1961 (4) TMI 119 - HC - Income Tax

Summary

Issues Involved:
1. Validity of service of notice under section 34 of the Income-tax Act.
2. Legality and validity of the return filed by a minor acting as karta of a Hindu undivided family (HUF).
3. Validity of representation of the HUF by a minor during assessment proceedings.

Detailed Analysis:

1. Validity of Service of Notice:
The primary issue was whether the service of notice on Udai Narayan, who was a minor at the time, was valid under section 63 of the Income-tax Act. The court noted that the term "adult" used in section 63(2) of the Income-tax Act should not be interpreted strictly according to the Indian Majority Act, 1875, which defines majority as 18 or 21 years under certain circumstances. Instead, the term "adult" should be understood as a person who has attained the age of discretion. The court referenced previous judgments indicating that the age of discretion in India is typically considered to be 16 years for males. Given that Udai Narayan was 17 years and 7 months old at the time of service, and he managed the family's affairs, the court concluded that he had sufficient discretion to be considered an adult for the purposes of receiving the notice. Therefore, the service of notice was deemed valid.

2. Legality and Validity of the Return Filed by a Minor:
The second issue was whether the return filed by Udai Narayan, a minor, acting as the karta of the HUF, was legal and valid. The court acknowledged that while Udai Narayan may not have been legally entitled to act as the karta under the Indian Majority Act, the return he filed could still be considered valid. Given that there was no other male member of the HUF who had attained majority and that Udai Narayan was effectively managing the family's affairs, the court held that the return filed by him was legal and valid. The court emphasized that the income-tax department could not be expected to halt proceedings merely because the karta was a minor, especially when the minor was in control and management of the family's income.

3. Validity of Representation by a Minor:
The third issue was whether Udai Narayan could validly represent the HUF during the assessment proceedings. The court found it unnecessary to directly address this issue because the return filed by Udai Narayan was already deemed valid. Since the return was valid, the subsequent assessment proceedings based on that return were also valid. The court noted that the income-tax authorities rightly proceeded with the assessment, treating Udai Narayan as the person in control and management of the family's income, thereby making the representation valid by default.

Conclusion:
The court answered all questions in favor of the department and against the assessee. The notice served on Udai Narayan was valid, the return filed by him was legal and valid, and the representation of the HUF by him during the assessment proceedings was implicitly valid. The assessee was directed to pay the costs of the reference to the department, fixed at Rs. 150 in each case.