TMI Blog2010 (6) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the respective pleadings of the parties, having settled the issues, ultimately came to the conclusion that the order under challenge does not suffer from any illegality and accordingly the suit was dismissed directing the parties to bear their own costs. Aggrieved by the same, the present appeal had been preferred. 2. The learned standing counsel representing the appellant had taken this court through the respective pleadings of the parties and the evidence available on record in proper perspective. The learned standing counsel also would maintain that in the facts and circumstances of the case, inasmuch as the fifth respondent was a partner representing the joint family as such, the respondents Nos. 1 to 4 being the sons of the fifth respondent are liable under the theory of pious obligation. The learned standing counsel had strongly relied upon the decisions in CIT v. Piara Singh [1980] 124 ITR 40 (SC) ; AIR 1980 SC 1271 and J. Devaraja Rao v. ITO, AIR 1970 AP 426 [FB] and made elaborate submissions on the aspect of the applicability of the doctrine of pious obligation and also on the aspect of the illegality of the contract as such hence the findings are to be set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oint family manager it had entered into a partnership with 18 others known as M/s. Visakha Gowda Association which carried on the business in abkari contracts by investing in joint family funds. The firm M/s. Visakha Gowda Association, now a dissolved firm, initially filed a return on August 28, 1971, disclosing a loss of Rs. 12,185 for the assessment year 1971-72. A revised return of income was filed by the said firm on November 26, 1971 finally disclosing an income of Rs. 88,890. Similarly a return was filed on December 19, 1972 for 1972-73 disclosing an income of Rs.72,903 which was further revised under a return dated March 26, 1975, disclosing an income of Rs. 73,403. The assessments for the said years could only be completed by the plaintiff on February 28, 1976, on account of the delaying tactics adopted and on account of the failure of the production of the accounts and required date by the said firm in proper time for the assessment years 1971-72 and 1972-73. Finally the firm was assessed to a total amount of Rs. 12,61,921 as tax and penalties for the said two assessment years. The properties belonging to the joint family of the fifth defendant and his sons, namely the pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he joint family as its karta, entered into a partnership business by investing the Hindu undivided family funds and carried the business on behalf of the family and as such the entire family properties are liable to be proceeded against including the share of the defendants Nos. 1 to 4. In any event, the fifth defendant being the father manager, the debts contracted by him and his liabilities to the plaintiff towards tax dues are to be discharged by the defendants Nos. 1 to 4 under law and the said liability is not an outcome of an illegal or immoral debt or transaction. In that view of the pious obligation theory recognized under the Hindu law also the share of defendants Nos. 1 to 4 in the joint family property is liable to be proceeded against for the recovery of the monies recoverable from the father-manager-fifth defendant and as such the orders of the Tax Recovery Officer passed in O. P. No. 136/79-80 dated April 29, 1980, are not proper and valid and are liable to be set aside and hence the suit. Averments made in the written statement filed by defendants Nos. 1 to 4 8. It was pleaded that the first defendant is already carrying on his separate business and the oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d against. No liability whatsoever attaches to these defendants and the theory of pious obligation never be invoked in a case of this nature. The orders passed by the Tax Recovery Officer in O. P. No. 136/79-80 does not call for any interference and hence the suit may be dismissed. 9. Averments made in the written statement filed by the fifth defendant The fifth defendant denied the material allegations in the plaint and had taken a similar stand as that of defendants Nos. 1 to 4 in their written statement. Further it was pleaded that besides being an illiterate person he used to contribute his signature whenever and whoever asked him to sign. He never joined as a partner in the arrack business of M/s. Visakha Gowda Association in the capacity as a joint family manager and karta and that he had joined as a partner in the said firm in his individual capacity. He had never invested the joint family funds in the said business and only his share of income was invested in the said firm and therefore the order passed by the Tax Recovery Officer in O. P. No. 136/79-80 does not call for any interference and hence the suit may be dismissed with costs. 10. Issues settled by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of the letter of the Income-tax Officer, A.Ward, Visakhapatnam to the fifth defendant.Exhibit A16 dated 28-2-1985-Photostat copy of the order of the Assistant Commissioner of Income-tax, Visakhapatnam. Exhibit A17 dated 26-12-1970-Photostat copy of the partnership deed between P. Raghavarao and 18 others. Exhibit A18 dated 23-3-1971-Photostat copy of the application for registration of M/s. Visakhapatnam Gowda Association. Exhibit A19 dated 30-11-1972-do-for declaration under section 184(7) of the Income-tax Act, 1961, for continuation of registration. Exhibit A20 dated 28-7-1971-Photostat copy of the return of income of M/s. Sree Visakha Gowda Association for the assessment year 1971-72. Exhibit A21 dated 26-3-1972 -do- of revised return for 1971-72. Exhibit A22 dated 28-2-1976-Copy of the assessment order for the assessment year 1971-72. Exhibit A23 dated 19-3-1972-Photostat copy of the return of income for 1972-73. Exhibit A24 dated 26-3-1972 -do- of revised return for 1972-73. Exhibit A25 dated 28-2-1976 -do- for the assessment order for 1972-73. Exhibit A26 dated 25-2-1980-Photostat copy of the objection petition of defendants Nos. