9911796707
TMI Blog1966 (7) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Officer made an assessment thereafter under section 19(3). That assessment was affirmed by the Deputy Commissioner in appeal, and, under section 55(2), as it then stood, the assessee applied to the Commissioner for a reference to this court of the questions of law arising out of the order made by the Deputy Commissioner, and the Commissioner made a reference accordingly. But, by an order of this court made on July 15, 1963, the Commissioner was directed to make a proper reference, and in obedience to that order we have now before us a statement of the case prepared by the Commissioner. It appears from the statement of the case that, in the year 1956, there was a partition between the assessee, his wife, Indirabai, and his son, and that at that partition there was an allotment of a property to the wife. The assessee who was assessed as an individual contended that the income of that property should be excluded from his income. But the Agricultural Income-tax Officer and the Deputy Commissioner were of the view that the allotment of the property to the wife was a transfer otherwise than for adequate consideration or in connection with an agreement to live apart within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons, and that, since the assessee and his wife lived together without there being any separation between them, it was not difficult to conclude that there was a transfer of the property by the husband to the wife without there being any intention of the income being enjoyed separately. In taking the view that Indirabai was not entitled to a share at the partition between her husband and her son, the Commissioner made an incorrect assumption. The family which made a partition in the year 1956 was governed by the Bombay Mitakshara School of Hindu law, and, as pointed out by the Full Bench of the High Court of Bombay in Parappa Ningappa Khaded v. Mallappa Kallappa, one of the basic principles of that school of Hindu law is that, at a partition between her husband and sons, the wife is entitled to a share equal to that of her son. Chagla C.J. said this in that context : " Although it may be true that a Hindu wife has no interest in joint family property and she has no right to challenge the alienation, it is equally true that on a partition between her husband and her sons she is entitled to a share equal to that of her son. It is the basic principle of Hindu law that a Hindu w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that of her son. So, even in a case where a wife is allotted a share at a partition between her husband and her sons, such allotment results in a transformation of the initial title to the totality of the property into separate titles of the individuals between whom the partition is made within the meaning of the decision in Sarin v. Ajit Kumar. That being the true position, it could not be said that there was any transfer of any property to Indirabai on the occasion of the partition between her husband and her son. Moreover, a case falls within section 11(2)(a)(iii) of the Act only when an asset is transferred by the husband to his wife and such transfer is made for no adequate consideration and without there being an agreement to live a part. There could be no such transfer by the husband to the wife when at a partition, to which the husband, the wife and the son are parties, a property is allotted to the wife. The transaction which results in such allotment is one to which the son is also a party and it could not, therefore, be right to think that that transaction involves any transfer of any property by the husband to the wife. The discussion made so far demonstrates that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 11(2)(a)(iii) of the Act, the only question which can arise and which indeed has been referred to us, is, whether the property allotted to the wife could be said to have been transferred by the husband to her within the meaning of section 11(2)(a)(iii). No other question such as the one suggested by Mr. Government Pleader can properly arise or be answered. So we should answer the first question in favour of the assessee. The second question consists of two parts. The first part concerns itself with the legality of the notice issued under section 18(2) of the Act on July 15, 1958. That sub-section provides that in the case to which it refers the Agricultural Income-tax Officer may serve, in the relevant financial year, a notice requiring the production of a return. It reads : " In the case of any person whose total agricultural income is, in the opinion of the Agricultural Income-tax Officer, of such amount as to render such person liable to payment of agricultural income-tax for any financial year, he may serve in that year a notice in the prescribed form requiring such person to furnish within such period not being less than thirty days as may be specified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second question is somewhat awkwardly worded. It asks us to decide whether the assessment " based " on the notice, which was issued late, is liable to be quashed. It was suggested that if the notice, as decided by us, is an illegal notice, since it was not issued within the time allowed, the assessment made consequent on the issue of such notice must necessarily be pronounced illegal. The question is whether we should say so. Although the notice was issued beyond the relevant financial year, the assessee, nevertheless, produced a return. On the production of that return, the Income-tax Officer proceeded to make an assessment under section 19(3) of the Act. Mr. Narayana Rao, the Government Pleader, urged that the production of the return by the assessee was made under section 18(3), and that if the assessment was based upon the production of the return made in that way, the assessment could not be called in question notwithstanding the delay in issuing the notice under section 18(2). He depended upon section 18(1) which imposes a statutory duty upon every person, upon whose total agricultural income during the previous year agricultural income-tax is charged, to produce a return b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed by or under sub-section (1) or sub-section (2), or, having furnished a return under any of those sub-sections discovers any omission or wrong statement therein, he may furnish a return or a revised return, as the case may be, at any time before the assessment is made. " Section 19 prescribes the procedure for the assessment of income. Sub-section (1) provides for an assessment on the basis of a return which the Income-tax Officer accepts. Sub-section (2) empowers the Agricultural Income-tax Officer, if he is not satisfied that the return is complete or correct, to require the assessee to produce evidence in support of the return. Sub-section (3) reads : " 19. (3) On the day specified in the notice under sub-section (2) or as soon afterwards as may be, the Agricultural Income-tax Officer, after considering such evidence as such person may produce and such other evidence as that officer may require on specified points, shall, by an order in writing, assess the total agricultural income of the assessee and determine the sum payable by him on the basis of such assessment. " It is undisputed that the assessment which is called in question in the matter before us is an asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18(1). Under section 18(3), a return could be produced at any time before the assessment, even after the time allowed by the notice under section 18(2) has expired. So, an assessee, in whose case no assessment has yet been made, has the option to produce his return, whether or not a notice under section 18(2) has been served, and even if that notice was served after the expiry of the relevant financial year. If he desists from doing so, he invites a best judgment assessment under section 19(4), the provisions of which are not similar to the corresponding provisions of the Indian Income-tax Act, 1922. But, if he does produce a return and even if the production is preceded by a late notice under section 18(2) which could have been ignored, the return has the status of one produced under section 18(3). The act of production, whatever might have prompted it, is what confers that status. The Income-tax Officer had thus the competence to make an assessment under section 19(3). So, the impugned assessment would be entirely above reproach. But we were asked to say that the form of the question referred to us precludes our taking that view and that what that question asks us to decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... infuses the assessment with efficacy and legality is the voluntary production of the return by the assessee under section 18(3) and the observance of the procedure prescribed by section 19. In that view of the matter, our answer to the second part of the second question should be in favour of the Commissioner and against the assessee. So, our answer to the first question is that the allotment of the lands to Smt. Indirabai, the wife of the assessee, at the time of the partition of the properties between the assessee and his son, does not amount to a transfer of an asset directly or indirectly within the meaning of section 11(2)(a)(iii) of the Act. Our answer to the second question is that the notice served on the assessee on July 31, 1958, under section 18(2) is an illegal notice, but that the assessment made under section 19(3) after the issue of such notice is not liable to be quashed on the ground that the notice issued under section 18(2) is an illegal notice. We should however make it clear, although it is not really necessary for us to do so, that by reason of our answer to the first question the income of the property allotted to Smt. Indirabai cannot be assessed as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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