1969 (8) TMI 12 - HC - Income Tax

Whether the assessment in the name of the Hindu undivided family is bad in law - question referred to the court is answered in the negative, and against the assessee

Summary

Issues:
1. Assessment of income from undisclosed sources for the assessment year 1944-45.
2. Validity of assessment in the name of the Hindu undivided family post-partition.
3. Interpretation of sub-section (2) of section 25A of the Indian Income-tax Act, 1922.

Analysis:
1. The judgment addressed the issue of assessing income from undisclosed sources for the assessment year 1944-45. The Income-tax Officer included two cash-credits in the assessment for that year, which were later found to be relevant to the assessment year 1943-44. The Tribunal corrected the assessment for 1944-45, but the Income-tax Officer issued a notice for the assessment year 1943-44. The Appellate Tribunal upheld the assessment for 1943-44, leading to a legal challenge by the assessee on various grounds, including the partition of the joint Hindu family.

2. The main contention revolved around the validity of the assessment in the name of the Hindu undivided family post-partition. The Appellate Assistant Commissioner recognized the partition of the family, but the assessment order by the Income-tax Officer was issued before this recognition. The debate centered on the applicability of sub-section (2) of section 25A of the Act, which deals with assessment after the partition of a Hindu undivided family. The tribunal acknowledged the timing discrepancy but highlighted that even under sub-section (2) of section 25A, assessment of the total income received by the joint family was permissible.

3. The interpretation of sub-section (2) of section 25A was crucial in determining the assessment's validity. The assessee argued that the assessment should have been conducted following the procedure outlined in this section, emphasizing the timing of the partition recognition. However, the court referred to precedents from various High Courts, indicating that even after the partition of a joint family, assessment on the erstwhile undivided Hindu family was permissible under section 25A(1) of the Act. The court clarified that the question of apportionment among family members did not arise in the present reference, ultimately ruling against the assessee and affirming the validity of the assessment in the name of the Hindu undivided family.

In conclusion, the judgment addressed the assessment of income from undisclosed sources, the validity of assessment post-partition, and the interpretation of section 25A of the Income-tax Act, ultimately ruling in favor of upholding the assessment in the name of the Hindu undivided family.