NAGANATHA IYER N Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS consolidated reference arises out of proceedings initiated by the Income-tax Officer, Tiruchirapalli, under S. 34 of the Indian Income-tax Act, 1922, against one Naganatha Aiyar, with a view to bring to tax amounts in his hands, which had escaped assessment in the two assessment years 1945-46 and 1947-48, Naganatha, the assessee was the junior member of a Hindu undivided family, the Karta thereof being his father, Narayanaswami Aiyar. In February 1941, Naganatha, in partnership with one Manickam, commenced a business under the name of Andhra Trading Co., Manickam retired from the partnership on 17-1-1945, and thereafter Naganatha continued to be its sole proprietor. Both he and the undivided family, of which he was a member, were assessees. So far as the income from the Andhra Trading Co., was concerned, the department at first accepted the position that Naganatha was exclusively entitled to the profits thereof. Accordingly, during the three assessment years proceeding the year of assessment, 1945-46, assessments were made on him on that basis. For the year 1945-46 Naganatha filed on 19-7-1946, his return disclosing the profits earned by him from the firm. But the Income-tax Officer refused to accept such income as his separate property as he held that it was the family and not Naganatha that was the real partner in the Andhra Trading Co. As a consequence, the income from the firm was included in the income of the family, which was represented by the assessee's father. THIS finding as well as the assessment, were affirmed by the Appellate Authorities. The matter was then taken up under S. 66, to this court, which gave the opinion that there was no material on record to sustain the conclusion of the Tribunal that it was the family and not Naganatha that was a partner in the firm. The opinion of this court was delivered on 12-12-1955 and is reported as Narayanaswami Iyer v. Commr., of Income-tax, (1956) 29 ITR 515: (AIR 1956 Mad 398).

(2.) IN the meanwhile, the assessee had filed his return in respect of the income from the Andhra Trading Co. for the year 1947-48. The department took no notice of this return, and proceeded to assess the Hindu undivided family as before on that income as well.

(3.) THAT was a case in which the father, who was sought to be assessed as the Kartha of the family, could not represent the junior member, as a partition had already taken place.