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TMI Blog1984 (3) TMI 346X X X X Extracts X X X X X X X X Extracts X X X X ..... t court in the case of Sool. Chand Ram Sewak v. CIT [1969] 73 ITR 466, which supported the Revenue's case and as the Division Bench before whom this case came was unable to accept that view, the Division Bench referred the case to larger Bench. This reference, thereafter, came before a Full Bench consisting of Gulati, H.N. Seth and C.S.P. Singh JJ. Gulati and C.S.P. Singh JJ. answered the question in the affirmative in favour of the Revenue and against the assessee. Seth J., however, was in favour of the assessee. In view of the majority, the question was answered in favour of the Revenue and in affirmative. Before we deal with the question in controversy, it will be necessary to note some of the relevant facts. There were originally four appeals for the assessment years 1946-47, 1947-48, 1948-49 and 1949-50. As the appeals for the assessment years 1946-47 and 1947-48 were withdrawn by the Revenue, we are now concerned with appeals for the assessment years 1948-49 and 1949-50. The present assessee is a branch of a bigger Hindu undivided family known as Nathu Ram Jawahar Lal, Jhansi. The bigger Hindu undivided family of M/s. Nathu Ram Jawahar Lal was partitioned on 19th May, 1945 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the subject-matters of appeals before the Tribunal. The point before the Tribunal was whether valid assessments could be made for the assessment years under consideration on 31st May, 1962, on the basis of the returns filed under s. 22(1) of the Act of 1922, on 18th November, 1950. The AAC by his order held that no valid assessments could be made on 31st May, 1962. It appears that on 28th October, 1954, relating to the assessment years 1946-47 to 1949-50 in the case of the bigger HUF, M/s. Nathu Ram Jawahar Lal, Jhansi, the order was passed by the Tribunal in the appeal relating to the assessments pending before it. It should be noted that originally on the basis that the bigger HUF had not been disrupted, assessments for these years had been made and appeals relating to those assessments were pending before the Tribunal. The Tribunal disposed of these appeals by the order dated 28th. October, 1954, and the Tribunal in the said order had observed, inter alia, as follows: " The assessments for those years were (have) necessarily to be set aside with the direction that fresh assessments should be made, one for the period ending 19-5-1945 up to which the Hindu undivided family wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch case assessment was possible under s. 34, if the case was covered by the second proviso to s. 34(3). The High Court was of the opinion that sub-s. (3) of s. 34 provides period of limitation of four years for an assessment under s.23 of the Act of 1922. If the assessment proceedings commence by filing of a voluntary return, as indeed these do, on the expiry of the period of four years from the end of the year in which the income, profits or gains were first assessable, such proceedings are suspended or interrupted. But neither the proceedings nor the returns become invalid. The High Court referred to the provisions of s. 34(3) and was of the view that since the order was passed by the Tribunal giving direction, the bar of limitation was lifted and the assessments could be made without any bar of limitation. Reference was made to the decision of this court in the case of CIT v. Ranchhoddas Karsondas [1959] 36 ITR 569 (SC), and in the case of Estate of late A. M. K. M. Karuppan Chettiar v. CIT [1969] 72 ITR 403 (SC) and CIT v. M. K. K. R. Muthukaruppan Chettiar [1970] 78 ITR 69 (SC). The High Court, on the basis of these decisions, was of the view that assessments could be made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t view of the matter, the majority judgment of the High Court on this aspect was in favour of the Revenue. Then on the question whether the direction for the assessment could be given in respect of any other year, other than the year in which the partition took place, it was contended that the direction could be given only for the assessment year 1946-47. Majority judgment of the High Court found no force in that contention. As this question arose directly for the assessment years 1948-49 and 1949-50 in respect of which the appeals came before the Tribunal in which the directions had been given, the High Court was of the view that it was necessary for the Tribunal to give a finding with regard to the partition of the family and the ownership of the income in both the appeals. The Tribunal was thus competent to give the direction. In that view of the matter, the two learned judges of the Allahabad High Court were of the opinion that assessments were valid and answered the question in favour of the Revenue. Referring to the said decision, which has been mentioned in the majority judgment, Seth J., however, was of the view that the direction given by the Tribunal in this case did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be assessed for the whole or any part of the income that went into assessment of the year under appeal or revision (emphasis supplied). Therefore, this court observed that " any person " in sub-s. (3) of s. 34 must be confined to a person intimately connected in the aforesaid sense with the assessments of the years under appeal. Reference may be made to the decision of this court in the case of Rajinder Nath v. CIT [1979] 120 ITR 14, where the ITO treated two buildings as belonging to a firm comprised of a father and his two major sons as partners and in the