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TMI Blog1974 (6) TMI 6X X X X Extracts X X X X X X X X Extracts X X X X ..... rried on business under the style of "Liladhar Hirachand" and also had acquired house property. The business was his individual business. The house property was also his self-acquired property. In respect of income from the said business and also the house property Liladhar was assessed to income-tax in the status of individual up to the assessment year 1943-44. From the assessment year 1944-45, Bhupatrai Hirachand, the assessee, was assessed as individual in respect of the income from the said two sources right up to the assessment year 1952-53. For the assessment year 1953-54, the business income as well as the property income had been clubbed together as before. But, on appeal preferred by the assessee against the order of the Income-tax Officer for the said year, the Appellate Assistant Commissioner held that under the Hindu Women's Rights to Property Act, 1937, the assessee's widowed mother had half share and so only the half share of the income should be assessed in the hands of the assessee. Thereafter, assessments were made for the assessment years 1954-55, 1955-56, 1956-57 and 1957-58, on the assessee in the status of individual including therein income from business and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-57 and 1957-58 held that section 34(1)(a) was applicable and that the correct status of the assessee should be that of Hindu undivided family and, therefore, upheld the said orders of the Income-tax Officer. The assessee preferred appeals to the Tribunal against these three orders. Here, it may be mentioned that for the assessment years 1953-54 and 1954-55, similar orders were made by the Income-tax Officers and in appeals by the Appellate Assistant Commissioner. Appeals were also preferred by the assessee to the Tribunal against the two orders of the Appellate Assistant Commissioner for the assessment years 1953-54 and 1954-55. By order dated June 17, 1961, the Appellate Assistant Commissioner upheld the orders of the Income-tax Officer dated July 11, 1959, for the assessment year 1958-59 mentioned hereinbefore and the assessee also preferred an appeal to the Tribunal against the said order of the Appellate Assistant Commissioner. Similarly, for the assessment years 1959-60 and 1960-61, the assessments were made by the Income-tax Officer on the assessee in the status of a Hindu undivided family on the entire income from the business and the property. These were regular assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 1955-56, 1956-57 and 1957-58, with reference to the provisions of section 34(1)(b) though the Income-tax Officer purported to initiate proceedings for these years under section 34(1)(a) of the Indian Income-tax Act, 1922 ? In respect of the assessment year 1958-59, the Tribunal has referred three questions of law for this court's consideration under section 66(1) of the Indian Income-tax Act, 1922. These three questions, which are identical with the first three questions referred for the assessment years 1955-56 to 1957-58 are the subject-matter of IT Reference No. 166 of 1963. For assessment years 1959-60 and 1960-61, the Tribunal, from its consolidated order dated February 21, 1963 (whereby it dismissed the assessee's appeal), has referred the following two questions of law, being the subject-mater of I. T. Reference No. 140 of 1963, to this court under section 66(1) of Indian Income-tax Act, 1922. "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the status of the assessee was that of a Hindu undivided family consisting of Sri Bhupatrai Hirachand and his widowed mother? (2) If the answer to question No. 1 is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich devolved on Bhupatrai from his father. That being so Bhupatrai was rightly assessed in the status of the karta of the Hindu undivided family. But the question does arise whether in computing the taxable income of the Hindu undivided family the income of the property to which Bhupatrai's mother is entitled under the aforementioned provision should be taken into consideration or not. This question will arise for decision only when the High Court goes into the questions which remain unanswered. But at this stage suffice it if we merely formulate the contentions advanced before us on that point without expressing any opinion of our own." The Supreme Court after recording the respective contentions of the parties remitted the cases. to this court for deciding all the remaining questions including the second part of the question, i.e., whether the widowed mother of Bhupatrai is a member of the Hindu undivided family of which Bhupatrai is a karta. Now I shall deal with the four questions of law as set out hereinbefore referred by the Tribunal. Question No,. (i) : In view of the judgment of the Supreme Court only a part of this question still remains to be answered and that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e