LAWS(MAD)-1976-10-24

T B HANUMANTHARAJ Vs. COMMISSIONER OF INCOME TAX

Decided On October 12, 1976
T. B. HANUMANTHARAJ Appellant
V/S
COMMISSIONER OF INCOME TAX Respondents

JUDGEMENT

(1.) UNDER section 66(1) of the Indian Income-tax Act, 1922, the Income-tax Appellate Tribunal, Hyderabad Bench, has referred the following question of law for the opinion of the court :"Whether, on the facts and in the circumstances of the case, the assessment for the year 1951-52 made on March 31, 1960, was barred by limitation in view of the provision of section 34(3) of the Income-tax Act ?" *One Borajannah was an assessee who was being assessed as an individual. He died on May 5, 1949, leaving his two sons, T. B. Raju and T. B. Hanumantha Raj, and also his widow, Putta Thayammal. What was left by the deceased consisted of immovable property and business, which devolved upon the Hindu undivided family constituted by the sons and others. There was a total partition of this family on November 30, 1950.

(2.) THE present reference relates to the assessment year 1951-52 for which the relevant accounting periods were : (a) the year ended November 30, 1950, so far as the immovable property was concerned, and (b) the year ended December 31, 1950, for the income from the business.For the assessment year 1951-52, the assessee filed a voluntary return under the signature of T. B. Hanumntha Raj described as the "karta" of the Hindu undivided family, on May 28, 1952, disclosing a sum of Rs. 17, 406 as income from property and a loss of Rs. 10, 333 from business. THE result was a net income of Rs. 7, 073 was disclosed in the return. A covering letter was sent with the return stating that the assessment should be made on the joint Hindu family and reference was made to the fact that partition had taken place between the brothers on December 2, 1950.THE Income-tax Officer completed the assessment on the basis of the above return on March 31, 1960. In the assessment so made, the Income-tax Officer added a sum of Rs. 10, 000 as income from undisclosed sources and another sum of Rs. 17, 767 being the share income from Messrs. A. Anandaraya Mudaliar & Co. THE assessee had not disclosed in the return nor at any point of time subsequently, the share income from the said firm of Messrs. A. Anandaraya Mudaliar & Co. Before the Income-tax Officer, the assessee urged that, by virtue of section 34(3) of the Indian Income-tax Act, 1922, the assessment for the assessment year 1951-52 had to be completed within a period of four years. THE Income-tax Officer considered that this argument was not maintainable. He pointed out that this was a case to which the provisions of section 28(1)(c) of the Act applied and that, therefore, there was a longer period of limitation available under section 34(3) of the Act.THE assessee appealed to the Appellate Assistant Commissioner disputing the assessment on the ground of limitation and also contesting that the addition of the cash credit of Rs. 10, 000 had been made without providing the assessee with a sufficient opportunity to prove the nature thereof.

(3.) THE conclusion of the income-tax authorities and the Tribunal that this was a case to which the provisions of section 28(1)(c) applied in view of assessee's conduct in regard to the sum of Rs. 10, 000 is correct.Learned counsel submitted that the Hindu undivided family having ceased to exist, there was no question of application of the provisions of section 28(1)(c) to it. THE question as to whether any penalty could be levied on the Hindu undivided family is different from the question as to whether the assessee is one to whom the provisions of section 28(1)(c) would apply. We are concerned with the earlier stage of the assessment itself and we have to find out whether this was a case to which the provisions of section 28(1)(c) applied. With reference to this aspect, there can be no dispute that the assessee not having disclosed in the return the share income, the provisions of section 28(1)(c) would apply. Whether section 28(1)(c) could be applied after the disruption of the undivided family for the levy of penalty is not a question to be gone into now in the present reference, because these are not penalty proceedings.For these reasons, we reject the contentions urged on behalf of the assessee and answer the question referred to us in the negative and against the assessee. THE Commissioner will be entitled to his costs. Counsel's fee Rs. 500.