TMI Blog1986 (9) TMI 59X X X X Extracts X X X X X X X X Extracts X X X X ..... h was not produced either before the Income-tax Officer or the Appellate Assistant Commissioner without giving the Department an opportunity to examine the same? " The substantial question is whether the Tribunal was correct in holding that the disputed property had to be treated and assessed as property of the Hindu undivided family consisting of the assessee, his wife and daughter. In order to appreciate the questions falling for consideration before us, it is essential that we must take notice of some facts. The assessee is now dead. He was a practising advocate of this State at Patna. He had a house in this town of Patna. In regard to it, he returned his income treating the house property in the status of " individual" till the assessment year 1967-68. In the accounting year 1967-68, he claimed that the house had been thrown in the hotch-pot of his Hindu undivided family consisting of himself, his wife and his daughter. He claimed that the income from the house property should be assessed separately as property of the Hindu undivided family and, therefore, it had not been included in his return of individual income. The Income-tax Officer did not accept the claim of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e from house property as the income of the Hindu undivided family, has got the references made to us. The relevant findings of fact thus are firstly that the house property was the property of the individual till the assessment year 1967-68. The second finding of the Tribunal was that by the declaration of throwing this property into the hotch-pot, the house property was impressed with the character of Hindu undivided family property. Upon these findings of fact let us consider whether the Tribunal was right in the view that it took. Mr. B. P. Rajgarhia, learned senior standing counsel for the petitioner, submitted that the present cases fall within the expanse of the decision of the Supreme Court in Surjit Lal Chhabda v. CIT [1975] 101 ITR 776, while learned counsel for the assessee, on the other hand, contended that the cases fall within the ambit of N. V. Narendranath v. CWT [1969] 74 ITR 190 (SC). Let us see how matters stand. The facts in the case of Surjit Lal Chhabda [1975] 101 ITR 776 (SC) were that for the accounting year 1956-57 corresponding to the assessment year 1957-58, the appellant (assessee) declared by a sworn statement before a Presidency Magistrate in Bomb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave extracted from the judgment of Shah J. in that case shows that the decision of this court did not proceed from any such consideration. The court held in terms categorical that the Hindu undivided family as an assessable entity need not consist of at least two male members. The same is true of the decision in N. V. Narendranath's case [1969] 74 ITR 190 (SC). " The Supreme Court further observed as follows (101 ITR at pages 785 and 786): " Having examined the true nature of an undivided family under the Hindu law and in view of the findings of the Tribunal and the High Court on the second aspect, two points emerge clear : firstly, that the appellant constituted a Hindu undivided family with his wife and unmarried daughter and, secondly, that Kathoke Lodge which was the appellant's separate property was thrown by him into the family hotch-pot. It remains now to consider whether the income of Kathoke Lodge must be assessed in the hands of the appellant as an individual or whether it can be assessed in his status as manager of the Hindu undivided family. " It will thus be seen that whereas in the case of N. V. Narendranath [1969] 74 ITR 190 (SC), the property was of the Hindu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the hands of the assessee. In this class of cases, the composition of the family is a matter of great relevance for, though a joint Hindu family may consist of a man, his wife and daughter, the mere existence of a wife and daughter will not justify the assessment of income from the joint family property in the status of the head as a manager of the joint family. The appellant's case falls within the rule in Kalyanji's case [1937] 5 ITR 90 (PC), since the property, before it came into his hands, was not impressed with the character of joint family property. It is of great relevance that he has no son and his joint family consists, for the time being, of himself, his wife and daughter. " Ultimately, the Supreme Court observed as follows (at page 795): " These two sets of tests, both evolved by the Privy Council, govern two distinct sets of cases and there is no inconsistency between the two tests. The test evolved in Kalyanji's case [1937] 5 ITR, 90 (PC), and not in Arunachalam's case [1958] 34 ITR (ED) 42 (PC) or Gowli Buddanna's case [1966] 60 ITR 293 (SC), has to be applied to the instant case. Kathoke Ledge was not any asset of a pre-existing joint family of which the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n born or adopted after alienation would have to take the family hotch-pot as he found it. In that view of the matter, the present case is governed by the case of Surjit Lal Chhabda [1975] 101 ITR 776 (SC) and not by the case of N. V. Narendranath [1969] 74 ITR 190 (SC). There is thus no escape from the position that the Tribunal was not correct in holding that the disputed property belonged to the Hindu undivided family consisting of the assessee, his wife and daughter. It could not be treated as a Hindu undivided family property. The income therefrom had to be treated as the individual income of the assessee. The question thus referred in Taxation Cases Nos. 170 and 171 of 1976 and the first question in the other two cases must, therefore, be answered in favour of the Revenue and against the assessee. In the view that we have taken of the aforesaid question, the second question referred to us has become academic and need not be answered. We therefore, refuse to answer the second question. Since the assessee is now dead, the references are answered without costs. Let a copy of this judgment be transmitted by the Assistant Registrar to the Income-tax Appellate Tribunal, Patna, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