seen if in the facts and circumstances of this case Bhupatrai's widowed mother is a member of the joint family. During the lifetime of Liladhar, who was governed by the Mitakshara school of Hindu law, the family consisted of himself, his wife and his minor son, the assessee. Thus, Liladhar with his wife and minor son constituted a Hindu joint family. Neither it is alleged nor the materials on record show that after Liladhar's death there was any disruption of the joint family. On the contrary, even after Liladhar's death the business and property left by him remained joint and Liladhar's son, the assessee, was assessed in respect of the entire income of the business and the property. All these, to our mind, go to show that after Liladhar's death the joint family continued. Further, until the contrary is proved, it is to be presumed that a Hindu family continues to be joint. In this connection reference may be made to Mulla's Principles of Hindu Law, 13th edition, at page 259, article 233, wherein it is stated that : "Generally speaking, I the normal state of every Hindu family is joint. Presumably every such family is joint in food, worship and estate. In the absence of proof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e entitled to the business and the house property along with the son under the Hindu Women's Rights to Property Act, 1937. The business and the house property being ancestral in the hands of the assessee, his son, after his birth, also got an interest therein. After Liladhar's death the family continued to be joint as already stated. From the facts found it appears that after Liladhar's death and during the relevant years the business and the property remained joint and were held by the assessee and his widowed mother as members of the joint family. On the material on record and in view of our answer to question No. (i), we hold that the income from the business and the house property should be assessed in the hands of the Hindu undivided family subject to this qualification that in respect of the income from house property only half share thereof should be so assessed in view of our answer to question No. (iii) stated hereinafter. Question No. (iii) : The answer to this question, in our opinion, is dependent on the interpretation of section 3(1) of the Hindu Women's Rights to Property Act, 1937. As Liladhar died some time in 1943, the Hindu Women's Rights to Property Act, 193 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... FCR 1 (FC). We do not think this case really helps Mr. Pal. It appears to us that when Varadachariar J. used the words "share" in connection with sub-section (2) of the Act, he means undefined share. The words "share" and "interest" may in some cases convey the same sense. But the meaning of these two words is to be ascertained with reference to the context in which they are used. In the context of sub-sections (1) and (2) where different situations are contemplated, these two words, in our view. do not convey the same meaning. We are unable to accept the contention of Mr. Pal that under sub-section (1) of section 3 of the Hindu Women's Rights to Property Act, 1937, the share of the widow is not definite or determined. From the language used in the two sub-sections it is quite clear that the nature of the "interest" or "share" in the property which a widow gets under the two sub-sections cannot be the same. Under sub-section (1) a widow becomes entitled to the "same share as a son", that is, both the son and the widow inherit in equal shares and, therefore, the shares are defined and determinate. Under sub-section (2) the widow is entitled to her husband's interest in the joint fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artition B dies there will be no fluctuation in the share of W. Her one-third share will remain static. But, as the property in the hands of A and B is ancestral and there is no partition, B's share or interest will go to A by survivorship. If there is a partition after B's death the respective shares of A and W will be 2/3 and 2/3. The above position was before the Hindu Succession Act, 1956. In the aforesaid view of the matter we are of the opinion that the share of the widow in the property left by Liladhar is defined and ascertained. In connection with this question reliance was placed by Mr. Pal on the cases of Commissioner of Income-tax v. Lakshmanan Cheitiar [1940] 8 ITR 545 (Mad), Arunachala Mudaliar v. Commissioner of Income-tax [1961] 41 ITR 432 (Mad), Biswa Ranjan Sarbadhikary v. Income-tax Officer [1963] 47 ITR 927 (Cal), Commissioner of Income-tax v. Smt. Bani Rami Rudra [1966] 59 ITR 216 (Cal) and Commissioner of Wealth-tax v. Gouri Shankar Bhar [1968] 68 ITR 345 (Cal). In Commissioner of Income-tax v. Lakshmanan Chettiar [1940] 8 ITR 545 (Mad) the widow obtained an interest in the ancestral property and as she was a member of the joint family the income was reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty under