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TMI Blog1955 (12) TMI 38X X X X Extracts X X X X X X X X Extracts X X X X ..... wder businesses. 3. For the first time in 1940-41 assessment year, the Income-tax Officer issued notices under section 22(2) of the Indian Income-tax Act to Naganatha Iyer as proprietor of the rice mill. The assessment on the family was made for this assessment on a return of income which was made by Naganatha Iyer himself and not by Narayanaswamy Iyer, the father, the return having been signed by Naganatha Iyer describing himself as the family manager. This was repeated in the family return for 1941-42 assessment year also. Naganatha Iyer is the eldest son. It is not denied that he was in charge of the family business of rice and flour mills, firewood depot, etc. 4. During the assessment year 1942-43, Naganatha Iyer filed two returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld the Income-tax Officer's action in this respect. 5. On appeal before the Tribunal, it was contended for the assessee that the order of the Income-tax Officer was at variance with his orders in the prior years, that the affidavit of the other two family members filed before the Appellate Assistant Commissioner disclaiming interest in the partnership concern should not have been disbelieved, that the entries in the account books were made under a bona fide mistake and therefore the income from Andhra Trading Company should have been treated as belonging to Naganatha Iyer and ought to have been excluded from the family assessment. 6. The Tribunal was of the view that in income-tax proceedings there was no question of estoppel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the family's books, corresponding adjustments were made by debiting a sum of ₹ 9,606 in the folio standing in the firm's name and crediting the corresponding amount to the capital account; (vi) the explanation that the aforesaid entries were made by mistake was not accepted for the reason that it was improbable that the same mistake would have been committed by the clerks of both the assessee family and of the firm of Andhra Trading Company and the entries were therefore deliberate and purposeful; and (vii) that Naganatha Iyer's drawings, during his alleged partnership in the Andhra Trading Company were insignificant and his only substantial drawings were to liquidate the debts due by the family for the fuel tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er challenges the conclusions of the Tribunal. The departmental representative agrees to the statement of the case as drawn up. T. V. Viswanatha Ayyar and S. Narayanaswami, for the assessee C. S. Rama Rao Sahib, for the Commissioner JUDGMENT The Order of the Court was pronounced by RAJAGOPALAN, J.-- The question that was referred to this Court on an application under section 66(2) of the Act was whether on the facts and in the circumstances of the case, there is material on record to justify the finding of the Appellate Tribunal that the joint family was a partner in the Andhra Trading Co., and not Naganatha Iyer in his individual capacity. The assessee was a Hindu undivided family, which consisted of Narayana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it was the joint family that was the partner. Learned counsel for the petitioner contended that the appreciation of the evidence on record by the Tribunal was vitiated as the Tribunal had misdirected itself even on questions of fact. In paragraph 6 of its appellate order the Tribunal recorded: (i) In the accounts of the Andhra Trading Co. there are no transactions in the name of K.S. Narayanaswami Iyer and they are all entered in the name of Naganatha Iyer; (ii) again Naganatha Iyer's drawings during his partnership in this firm were insignificant and his only substantial drawings were to liquidate the debts due by the family for the fuel taken. Neither of these statements was factually correct. Annexure B to the statement of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny in the year in question accrued to the joint family, was what was recorded in paragraph 6(v), that a sum of ₹ 9,606 due from the family on its dealings with the company was paid by adjustment. The books of the company showed that the family was credited with this sum and Naganatha was debited with it. In paragraph 6(vi) the Tribunal observed that the explanation furnished by the assessee was unacceptable. Even had the whole sum of ₹ 9,606 been utilised by Naganatha to pay off a debt due by the family to the company, such a transaction would not prove that the money all along belonged to the family and not to Naganatha in his individual capacity. Even that assumption, that the entire amount was paid by Naganatha may not be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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