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TMI Blog1986 (8) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... anies Act. A certificate of incorporation was issued on September 20, 1968. It was the case of the assessee that under section 575 of the Companies Act, the immovable properties owned by Champabati and the other co-owners automatically vested in it on incorporation and the assessee claimed the said properties as its own. The assessee was assessed to income-tax in the assessment year 1970-71, the accounting period ending on September 30, 1969. In its return, the assessee claimed ownership of the said properties and offered the income arising out of the said properties for being taxed. The Income-tax Officer obtained the opinion of the Government Solicitor and came to the conclusion that in the absence of a deed of conveyance, the assessee cannot be held to be the owner of the said properties as they still stood in the name of Champabati. The Income-tax Officer, however, held that as the assessee had filed its return showing income from the said properties, as a protective measure, the same would be treated as income of the assessee. It was observed by the Income-tax Officer that actually the income accruing from the said properties ought to be assessed in the hands of Champabati in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ties was being reserved. The assessee, it was held, was not prejudiced in any manner by the said assessment. The Tribunal noted that no assessment had been made on anybody else in respect of the income from the said properties which had been assessed in the hands of the assessee. The Tribunal recorded that in spite of the observations in the order of assessment, no further assessment might be made at all on any other person and if such an assessment was made, the other person might have a right of appeal. The decision of the Appellate Assistant Commissioner in respect of the ownership of the said properties was held to be academic in nature. The Tribunal vacated the findings of the Appellate Assistant Commissioner holding that all his observations and findings should be treated as non est. The appeal of the Revenue was allowed. On an application of the assessee under section 256(1) of the Income-tax Act, 1961, the following question was referred, as a question of law arising out of the order of the Tribunal, for the opinion of this court : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Appellate Assistant Commissioner was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t-matter of an assessment were in the process of partition in a partition suit. There was a consent decree declaring the shares of the plaintiff and the defendant in the properties and a commissioner for partition was appointed. An order was also passed in the suit directing the plaintiff and the defendant to collect rents jointly as managers. The Income-tax Officer in making the assessment proceeded to tax the assessee, one of the parties to the suit, directly in respect of his share of income derivable from the properties under section 9 of the Indian Income-tax Act, 1922, and did not make any assessment in the first instance on the joint managers for the purpose of arriving at the quantum of income assessable in respect of the property. Questions were referred to this court whether, in the circumstances, the joint managers came within the purview of section 41 of the Act of 1922 and whether the Income-tax Officer had acted legally in assessing the assessee in respect of his share of the property. It was held by a Division Bench of this court that the assessee and the other party were not managers appointed by the court within the meaning of section 41 of the Act of 1922 and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing the objections. The proceedings against the other person may also continue and be concluded but until the proceeding against one has been finally determined, no assessment order should be passed. A final determination had, however, to be made in one of the proceedings. (d) Smt. Hemlata Agarwal v. CIT [1967] 64 ITR 428 (All). Here, house was purchased in the name of the assessee who was the wife of member of a Hindu undivided family. The assessee contended that the wife had paid the consideration for the purchase partly out of money borrowed from the family and the balance from sale of her jewellery. The case of the sale of the jewellery was not accepted and the amount stated to be the sale proceeds of the jewellery was sought to be taxed in the hands of the Hindu undivided family. The assessment made on the Hindu undivided family was set aside on appeal on the ground that the family had been disrupted and no further assessment could be made on it. The Revenue thereafter sought to assess the said amount in the hands of the husband of the assessee stating that the said amount could not be the income of the wife as she had no business and had no source of income. Immediately ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income-tax authorities to make protective assessment. (f) Smt. Daya Bai v. CIT [1985] 154 ITR 248 (MP). The facts of this case were that income arising out of a matinee show business was assessed in the hands of a firm, the Income-tax Officer holding that an individual who had shown the same income in the latter's return was only a name-lender. The Income-tax Officer also made a protective assessment of the same income in the hands of the individual. The Appellate Assistant Commissioner and the Tribunal upheld both the orders of assessment. On a reference, it was held by a Division Bench of the Madhya Pradesh High Court that the same income could not be assessed twice in law. It was held further that the Tribunal was not justified in confirming the protective assessment made on the individual. The learned advocate for the Revenue contended, on the other hand, that, in the instant case, the only grievance of the assessee was that his assessment was a protective assessment and not a final assessment. The learned advocate emphasised that the assessee did not deny his liability to pay the tax on the income arising from the properties. In fact, the assessee offered the said income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te Assistant Commissioner against such order- . ...... (c) an order against the assessee where the assessee denies his liability to be assessed under this Act or any order of assessment under sub-section (3) of section 143 or section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed." It appears to us that in view of the clear finding of the Income-tax Officer that the properties in dispute did not belong to the assessee, the assessee was entitled to object to the assessment on the ground that it was not taxable in respect of the said income. The assessee could object both to the amount of income assessed and to the amount of tax determined. It is not clear to us whether the assessee had impugned the order of the Income-tax Officer on that ground inasmuch as the grounds of appeal before the Appellate Assistant Commissioner cannot be found from the records before us. Be that as it may, we find that it was open to the assessee to file an appeal on this ground. If there was a determination in respect of the title of the assessee by the revenue authoritie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal from the assessment. There is nothing in the order of the Tribunal in the instant case to show that the order of assessment made on the assessee has become or was being treated as substantive. On the other hand, the Tribunal considered the possibility that there might be a further assessment in the hands of somebody else and, if so, the other person might have a grievance which he could agitate in an appeal under section 246(c). For the reasons as aforesaid, we are unable to accept the decision of the Tribunal as correct. We answer the question referred in the negative and in favour of the assessee. We remand the matter to the Tribunal with a direction that the Tribunal should go into the question of title and determine the same. The Tribunal will also consider whether in view of the fact that no other assessment in respect of the same income has been made on any other person, the assessment made by the Income-tax Officer has become a substantive assessment. The Tribunal will take note of the submission of the assessee made before us at the hearing that in the subsequent years, the assessee had been treated as the owner of the said properties and had been assessed to tax acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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