DALPATBHAI DAMJIBHAI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question which is referred to this Court by the Tribunal under S. 256(1) of the IT Act, 1961 is as under :

(2.) THE assessment of the assessee Chhaganlal for the asst. year 1971 72 was completed under s. 143(1) on 12th Nov., 1971. He had applied for reopening the assessment under S. 143(2)(a) as the status shown as HUF in the return was not accepted by the ITO considering the fact that business of iron and hardware was started by the assessee in his individual capacity and that right from S.Y. 2015 (asst. year 1960 61) he was assessed as an individual, and other circumstances, held that status of the assessee as individual was rightly adopted by him. The assessee's income was thus computed and tax liability was assessed on that basis. This order was passed on 29th March, 1974. It further appears that he had also made on application under S. 171 on the ground that partition had taken place and, therefore, the assessee should be assessed as an individual. This claim of the assessee was rejected by passing an order on 29th March, 1974. Against the assessment order, the assessee preferred an appeal to the AAC. In that appeal, it was contended that the ITO had failed to appreciate the deed of partition and had committed an error in not accepting the claim of the assessee that the business of the assessee was really the business of the HUF and the correct status of the assessee was, therefore, HUF. The AAC held that the assessee's claim for HUF status was not justified. He further held that as a separate order was passed by the ITO under S. 171 and as an appeal is separately provided against an order passed under that section, a separate appeal ought to have been filed challenging the said order. As no separate appeal was filed, challenge to that order should not be entertained. He, therefore, dismissed the appeal. The assessee then preferred an appeal to the Tribunal. Before the Tribunal also, it was contended that assessee Chhaganlal had under some mistaken notion disclosed the income from the said business as of individual, though in reality, it belonged to HUF. The Tribunal, after considering the partition deed, statements of other coparceners and other relevant facts and circumstances came to the conclusion that the business in question really belonged to HUF and it was not individual business of the assessee. The Tribunal, therefore, directed that income from the business should be shown in the hands of HUF. As regards the contention regarding partition, the Tribunal noted the fact that against the order passed by the ITO, no separate appeal was filed by the assessee and, therefore, the finding recorded by the ITO that no partition had taken place, could not be reconsidered in the quantum appeal. The finding recorded by the AAC in this behalf was thus confirmed, though on the other point, the appeal was allowed. The assessee then moved the Tribunal for referring the abovestated question to this Court. It may be stated that though the assessee is Chhaganlal, in the title of the appeal memo before the AAC and also before the Tribunal, Dalpatbhai Damjibhai, father of Chhaganlal is shown as the appellant. Even in the reference application, name of the applicant is shown as Dalpatbhai Damjibhai. On perusal of the record, it appears that the draft statement of facts is signed by Chhaganlal Dalpatbhai and the name of the applicant is also shown as Chhaganlal Dalpatbhai. The learned advocates appearing for both the sides agree that the assessee in this case is Chhaganlal and not Dalpatbhai.

(3.) AS against that, the learned counsel for the Revenue relied upon the observations made by the Bombay High Court in Tuljansa Janardhansa Pawar vs. CIT (1950) 18 ITR 648 (Bom) that :