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TMI Blog1967 (12) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 1941-42 on December 5, 1942. In T. C. No. 11 of 1964, a notice under section 22(2) was issued on November 22, 1949, in respect of the assessment year 1949-50 and the assessee returned a loss of Rs. 1,310 and for the subsequent year an income of Rs. 238 in response to a similar notice issued on March 27, 1951. The assessee furnished voluntary returns for the subsequent years on July 24, 1953, declaring his respective incomes for the years 1951-52, 1952-53 and 1953-54. For all such years commencing from 1950-51 and ending with 1953-54 the accounts were examined, income determined and the tax was demanded as per law. For all these years, for failure to pay advance tax under section 18A, the applicant was required to show cause why penalty should not be imposed. In T.C. No. 12 of 1964, the assessee filed voluntary returns for the years 1942-43 to 1948-49 and stated that he incurred losses and therefore there was no assessment. On a notice being issued under section 22(2) for the assessment year 1949-50, the assessee returned a loss of Rs. 1,920 and for the subsequent year he showed a net income of Rs. 481 in response to a similar notice issued under section 22(2). Similarly for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax over the income which is exigible by a Hindu joint family at a time when a division takes place amongst the members of the coparcenary by metes and bounds. When such a division is effectuated, it is obligatory that any one of its members brings such an event to the notice of the Income-tax Officer concerned, who shall satisfy himself both objectively and subjectively about the factum of such a disruption in the family. On such an ascertainment by the Income-tax Officer, he has to record a finding to that effect under section 25A(1) of the Act. Such a finding leads on to the ascertainment and reckoning of the quantum of tax over the income of the family. As already seen, the united family, no doubt, is no longer in existence. Here the law imports a fiction. The fiction consists in treating the family as if it is joint, to reckon the income thereat and to quantify it. After such quantification, by another legal fiction the ban imposed under section 14(1) of the Act is partially removed. It is a partial screening of the interdict adumbrated in section 14(1), because section 25A(2) enables the Income-tax Officer to treat the family as if joint for a certain purpose and upto a certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings against such separated members in accordance with the provisions of section 23. Even if a fresh assessment proceeding was started, it would not result in any variation or modification of the tax liability already determined as aforesaid. The other class separated members would consist of persons or groups, who have a separate income also apart a from share in the income of the Hindu undivided family. In the case of such members or groups of members proceedings under section 23 will necessarily have to be initiated to bring to tax their separate income. These proceedigs may either have concluded or be pending or my yet have to be taken. Once these proceedings have terminated, and their separate tax liability determined, all that would remain to be done would be to add to the tax liability thus determined, the share of the tax liability of the family for which this class of members would be liable according to their share at the partition and to arrive at the total tax liability that will have to be realised from them by issue of notice under section 29. In the case of this class of members also, it will serve no useful purpose at all if a fresh assessment proceeding under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the divided coparcenary in a Hindu undivided family is not a liability arising from the income earned by him for the assessment year in question, but on the income earned by the joint family as such, prior to its disruption. It is convenient at this stage to consider the import of section 18A of the Act. Section 18A(1) enables an Income-tax Officer by order in writing to call upon an assessee to pay in quarterly installments an amount equal to one quarter of the income-tax and super-tax payable on so much of such income as is included in his total income of the latest previous year in respect of which he has been assessed, if that total income exceeded the maximum amount not chargeable to tax in his case by two thousand five hundred rupees. This provision obligates the Income-tax Officer to act and call upon a person already assessed his income to pay advance tax as provided for above. No doubt, the assessee, on receipt of such an order, may make representations under section 18A(2) that his income is not as estimated by the Income-tax Officer and he may voluntarily assess his own income and estimate the same and pay such amount as accords with his estimate in equal installments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the provisions of the Act has to be rejected. Even so, it appears to us to be plain that the expression in section 18A (3) that "any person who has hitherto been assessed" should only refer, in the context of events, to a person who has been assessed as such on "his total income". It cannot be said that in the instant case the applicant was assessed in that sense when proceedings were initiated, and completed under section 25A(2) of the Act. Such compartmentalisation of the two distinct assessments under section 25A(2) and under the other provisions of the Act, such as section 23 et seq if borne in mind, leads to the one and only conclusion that the applicant cannot be deemed to be a person who has been hitherto assessed within the meaning of section 18A(3) of the Act. We shall now consider the precedents cited by the learned counsel for the applicants and of the revenue. Mr. Swaminathan contends that the proceedings initiated under section 25A(1) followed up by the quantification of the tax liability of the coparcener, tantamounts to an " assessment " of the individual and therefore, there is no obligation cast upon the applicant in each of these cases whose exigibility to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aliquoted share of tax. We fail to see how any assistance could be drawn from this decision in the instant case to find that the divided coparcener, as the applicants are, could be treated in pari materia with the legal representative of a deceased assessee liable to tax under section 24B of the Act. Mr. Balasubrahmanyan learned counsel for the revenue, drew our attention to several decided cases, a few of which throw considerable light on the subject under discussion. He referred to C. A. Abraham v. Income-tax Officer, Kottayam to support his view that it is only section 23 which deals with assessment as if it is computation of income but the other sections in Chapter IV of the Act deal with determination of liability and machinery for imposing such liability and the procedure in that behalf. According to him, and indeed rightly, section 25 is one such section. Following up his argument, he referred to us the following passage in Sundar Singh Majithia v. Commissioner of Income-tax. : " Section 25A provides that if it be found that the family property has been partitioned in definite portions, assessment may be made notwithstanding section 14(1), on each individual or group in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respectfully apply this ratio and find that the petitioner is not a person, and cannot be deemed to be one, who has already been assessed within the meaning of section 18A(3). The next contention of the learned counsel for the applicants is that in T.C. No. 11 of 1964 a notice under section 34 of the Act in respect of the year 1942-43, had been served on the assessee on March 27, 1952, and that the Income-tax Officer had closed the file saying " no action ", after looking into the books of account and that the therefore an " assessment " was made within the meaning of the Act and hence the penalty provision under section 18A cannot be pressed into service for the entire period and in any event for the period 1953-54. Reiance is placed upon V. S. Sivalingam Chettiar v. Commissioner of Income-tax. In that case one of us speaking for the Bench, held the view that a note " N. A." (no action) of the Income-tax Officer is an order which is covered by section 23(3) of the Act. The applicant in this case also secured a similar order on March 27, 1952. Therefore it would be anomalous to treat the applicant as a " person not hitherto assessed " for the assessment year 1953-54. Learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. C. No. 11 of 1964 is that, since the section 34 proceedings relate to the assessment year 1942-43 and he had been called upon to file the returns of income and produce books of account ever since 1942-43, he had a reasonable cause is not filing his voluntary estimate of his income under section 18A(3) and pay the advance tax thereon for the years commencing from 1950-51. The case of the petioners in T.C. No. 12 of 1964 is that in respect of the year 1949-50, notice under section 23(2) has been served in February, 1950, for compliance on March 3, 1950, and that on that date the books of account were looked into and assessment made later in 1953 and for this reason he had a justifiable reason not to act as per the requirements of section 18A(3) for the years commencing from 1950-51. The revenue no doubt concedes that such were the representations made by the respective applicants. The point for determination is whether the authorities including the Tribunal adverted themselves to the material contention of the applicants that there was reasonable cause for the inaction under section 18A(3). As already stated, a specific finding one way or the other is not found in the order of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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