LACHHMAN PANDEY PT Vs. STATE OF U P

JUDGEMENT

(1.) THIS is a reference under Section 66 (1), Income-tax Act, and the question, which has been referred to us for decision, is as follows:

(2.) PANDIT Lachhman Prasad Pandey had three sons, Chintamani Pandey, Vishnu Datt Pandey and Hari Datt Pandey. He was assessed to income-tax from the assessment year 1918-19 to the assessment year 1926-27. It was not mentioned in what capacity he was being assessed but, from the order of the Income-tax Appellate Tribunal, it appears that he was assessed as an individual. From the assessment year 1927-28 to the assessment year 1937-38, Lachhman Prasad Pandey was assessed to income-tax as representing the Hindu undivided family. It appears that, in 1932 there was some litigation and Civil Suit No. 15 of 1932 was filed in which Lachhman Prasad Pandey had claimed that he was the exclusive owner of the business and that his sons had no interest in it. There was a compromise entered into between the parties which was filed in the Chief Court of Avadh. Under this compromise, it was recognised that Lachhman Prasad Pandey was the sole owner. On 28-7-1938, Lachhman Prasad Pandey executed a will, declaring therein that all the properties which were the subject-matter of the will including the business were his self-acquired properties and that he was competent to divide the same. By reason of that compromise and the assertions made in the will, the Income-tax Officer started assessing Lachhman Prasad Pandey as an individual from the assessment year 1938-39 and the capacity, in which he continued to be assessed, remained the same till his death in 1942. There was some dispute in 1940 or 1941 between the three sons and Lachhman Prasad Pandey and the matter was again referred to arbitration. The sons claimed that they were living with Lachhman Prasad Pandey as members of the joint Hindu family and as they had also worked in running the business, the business must be deemed to be joint family business. On 31-3-1941, the arbitrators gave an award, holding that the business belonged to the joint family. They also proceeded to partition the properties, giving the business to the three sons of Lachhman Prasad and the other property to Lachhman Prasad Pandey. On 5-4-1942, Lachhman Prasad Pandey died.

(3.) THE Income-tax Appellate Tribunal has recorded a finding that Lachhman Prasad was succeeded by his three sons under the award.