P PAVANASA NADAR Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following two questions have been referred to us under section 66(1) of the Income-tax Act, 1922 "1. Whether, on the facts and in the circumstances of the case, the reopening of the original asessments for the assessment years 1957-58 to 1959-60 under section 34(1)(b) of the Income-tax Act, 1922, is correct in law ?.2. Whether, on the facts and in the circumstances of the case, the assessment of the income of the house property and of the business of Palaniappa Match Works for the assessment years 1957-58 to 1960-61 in the hands of the assessee in the status of an individual is correct in law ?" *THE assessee was originally a member of a Hindu undivided family consisting of himself, his brother and his father, which carried on business in the manufacture of match sticks under the name and style of National Match Works, Sivakasi. After the death of the assessee's father, he and his brother became divided in respect of the said business, which was thereafter carried on in partnership between them. In or about 1947 there was a further partition between the assessee and his brother both in respect of the said business and the other assets. By this process the assessee and his sons came to own the business in match works. THE Hindu undivided family of the assessee and his sons later acquired a new business called Palaniappa Match Works at Alathur, and certain assets in foreign countries. Subsequently on October 5, 1953, there was a partition between the assessee and his sons in which the business of National Match Works, Palaniappa Match Works and the foreign assets as also other properties came to be divided between them.

(2.) THE assessee got a house property and the business of Palaniappa Match Works towards his share. THE foreign assets, however, continued to be owned jointly by the assessee and his sonsFrom the assessment year 1954-1955 up to the assessment year 1959-1960 three assessment orders were made on the assessee every year. THE assessments relating to the house property and the business of Palaniappa Match Works were in the status of a Hindu undivided family, of himself, his mother, wife and daughters, while the foreign income was assessed in the hands of the joint family consisting of the assessee and his sons. In the course of the assessment year 1960-61 the Income-tax Officer re-examined the position in regard to these assessments and came to the conclusion that in respect of the income from the properties and the business allotted to the assessee at the partition the assessment had wrongly been made in the status of a Hindu undivided family and that he should have been properly assessed in his status as an individual along with his other income. In that view proceedings were initiated under section 34 of the Act. THE assessee challenged not only the legality and propriety of the proceedings initiated under section 34, but also contended that the income from the properties allotted to him at the partition had been rightly assessed in the status of a Hindu undivided family.