KAILASH NATH BHARGAVA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) I have had the advantage of reading the order proposed by my learned brother, but I regret I am unable to agree with him.

(2.) THE facts of the case have been clearly set out by my learned brother and it is unnecessary to repeat them. THE answer to both the questions referred to depends, to my mind, on the single question as to whether the Income-tax Officer must necessarily make an assessment under section 23 after passing an order under section 25A(1) of the Income-tax Act. THE contention raised by learned counsel for the assessee relating to the apportionment of the tax on the income of the erstwhile family between the two separated groups does not appear to have any force and I agree with my learned brother when he says that having regard to the language of the statute the apportionment has to be made according to the portion of the joint family property allotted to each separated member. I agree that there is nothing in the statute to support the argument that in deciding the value of the portion the income yielding capacity of that portion should be determined by the Income-at Officer. In a partition the value of the different assets are often estimated not only having regard to the capital invested in acquiring them, but due consideration is given to their income or profit yielding capacity, but this is done before the allotment of the various assets of the family to the shares of the members entitled to partition. If four persons are entitled to equal shares, the portion which each would get on partition would be one-fourth portion of the entire family assets. THE word portion in section 25A(2) is used in this sense and I agree with my learned brother that the Income-tax Officer is not expected to embark upon and duty of determining a fresh the value of the assets that fell to the lot of the separating members in order to determine what portion of the joint family property fell to the share of each member.But this argument does not appear to have any bearing on the questions referred to us.

(3.) THE Income-tax Act does not provide for two assessments being made on the same person. THE tax is to be levied according to the Income-tax Act read with the Finance Act passed every year and it is levied on the total income earned by the units of assessment mentioned in section 3 of the Act during the previous year. Every member of a Hindu undivided family is capable of having his own separate property and his own separate income. It is also possible that he may be a person separately assessed to income-tax. THE liability that falls on him as a divided member of his erstwhile family in accordance with section 25A has to be included by the Income-tax Officer in the assessment that has to be made against that person. When the statute says that the Income-tax Officer shall make assessments in accordance with the provisions of section 23, it is difficult to assume that all the provisions of section 23 required to be complied with in making an assessment are not to be complied with in making the assessment under section 25A(2) on the divided members. Section 23(1) says how the Income-tax Officer may make an assessment if he feels that the return made under section 22 is correct and complete. Section 23(2) requires the Income-tax Officer to give an opportunity to the assessee to produce evidence in support of his return. THE next sub-section enables the Income-tax Officer to call for evidence on specified points if he so desires and then to assess the total income of the assessee and determine the sum payable by him on the basis of such assessment. After considering the language of the statute, I am of opinion, that when the statute requires an assessment to be made in accordance with section 23, it confers on the assessee the right of availing of the opportunities mentioned in section 23 and to take part in his assessment to tax. I find on justification for taking the view that, in spite of the express language of the statute requiring the assessments on the various divided members being made in accordance with the provisions of section 23, all that the Income-tax Officer may do is to calculate the tax liability and issue a notice of demand. It is possible that the divided members may have no other income and the Income-tax Officer may find it ultimately that they are liable to pay only their respective shares of the tax that would have been levied on the income of the erstwhile family. But it is in the interests of revenue to probe into the matter and to ascertain that the divided members or groups of members have in fact no other income on which tax may be demanded from them. It is also possible that these divided members or some of them may have assessable income and may be separately liable to tax without reference to their liability for the tax recoverable from under section 25A(2). But only one assessment can be made under the Income-tax Act unless an assessment on income that has escaped assessment is made under section 34 of the Act. It is true that the word assessment has not been used in the same sense everywhere in the Income-tax Act, but when the statute requires the Income-tax Officer to make an assessment in accordance with the provisions of section 23, I am of opinion that the procedure under section 23 cannot be ignored.