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from any illegality and dismissed the suit. 13. In the light of the submissions made by the counsel on record, the following points arise for consideration in this appeal : (a) Whether the findings recorded by the learned Principal Subordinate Judge, Visakhapatnam dismissing the suit are to be confirmed or to be disturbed or set aside in the facts and circumstances of the case ? (b) If so to what relief would the parties be entitled ? 14. Point No. 1 : The fifth defendant is the father of defendants Nos. 1 to 4 and the fifth defendant joined as partner in M/s. Visakha Gowda Association. It is the case of the plaintiff that the fifth defendant joined the said Association as one of the partners of M/s. Visakha Gowda Association representing the Hindu undivided family, in short referred to as "HUF" but however the specific stand taken by the defendants is that the fifth defendant joined as a partner in the said association in his individual capacity and not representing the joint family. The learned judge after appreciating the evidence available on record referred to the undernoted decisions : Chamdrayya v. Sambayya [1966] (2) AN WR 393, Velu Padayachi v. Siva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latest example it is an expression as elastic and indefinite as the expression "reasonable restrictions" in article 19 of our Constitution. Colebrooke translated the expression "avyavaharika" as "repugnant to good morals". There have been other translations, like "improper" and "not lawful, usual or customary". "Vyavahara" is a word which has more than one meaning. But we agree with Mr. Venkata Subramania Aiyar that the word has reference to the ideal of good conduct according to the notions prevailing at the material time. But we are unable to hold that any debt which the father ought not to have strictly contracted is necessarily a debt which is "avyavaharika". There should be an element of moral turpitude involved in the debt. It is only then that it could be called "avyavaharika"'. Whatever may be the difference in the translations of this expression, it is now clear that the expression `avyavaharika' has been understood as repugnant to good morals or tainted with immorality or illegality or involving some moral turpitude. Even if a wider meaning such as `improper' is given there can be no doubt that the liability in the present case, namely, the liability of the father to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sometimes `tax', sometimes `duty'. In arriving at the meaning of the expression used in the texts it is important to bear in mind the context in which these passages occurred. As observed already these texts refer to the exceptions to the general rule that a son is liable to pay the debts of his father. As pointed by the Privy Council in 70 Ind. App. 171 (AIR 1943 PC 142) most of the debts mentioned in the texts as debts which he need not pay, are of objectionable character, even if some type of taxes or duties were exempt from the doctrine of pious obligation for certain reasons which appealed to the ancient Smriti text writers ; it is for the court to decide in the context of the present society whether any particular tax liability is of such a nature as could be treated as one tainted with illegality or immorality or opposed to the right conduct as to bring it within the exceptions to the general rule that the son is liable to pay the father's debt. We have no hesitation in holding that the liability to pay arrears of income-tax cannot be regarded as one such. On the other hand it appears to us that it is obligatory on the son that he should pay taxes which are legitimately due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Another meaning of the word `sulka' is a nuptial present, given as the price of a bride. Reference is made to Haradatta's translation where he assigns the meaning of bride price to `sulka' and to the fact that this translation is supported by Sarvajna Narayana in his gloss on the text in Manu. Mayne is of the opinion that this stands to reason as a promise of bride price is not enforceable even according to the modern decisions and being unapproved marriage neither the liability to pay the bride price nor a debt incurred for the purpose of paying it can be lawful or proper (vyavaharika). Even if the meaning is not restricted to the last mentioned one, namely, the bride price, we are of the opinion that having regard to the context in which it occurs, `sulka' must be confined only to such liability, though in the nature of tax or a duty, which would involve some moral turpitude on the part of the father or the incurring of which would be tainted with illegality or immorality. 9. The Bench of the Madras High Court in AIR 1955 Mad 382 had to consider whether court-fee payable by the father in a litigation which he carried on comes within the expression `Danda' used in the text w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the business and it was further held that it was a loss which arose directly from the carrying on of the business and is incidental to it. The apex court applied the view expressed in Badridas Daga v. CIT [1958] 34 ITR 10 (SC); AIR 1958 SC 783 following the decision in CIT v. S. C. Kothari [1971] 82 ITR 794 (SC) ; [1972] Tax LR 168 SC. 19. In the decision of Sidramappa Veerabhadrappa v. Babajappa Balappa, AIR 1962 Mys 38 where the father carried on family kulachar of dyeing without any aid of ancestral nucleus and though the son assisted him in the business, it was held that the said dyeing business cannot be called family trade and subsequent starting of clothes business is not an extension of the trade. 