1968 (10) TMI 2 - HC - Income Tax

Summary

Issues:
1. Whether the entire income from a business belongs to the assessee or part of it belongs to a separate trust.
2. Validity of an order passed by the Income-tax Appellate Tribunal dated July 8, 1958, under the signatures of four members.

Analysis:
The case involved six assessment years, with the question arising whether the assessee was liable for the entire income from a business named Radha Vilas Karyalaya or if part of it belonged to a separate trust named Sri Ram-Lakshman-Janki. The Income-tax Officer, the Appellate Assistant Commissioner, and the Income-tax Appellate Tribunal upheld that the assessee was liable for the whole income. The Tribunal referred two questions of law to the High Court, including the validity of the order passed by the Tribunal dated July 8, 1958, under the signatures of four members.

Regarding the second issue, the Tribunal's judgment was signed by four members, with the contention that four members could not constitute a Bench. The Tribunal explained that a special Bench was constituted due to the President's oversight, with all members signing the order. The High Court addressed a preliminary objection that the question referred did not arise under the Income-tax Act, emphasizing that if the Tribunal's judgment was invalid due to the Bench's defect, it would vitiate the judgment. The High Court overruled the objection, holding that the question referred did arise from the Tribunal's judgment.

The High Court analyzed the provisions of the Income-tax Act related to the constitution of Benches of the Appellate Tribunal. It highlighted that a Bench should consist of one judicial member and one accountant member, with provisions for special Benches. The Court concluded that the disposal of appeals by a Bench of four members was not authorized by the statute, rendering the order passed by the Tribunal with four members invalid. The Court emphasized that the appeals needed to be reheard by a properly constituted Bench.

In conclusion, the High Court did not answer question No. 1 due to the need for rehearing the appeals. The answer to question No. 2 was in the negative, declaring the order passed by the Tribunal with four members as invalid. The applicant was awarded costs for the reference.