COMMISSIONER OF INCOME TAX Vs. SHANTILAL PUNJABHAI

JUDGEMENT

(1.) THIS reference arises out of reassessment of the assessee for the asst. yrs. 1944 45, 1945 46 and 1946 47, the relevant previous years being Samvat years 1999, 2000 and 2001 respectively. The reassessment proceedings were adopted having recourse to the second proviso to S. 34(3) of the IT Act of 1922. The facts for all the three assessment years are similar and hence it is possible to take the facts relevant to the asst. year 1944 45 as typical. That was also the way in which the case was presented to us by the learned Advocate General.

(2.) THE assessee, Shantilal Punjabhai, used to be assessed in the status of an individual. For the asst. year 1944 45, he filed his returns in which he included his share of profit in the firm of M/s Bharat Cloth Agency. The assessee, at the material time, was a member of the HUF known as Punjabhai Deepchand. In the course of the assessment proceedings of that family also for the asst. yr. 1944 45, the ITO found that the assessee was the nominee of the HUF in the said firm and, therefore, included the share of profits of the assessee in the said firm in the computation of the total income of the HUF. The HUF thereupon went in appeal before the Tribunal and the Tribunal, by its order dated 5th May, 1953, held that there was not sufficient evidence from which it could be said that the assessee was a partner in the said firm as the nominee of the HUF, and directed that the share of profits of the assessee should be deleted from the assessment of the HUF.

(3.) ON these facts, three questions have been referred to us, namely :