1967 (3) TMI 20 - SC - Income Tax

Whether after partition of the family an order of assessment could be made by the Income-tax Officer? Held that - The statement of the case by the Tribunal is incomplete in that the Tribunal has not set out its conclusion on a material issue of fact. We are also of the opinion that the question referred by the Tribunal should be refrained as follows Whether in the circumstances of the case, the assessment was validly made on the assessee in the status of a Hindu undivided family ? The judgment of the High Court is set aside and the case is remanded to the High Court. Appeal allowed by way of remand.

Summary

Issues:
1. Assessment of income from undisclosed sources based on capital introduced into the business.
2. Validity of assessment on a Hindu undivided family after partition.
3. Interpretation of provisions under section 25A of the Income-tax Act.
4. Reframing of questions referred by the Tribunal for High Court's consideration.

Analysis:

1. The judgment addressed the issue of assessing income from undisclosed sources based on the capital introduced into the business by a Hindu undivided family. The assessee had claimed that the assets were brought during migration from Lahore, while the Income-tax Officer treated the balance of capital as income from undisclosed sources. The Appellate Assistant Commissioner estimated the assets brought from Lahore and directed assessment of the remaining amount as undisclosed income. The Tribunal upheld this decision without determining if there was a disruption of the joint status of the family, stating that partition issues should be raised under section 25A.

2. The judgment also delved into the validity of assessing a Hindu undivided family after partition. The High Court observed that the family had filed returns in its name, indicating the absence of an order under section 25A(1) and justified the assessment on the family. The High Court rejected the contention that assessment was improper due to the alleged partition, citing a previous judgment. However, the Court noted errors in the proceedings and ordered a supplementary statement of the case for further clarification.

3. The interpretation of provisions under section 25A of the Income-tax Act was crucial in determining the assessment validity. The Tribunal had not conclusively addressed the question of whether there was an actual partition of the joint family. The High Court considered the meaning of "assessed" in section 25A(1) and (3) and concluded that assessment could proceed without an order under section 25A(1) in certain circumstances. The Court referred to a previous case but acknowledged the need for a more detailed statement of the case.

4. The judgment highlighted the need to reframe the questions referred by the Tribunal for the High Court's consideration. The Court found deficiencies in the questions submitted and suggested a more precise formulation. The Court set aside the High Court's decision, remanding the case for further clarification through supplementary statements of the case. The Court emphasized the importance of addressing all legal issues thoroughly before making a final determination, ensuring a fair and accurate assessment process.