section 3(1) of the Hindu Women's Rights to Property Act, 1937, along with her son. It was held that the share of each of them in the income from house property inherited should be included in his or her total income, for the purpose of assessment to Income-tax under section 9(1) read with section 9(3) of the Indian Income-tax Act, 1922, though they may be members of an undivided family. In the case of Commissioner of Wealth-tax v. Gouri Shankar Bhar [1968] 68 ITR 345 (Cal), which is a case under the Wealth-tax Act, it was held that on the death of a Hindu governed by the Dayabhaga school of Hindu law his heirs do not spontaneously by operation of law become members of a Hindu joint family. They remain as co-owners with definite and ascertained shares in the property left by the deceased unless they voluntarily decide to live as a joint family. In our view the above cases do not support Mr. Pal's contention. On the contrary the cases decided under the Dayabhaga school of Hindu law support the contention of the assessee. In our view, as section 3(1) of the Hindu Women's Rights to Property Act applies to cases where a Hindu governed by the Dayabhaga school of Hindu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action could be justified under clause (b) of section 34(1) though it was purported to be taken under clause (a) of section, 34(1). Therefore, according to this decision, though action is purported to be taken by the Income-tax Officer under clause (a) of section 34(1) the same can be justified under clause (b) of that section if, in the facts and circumstances of the case, it appears that the conditions for taking action under clause (b) are fulfilled. Counsel for the assessee has strongly criticised this decision and submitted that while deciding the case the Division Bench has not properly appreciated the decision of the Supreme Court in Johri Lal v. Commissioner of Income-tax reported in [1973] 88 ITR 439 (SC). In the Supreme Court case the question for decision was whether, on the facts and circumstances of the case, the proceedings which were commenced under section 34(1)(b) could have been converted into proceedings under section 34(1)(a) by the Income-tax Appellate Tribunal. The material facts in that case were that for the assessment year in question the assessee was assessed without any objection. Thereafter, the Income-tax Officer issued a notice to it under section 34 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 34(1)(a). Consequently, he may or may not have recorded the reasons as required by this section nor do we know whether those reasons were submitted to the required authority and his sanction obtained on the basis of those reasons. This court also has ruled that the Commissioner or the Board of Revenue, while granting sanction, will have to examine the reasons given by the Income-tax Officer and come to an independent decision and the authority in question should not act mechanically. From the material on record there is no basis to hold that those requirements had been fulfilled. Possibly, they could not have been fulfilled because the Income-tax Officer proceeded only on the basis of section 34(1)(b) and not on the basis of section 34(1)(a). He himself had declined to proceed on the basis of section 34(1)(a) for whatever reason it may be. Therefore, it was not open to the Tribunal to justify the proceedings taken by the Income-tax Officer under section 34(1)(a). The Tribunal could not have initiated proceedings under section 34(1)(a). If the Tribunal converts the proceedings into one under section 34(1)(a) then the conditions prescribed in section 34(1)(a) cannot be satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer can be exercised by him, provided, however, the provisions laid down either in clause (a) or clause (b) of section 34(1) are fulfilled. Whether the necessary conditions have been satisfied or not, must necessarily depend on the facts and circumstances of each particular case. It was further argued by the counsel for the assessee that it was not open to the Tribunal to go into the question whether action taken under clause (a) of section 34(1) could be justified under clause (b) of that section, as the said question was beyond the scope of appeal. With regard to the scope of the Tribunal's power under section 33(4) of the Indian Income-tax Act, 1922, reliance was placed on the cases of Hukumchand Mills v. Commissioner of Income-tax reported in [1967] 63 ITR 232 (SC) and J. K. Bankers v. Commissioner of Income-tax reported in [1974] 94 ITR 107 (All). These cases have held that section 33(4) of the Indian Income-tax Act, 1922, restricts the jurisdiction of the Tribunal to the subject-matter of the appeal and the subject-matter of the appeal is stated in the original grounds of the appeal and such additional grounds as may be raised by leave of the Tribunal. In our view these ..... X X X X Extracts X X X X X X X X Extracts X X X X
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