1970 (7) TMI 22 - HC - Income Tax

Returns originally filed as individual were later file d as HUF Whether the statement made in the returns amounts to declaration of assessee s intention to impress the property with the character of family property - whether there was sufficient ancestral nucleus which formed the basis for the acquisition of the properties - whether the plaintiff is entitled to a share in the suit schedule properties as claimed by him

Issues Involved:
1. Sufficient ancestral nucleus for acquisition of properties.
2. Plaintiff's entitlement to a share in the suit schedule properties.
3. Character of joint family properties due to the first defendant's conduct.
4. Accretions to the estate of late Voleti Chenchuramaiah.

Detailed Analysis:

1. Sufficient Ancestral Nucleus for Acquisition of Properties:
The court examined whether there was a sufficient ancestral nucleus to form the basis for acquiring the properties listed in the schedules attached to the plaint in O.S. No. 26/56. The plaintiff argued that there was an ancestral nucleus at the time of partition in 1903, which his father used to start various businesses, ultimately acquiring the suit properties. However, the first defendant contended that he did not receive any significant share from the partition that could constitute an ancestral nucleus. The court found no evidence to support the existence of a substantial ancestral nucleus at the time of the first acquisition (the rice mill in 1914). The ancestral property available was minimal and sold off by 1908 to discharge debts, leaving no ancestral funds for subsequent acquisitions.

2. Plaintiff's Entitlement to a Share in the Suit Schedule Properties:
The plaintiff claimed a one-third share in the properties, arguing that they were acquired from the ancestral nucleus and income from his mother's properties. The court, however, found no evidence to support the claim that the ancestral nucleus contributed to the acquisition of the rice mill or other properties. The lower court's decree for partition of properties into six shares was modified, recognizing only the rice mill and item No. 2 of the A schedule as joint family properties, entitling the plaintiff to a one-third share in these specific properties.

3. Character of Joint Family Properties Due to the First Defendant's Conduct:
The court considered whether the first defendant, through his conduct, impressed the properties with the character of joint family properties. The plaintiff relied on income-tax returns filed by the first defendant for the years 1949-50 and 1950-51, which showed the status of the family as a Hindu undivided family. The court held that these declarations indicated the first defendant's intention to treat the rice mill as joint family property. It was noted that such declarations were not isolated instances but were repeated, showing a clear intention to abandon his separate rights and impress the property with the character of joint family property. Therefore, the rice mill and item No. 2 of the A schedule were deemed joint family properties.

4. Accretions to the Estate of Late Voleti Chenchuramaiah:
The third defendant claimed all suit properties, arguing they were acquired from the income of her mother's estate, which was managed by the first defendant. The court found no evidence to support this claim. The first defendant asserted that he did not use any income from his wife's estate for acquiring the suit properties. The third defendant did not provide any evidence or testify to substantiate her allegations. Consequently, the court concluded that the properties did not represent accretions to the estate of Voleti Chenchuramaiah.

Conclusion:
The court modified the lower court's decree, providing for the partition of the rice mill (item No. 1 of the B schedule) and item No. 2 of the A schedule into three equal shares, with the plaintiff entitled to one such share. The other suit properties were not considered joint family properties. The alienation of item No. 12 of the B schedule by the plaintiff was set aside, and the alienation of item No. 1 of the A schedule by the first defendant was allotted to his share. The appeals were allowed in part, and the parties were ordered to bear their own costs. Additional petitions were dismissed or allowed as per the specific orders.

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