1978 (2) TMI 116 - AT - Income Tax

Summary

Issues:
1. Inclusion of share-income from M/s. Deonarain Jagadishlal in the total income of the assessee assessed as an individual.
2. Validity of the return filed in the status of H.U.F.
3. Competency of the appeal before the Appellate Asst. Commissioner.

Analysis:
1. The appeal was filed against the inclusion of share-income from M/s. Deonarain Jagadishlal in the individual income assessment. The assessee initially filed a return as an individual showing income from two firms but later revised it to show income from only one firm as an individual and the other under H.U.F. status. The Income Tax Officer included the share income from Deonarain Jagadishlal in the individual assessment, despite the funds coming from the H.U.F. The Appellate Asst. Commissioner upheld this decision citing the invalidity of the H.U.F. return. However, the Tribunal found that the income earned with H.U.F. funds belonged to the H.U.F., directing exclusion of H.U.F. income from the assessment.

2. The Income Tax Officer argued that the return filed in the status of H.U.F. was invalid, leading to the inclusion of H.U.F. income in the individual assessment. The Tribunal, however, held that even if the H.U.F. return was invalid, it did not justify taxing the income shown in that return as the individual's income. The Appellate Asst. Commissioner's decision based on the invalidity of the H.U.F. return was deemed unjustified by the Tribunal.

3. The Departmental representative contended that the appeal before the Appellate Asst. Commissioner was incompetent as the assessee did not specifically challenge the clubbing of income. However, the Tribunal found the assessee was aggrieved by the inclusion of H.U.F. income in the individual assessment, a ground that was not considered by the Appellate Asst. Commissioner. The Tribunal concluded that the authorities were not justified in clubbing the income of the H.U.F. with the individual income, as the H.U.F. is a separate entity under the Income-tax Act, allowing the appeal and directing the exclusion of H.U.F. income from the assessment.