1975 (7) TMI 59 - HC - Income Tax

Summary

Issues:
1. Ownership of the suit property
2. Assessment of tax on the Hindu undivided family
3. Nature of business and liability for tax
4. Bar under Income-tax Act and Excess Profits Tax Act
5. Notice under section 80, Code of Civil Procedure
6. Limitation period for the suit
7. Maintainability of the suit
8. Entitlement to injunction relief
9. Relief entitled to the parties

The judgment pertains to a case where the appellant, one of the sons of Tej Singh, contested the tax recovery proceedings against the joint family property. The key issues revolved around the ownership of the property, assessment of tax on the Hindu undivided family, the nature of business, legal bars under the Income-tax Act and Excess Profits Tax Act, notice requirements under section 80 of the Code of Civil Procedure, limitation period, maintainability of the suit, entitlement to an injunction, and the relief sought by the parties.

The court noted that the property in question was joint family property and the tax assessment was on the Hindu undivided family, not on Tej Singh personally. The assessment had become final and could not be challenged further. The appellant sought relief through an injunction to prevent tax recovery from the property. However, the court held that since the assessment was on the joint family, the property was liable for tax recovery, regardless of Tej Singh's death in 1965. The absence of a partition post-assessment strengthened the joint family's liability for tax dues.

The appellant argued that the tax liability, based on speculative business profits and estimates, was not binding due to the concept of avyavaharika debt in Hindu law. The court rejected this argument, clarifying that the liability was on the Hindu undivided family, not Tej Singh individually. Precedents from the Madras High Court and the Supreme Court supported the view that income tax dues were not considered avyavaharika debts under Hindu law.

The court dismissed the appeal, emphasizing that the joint family property was liable for tax dues, and the appellant was not entitled to an injunction. Technical points like limitation, notice compliance, and statutory bars were deemed unnecessary to address given the main findings. The appeal was dismissed with no order as to costs, considering the circumstances of the case.