members is liable, in addition to any income-tax for which he is separately liable, for a share of the tax on the income so assessed according to the portion of the joint family property allotted to him or it. But even after this apportionment of liability for the tax assessed on the total income of the joint family, the members of the family or groups ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... definite portions, assessment may be made, notwithstanding section 14(1), on each individual or group in respect of his or its share of the profits made by the undivided family, while holding all the members jointly and severally liable for the total tax. " In the present case no order under section 25A(1) was recorded. It is true that Nagappa had made before the Income-tax Officer on January 19, 1948, the following statement : " I am at present living singly. My sons divided from me about ten months back. There is a document to this effect. The document was registered. My sons are as follows:-" After recounting the names of his three sons and their respective ages, he proceeded to state: "The guardian to these minor children is my wife. I divided my family properties between myself and my children. The properties belonged to our joint family. The business also belonged to my joint family. " It may be assumed that by this statement within the meaning of section 25A it was claimed " by or on behalf of any member of a Hindu family hitherto assessed as undivided " that a partition had taken place among the members of his family and that the Income-tax Officer was bound to make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 25A(2), proviso. The plea of irregularity in holding the sale proceedings set up in the trial court was negatived by the trial court as well as the High Court, and has not been canvassed before this court. About the title of the plaintiffs to items 46 to 51 in the schedule annexed to the plaint, the High Court disagreed with the trial court. These properties were purchased in the names of two of the three plaintiffs by the sale deed, exhibit A-230, dated March 15, 1944. The consideration of the sale deed was Rs. 23,500 of which Rs. 5,019 had been paid in advance in four instalments before March 15, 1944, and the balance of Rs. 18,481 was paid before the Sub-Registrar to the vendors who conveyed the properties to Devadattam and Devarayulu, two of the three plaintiffs, acting by their mother, Narayanamma, as their guardian. The properties having been purchased in the names of the two plaintiffs the burden prima facie lay upon the taxing authorities to establish that the sale deed was taken for and on behalf of the joint family or with the aid of joint family funds. Evidence was led by both the sides to support their respective versions. The trial court held that the plaintiffs' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In crossexamination Narayanamma altered her version. She stated that Seshamma's uncle had left everything to her as he had no children or family but he did not execute any document in favour of Seshamma and that at the time of his death he stated orally that Seshamma should take all the properties and that Seshamma and her brother knew about what she received from her paternal uncle. P. W. 5, Venkatasami, who was originally a clerk of Nagappa, said that he was acting as a clerk in the employment of Narayanamma. He swore that he had seen Seshamma giving Rs. 6,000 to Narayanamma about four years ago and that a month later Seshamma brought Rs. 3,000 and gave them to Narayanamma and that about ten days thereafter Seshamma brought Rs. 12,000 and gave them to Nagappa and Narayanamma. He admitted that Seshamma had no immovable property other than a house which she had bequeathed to her daughter under a will. The witness did not know how Seshamma got the amount. He, however, stated somewhat inconsistently under cross-examination that on the date of registration of exhibit A-230 Seshamma had asked her daughter " Narayanamma to bring the money ". On that day the key of the iron safe was wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r attachment before judgment was vacated when the suit was dismissed by the trial court on August 31, 1944. This circumstance in the context of the other evidence strongly supports the contention of the Union that with a view to protect the properties from his creditors, Nagappa thought of purchasing the properties in the names of his sons, the plaintiffs, and the consideration was advanced by him. The High Court was, therefore, right in holding that the properties, items 46 to 51, were of the joint family and liable to be attached and sold in enforcement of the liability for payment of income-tax. Civil Appeal No. 641 of 1961 must, therefore, fail. We may now deal with the questions which fall to be determined in Civil Appeal No. 642 of 1961, one of the questions being common in Appeals Nos. 641 and 642 of 1961. Suit No. 7 of 1944 was filed by the firm, Kumaji Sare Mal, for damages for breach of contract. That suit was decreed by the High Court on March 5, 1947. Within nine days thereafter, the deed of partition came into existence. The plaintiffs contended that the debts due by Nagappa to Kumaji Sare Mal being immoral or avyavaharika their share in the properties was not liable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as property over which the father had a disposing power within the meaning of section 60, Civil Procedure Code. " On the other hand the Bombay High Court has held in Ganpatrao Vishwanathappa v. Bhimrao Sahibrao I. L. R. [1950] Bom. 414, that a decree obtained against the Hindu father may after partition be executed against the son's interest by impleading the son as a party to the execution proceeding against the father. There is no clear expression of opinion by this court on this question, though in S. M. Jakati v. S. M. Borkar [1959] S. C. R. 1384, this court has held that the liability of a Hindu son to discharge the debts of his father which are not tainted with immorality or illegality is founded in the pious obligation of the son which continues to exist in the lifetime and even after the death of the father and which does not come to an end as a result of partition of the joint family property ; all that results from partition is that the right of the father to make an alienation comes to an end. In that case the property of the family was sold in execution of a money decree against the father and the sons sued to set aside the sale in so far as it affected their interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and sold away one of the houses. The intention of Nagappa to make it appear to the income-tax department that no useful purpose would be served by taking coercive steps as the property allotted to him and remaining after disposal of a good part of it as indicated above was wholly insufficient to meet the demands of the department, is indeed clear. It was Nagappa who had instigated and prosecuted the suits. Narayanamma was an illiterate and ignorant woman, who knew nothing about Nagappa's transactions and dealings. She did not even know what property had fallen to the share of her sons. Admissions made by her disclose that she did not manage the property though apparently she was treated as the guardian of her sons in the partition deed. The story that Nagappa was living with a mistress, and was not looking after the education and welfare of his minor sons does not appear to be supported by any reliable evidence. The eldest son was at the date of the alleged partition fourteen years of age, and the youngest was three years old, and in the absence of any serious cause for the differences between Nagappa and Narayanamma, partition of the estate could not have been thought of. Witness, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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