20. In the decision of P. Murugayya Pillai v. S. Somasundaram Pillai, AIR 1957 Mad 100, it was held that there is no presumption that a business carried on by a member of a joint family is the joint family business or is there is any presumption that a business carried on by such a member in partnership with a stranger is a joint family business and there is no presumption that a business started by even the manager is a joint family business but if the joint family fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t incurred for the business. 25. In the decision of A. Rohini v. A. K. Sethumadhavan, AIR 1978 Ker 119 it was held that where there is no proof that the business was the family business and not a new or independent business of the karta, the loan taken for such business could not be said to be for the binding necessities or for the benefit of the family. 26. In the decision of Kanakarathanammal v. V. S. Loganatha Mudaliar, AIR 1965 SC 271 it was held that where consideration for sale transaction proceeded for husband and his subsequent conduct showing his admission that title to the property vested in wife, the purchase by wife cannot be held to be benami for husband but she is herself the owner of the property and the fact that the husband was in possession and management of the property or that he was receiving the rents does not affect the position inasmuch as in ordinary Hindu families property belonging exclusively to a female member would also be normally managed by the manager of the family. 27. In the decision of G. Narayana Raju v. G. Chamaraju, AIR 1968 SC 1276 it was held that it is well established that there is no presumption under the Hindu law that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -3 is the certified copy of the income-tax return of receipts and payments filed by fifth defendant for the assessment year 1963-64 in the status of Hindu undivided family. Exhibits A-4 and A-5 are certified copies of income-tax returns relating to the assessment years 1971-72 and 1972-73 filed by the fifth defendant in the status of Hindu undivided family which discloses that the family was having business income. Exhibits A-6 to A-8 are similar returns filed by the fifth defendant for the assessment year 1973-74, 1977-78 and 1978-79 along with receipts and payments statements. Exhibits A-9 to A-11 are the certified copies of the notices issued to the fifth defendant calling upon him to submit income-tax returns for the assessment year 1971-72 and exhibits A-12 to A-14 are the certified copies of such notices issued under section 148 for the assessment year 1972-73. The original of exhibit A-15 was issued to the fifth defendant on June 10, 1981, calling upon him to give explanation for investment of Rs. 88,800 in M/s. Visakha Gowda Association but he did not furnish any such necessary explanation. Exhibit A-16 is the certified copy of the orders of the Commissioner of Income-tax ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax returns submitted by the fifth defendant which were filed on August 17, 1976. This witness also deposed that exhibits A-3, A-4, A-5, A-6, A-27, A-28, A-29, A-30 and A-31 were filed on August 12, 1976. He further deposed that except the signature of the assessee, the entire form is in English and he cannot say whether the signature of T. Appa Rao (fifth defendant) appears to be only that of a person not educated but only learnt to sign. He further deposed that exhibits A-6 and A-31 also contain assessment orders and all the assessment orders were originally typed as individual and struck off and the words "Hindu undivided family" were written and they were not attested by anybody and in the statement of case that was typed as individual. Further PW-1 deposed that the original of exhibit B-1 was signed by the Appellate Assistant Commissioner and in the said order the Appellate Commissioner found that there is no material to show that the fifth defendant joined as a partner in his capacity as karta of the joint family. He further deposed that the return filed by the fifth defendant does not disclose that the fifth defendant joined in M/s. Visakha Gowda Association as karta o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Tax Recovery Officer which orders are valid. Exhibits B-5 and B-8 are the photostat copies of the orders relating to the firm M/s. Visakha Gowda Association apportioning income among the partner. DW-1 also further deposed that the Income-tax Department is proceeding against him only and not against the other partners. His sons have nothing to do with the business carried on by him as a partner in the said Association. His sons are contesting the suit and the attachment effected over the shares of his sons is not valid and the Tax Recovery Officer upheld their contentions. 31. The evidence of DW-2 is that he lent the fifth defendant (DW-1) Rs.2,000 in the month of September 1970 when he requested him to lend him Rs. 5,000 in connection with arrack auctions. DW-3 also deposed on similar lines. The evidence of DW-4 and DW-5 also is available on record and their evidence goes to show that these witnesses had contributed amounts to DW-1 towards his share of investment as a partner in the association aforesaid. 32. t is not as though the father-fifth defendant is dead. He is alive and was examined as DW-1. Though there is no quarrel to the propositions which had laid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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