assessments on the firm for the assessment years 1955-56 and 1956-57, he estimated the cost of construction of the buildings at a higher figure than that disclosed and brought to tax the excess as income in the hands of the firm. On appeal, the AAC found that the money advanced for the construction of the buildings had been debited in equal shares to the father and two major sons and a minor son and held that the firm was not the owner of the properties and deleted the addition. The AAC also observed that the ITO was free to take action to assess the excess in the bands of the co-owners. The ITO thereupon issued notices unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the bigger HUF or to the smaller HUF, the present assessee along with another smaller HUF and to no one else. Therefore, a finding that it belongs or it does not belong to the bigger HUF which had disrupted on partition would determine the issue whether it could be taxed in the hands of the present assessee judged in the light of the test laid down in Murlidhar Bhagwan Das and as pointed out in Rajinder Nath's case, it appears to us that the present assessee can be said to be a person who would be liable to be assessed for the whole or part of the income that went into the assessment of the bigger HUF in the years under appeal and is person intimately connected with the assessments of the bigger HUF. The income in this case cannot be the income of both the bigger HUF and the present assessee, it must be of either of these two. We are, therefore, of the opinion that directions given in the appeals filed by the bigger HUF would be applicable to the present assessee. On behalf of the assessee, it was contended that only the categories of persons referred to in ss. 30(1) and 30(3) of the 1922 Act would be governed by the said expression " any person ". Sub-section (3) of s. 31, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . We are unable to accept this contention. Firstly, it must be observed that the Tribunal passed the orders and gave its directions in respect of the years concerned. These years were the subject-matters of appeal before the Tribunal in the case of the bigger HUF. It was contended that these directions were given subsequent to the order under s. 25A and could not affect the position thereafter. We are unable to accept this position also. As mentioned hereinbefore, the order under s. 25A was passed in August, 1954. The bigger HUF had applied for an order under s. 25A regarding the disruption of the HUF ; the ITO rejected that prayer. The assessee appealed therefrom. In August, 1954, this order was set aside by the Tribunal and it was held that the bigger HUF had been disrupted. Inasmuch as the income liable to be assessed on the smaller HUF would arise only on the disruption of the larger HUF, this direction was proper. The order under s. 25A declares the status of the family and the smaller HUF became liable to be assessed as a result of disruption of the bigger HUF. The assessment orders, however, were passed based on the previous order under s. 25A but these orders were passed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Mathuradas B. Mohta v. CIT [1965] 56 ITR 269 and a decision of this court in the case of CIT v. Mohd. Shakoor Mohd. Bashir [1973] 89 ITR 57. But, in view of the facts and circumstances of the instant case before us, it is not necessary to deal with the said decisions. On behalf of the assessee, reliance was placed on a decision of the Division Bench of the Gujarat High Court in the case of CIT v. Shantilal Punjabhai [1965] 57 ITR 58. There an individual, Shantilal, was a member of an HUF and also a partner of the firm. The ITO found that the assessee was the nominee of the HUF in the said firm, and, therefore, included the share of profits of the assessee in the said firm, in the total income of the HUF. The decision proceeded on the basis that the I.T. Act did not contemplate two different assessees in the same assessment year for the same taxable income. In that case, the assessee was also an assessee in his own right. In that case, the court had observed at p. 80 of the report that there were two separate and distinct assessment proceedings, one in respect of the assessee in his status as an individual and the other in respect of the HUF. The assessment proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of ITO v. Muylidhar Bhagwan Das [1964] 52 ITR 335. The decision of this court in the case of CIT v. S. Raghubir Singh Trust [1980] 123 ITR 438, was relied on behalf of the assessee. There the respondent-trust created by R filed its return of income for the assessment year 1954-55. Holding that the trust was invalid, the ITO assessed the income of the trust in the hands of R. R carried the matter in appeal and other proceedings and ultimately the High Court held that the trust was valid and the income was the income of the trust and not of R. The ITO issued a notice on 19th September, 1961, under s. 34(1)(b) of the Indian I.T. Act, 1922, to reopen the assessment of the trust. The trust claimed that the notice was barred by limitation. The Tribunal accepted the claim and held that the trust was a stranger to the proceedings for the assessment of R and the second proviso to s. 34(3) did not save the reassessment proceedings initiated against the trust from the bar of limitation and the High Court, on a reference, agreed with the Tribunal. On appeal to this court it was held, affirming the decision of the High Court, that even though the finding of the High Court that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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