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TMI Blog1970 (3) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1922, had no application in the present case ? (b) If the answer to question No. 1 (i.e., (a)) is in the negative, then, whether, on the facts and in the circumstances of the case, the Tribunal was right in placing the onus upon the department to prove that the agricultural income in Pakistan belonged to the Hindu undivided family and still retained that character ? (c) If the answer to question No. 2 (i.e., (b)) is in the negative, then, whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the agricultural income in Pakistan did not belong to the assessee-Hindu undivided family, and in directing exclusion of the said income from the assessable income of the family ? " There was a direction in the order passed by this court under section 66(2) of the Income-tax Act, that Income-tax Reference No. 149 of 1964 shall be heard along with the earlier one, i.e., Income-tax Reference No. 73 of 1964. We shall, therefore, on these facts and circumstances, dispose of both these references by one judgment. The facts giving rise to these questions should be set out at the outset. The assessment year is 1948-49 for which the relevant pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... individuals the fact is recorded that these four brothers were jointly managing the agricultural properties and it was only for the purpose of convenience and facility of assessment that the total agricultural income derived from their entire property was derived first and thereafter the incidental allocation or apportionment was made to the share of each assessee. On that evidence contained in these two orders of assessment for Pakistan, the Indian Income-tax Officer included the agricultural income from Pakistan, namely, the balance of Rs. 1,96,045, as income under the head " Other sources " for these assessees who are being assessed as a Hindu undivided family by the Indian Income-tax Officer. It will be appropriate at this stage to notice that the Indian Income-tax Officer in his assessment order dated 27th February, 1953, records the fact that the assessment was being made by him under section 23(3) of the Income-tax Act. He records the further fact that, in response to the notice under section 23(2), the representatives on behalf of the assessee, i.e., the Hindu undivided family, produced the bank books of the Imperial Bank of India (Mymensingh Branch), Calcutta, and the Ll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndu undivided family. Under that section it is necessary that a claim for partition should be made and after enquiries the Income-tax Officer should be satisfied that the joint family properties have been partitioned and then only the properties belonging to the Hindu undivided family can be taken as partitioned among its members. In the present case I find that the appellant filed the return of income in the status of Hindu undivided family and there was no claim for partition of any of the properties and as such the contention raised by the representative is totally irrelevant and is required to be rejected. This raised the whole point of controversy. Before proceeding further, it is essential to notice here at this stage that the Appellate Assistant Commissioner records that the present contention of the assessee is that the four properties of the Hindu undivided family have been assessed in their individual capacity at Mymensingh and, therefore, the assessment of income from Pakistan in the hands of the Hindu undivided family was not justified. In other words, the whole contention of the assessee before us has been that the income of the Hindu undivided family cannot include ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been made in the hands of the individuals by the Pakistan authorities. In other words, the Appellate Assistant Commissioner saw from the order of assessment of the Pakistan Agricultural Income-tax Officer that, although he was treating the assessee in the status of individual, the real nature is described by him as four brothers having equal shares in the properties which were jointly managed and it was first found by the Pakistan Income-tax Officer what was the total agricultural income derived from the entire property so jointly owned. The Appellate Assistant Commissioner had also before him the assessment order of the Pakistan Income-tax Officer dated 27th February, 1950, from where it was clear that the Pakistan Income-tax Officer was treating these very four assessees in the status of a Hindu undivided family. The position then is that the Pakistan Agricultural Income-tax Officer was assessing these assessees as individuals although knowing their jointness, the Pakistan Income-tax Officer was assessing these four assessees as Hindu undivided family and the Indian Income-tax Officer was treating these four assessees as Hindu undivided family. In that context the Appellate As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailing to discharge any onus that lay upon him. This fundamental misconception and the failure of the Tribunal to realise that the point was not raised or argued before the Income-tax Officer vitiates their entire order on this point. This misconception persisted even in the statement of the case which the Tribunal prepared, where it appears again in the following terms : " The assessee did not include that income in its return on the ground that the agricultural income did not apply to the Hindu undivided family but belonged to its members in severalty. The Income-tax Officer did not accept the assessee's contention. " These are entirely wrong statements. The assessee never said, never alleged and never argued that the exclusion from the return was on the ground that such agricultural income did not belong to any Hindu undivided family but belonged to its members in severalty. Secondly, it was entirely wrong to say that the Income-tax Officer did not accept the assessee's contention because the assessee never contended and never alleged that this was their separate property. It is, therefore, impossible on the facts and circumstances of the case to agree with the Tribunal in pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rth by the assessee before him. It was not a case in which the property out of which the income arose was admitted by the assessee to belong to the Hindu undivided family and then a division of the income was sought. The pure and simple case was that the income from agriculture accruing in Pakistan did not belong to the Hindu undivided family but belonged to the individuals in severalty. In our opinion, therefore, there is no question of the application of section 25A to such matters. The department in such cases had to rebut the fact of separation among the members of the Hindu undivided family in respect of the agricultural income. " This again, in our view, was an entirely wrong approach by the Tribunal. It was wrong on facts ; it was wrong in the inference that the Tribunal appeared to draw. The Tribunal observes : " The Appellate Assistant Commissioner failed to appreciate the nature of the case put forth by the assessee before him. " But what is the case and what was the nature of the case put forth ? As already indicated, this case or its nature was never even uttered before the Income-tax Officer when the assessment was being made. This case and its nature were never put ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rshad Mattan Lal v. Commissioner of Income-tax, laying down the proposition, inter alia, that in the case of a joint family, the presumption is that until the contrary is proved the family continues to be joint and that, as the assessee in that case had not substantiated the claim, the legal presumption that the Hindu family continued joint had not been rebutted. It is unnecessary to pursue this point because it is a well-settled proposition in Hindu law. Reference is also made by Mr. Sen for the revenue to the Privy Council decision in Suraj Narain v. Ratan Lal, where the observation by Lord Buckmaster was made, at page 205, as follows : " In the Hindu joint family the law is that, while it is possible that a member of the joint family could make separate acquisition and keep monies and property so acquired as his separate property, yet the question whether he has done so is to be judged from all the circumstances of the case. " Therefore, all the circumstances of the case must be taken into consideration. We regret to say that the Tribunal failed to consider any of the facts and circumstances of this case bearing on this point. The Privy Council in that case also, dealing with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be liable jointly and severally for the tax assessed on the total income received by or on behalf of the joint family as such. (3) 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 purposes of this Act to continue to be a Hindu undivided family. " Here we shall make a reference to the decision of the Supreme Court in Kalwa Devadattam v. Union of India, because it contains observations on the above section 25A of the Income-tax Act, 1922. At page 172 of the report, the Supreme Court observes : " If no order is recorded under sub-section (1) of section 25A, by virtue of sub-section (3), the family shall be deemed, for the purposes of the Act, to continue to remain a Hindu undivided family. Section 25A merely sets up a machinery for avoiding difficulties encountered in levying and collecting tax, where since the income was received, the property of the joint family has been partitioned in definite portions, while at the same time affirming the liability of such members or group of members, jointly or severally, to satisfy the total tax in respect of the income of the family as such. The sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate. This argument is based on the assumption of the fact that the Pakistan authorities treated these assessees as separate and as individuals. The records show that that is not a fact and that is not a conclusion which can be drawn as an inference from the facts on record and as we have indicated above even in Pakistan these assessees are treated as Hindu undivided family by the Pakistan Income-tax Officer. We are, therefore, unable to accept the submissions of Dr. Pal for the assessee that by some mysterious process these four brothers composing the Hindu undivided family here in India were separate individuals in Pakistan. If that was so, then this contention could not have been raised by way of an after-thought in the manner that it was done in the records of these proceedings and to which we have already made a reference. If they were separated, then that would have been the first point for the assessee to raise before the Indian Income-tax Officer that separate incomes of separate individuals were being included in assessing the Hindu undivided family in India. But that was not done. In the particular facts and circumstances of the case, we are satisfied that the facts do no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... every Hindu family is presumed to be joint unless the contrary is proved. " Here is a Hindu family, which is a Hindu undivided family admittedly even in Pakistan contending that it is not so and yet there is no proof to show or support how and in what circumstances the members of this Hindu undivided family became separate individuals. Normally, in Hindu law partial partition is discouraged. But here the assessee's case is that not only a partial partition but the more illogical assertion that it is not a partial partition either with regard to properties or members but the same members composing Hindu undivided family for one purpose and not composing Hindu undivided family for another purpose. In that context it seems illogical for us to hold that the same members are a Hindu undivided family in one breath and separate members in another. The facts render such a conclusion impossible. For the reasons stated above, we proceed to answer the questions asked : We answer the question asked in Income-tax Reference No. 73 of 1964 in the negative in favour of the revenue. We hold that the Tribunal was not justified in placing the burden of proof in the facts and circumstances of this ..... X X X X Extracts X X X X X X X X Extracts X X X X
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