NARENDRA LAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee was, in the relevant assessment year 1948-49, a Hindu undivided family. Its assessment for that year was made by including in the returned income amounts of certain credits appearing in the books of the assessee as being income from undisclosed source. In view of the additions made in its income, the Income-tax Officer issued a notice under Section 28(3) of the Indian Income-tax Act, 1922, on February 27, 1958. Penalty proceedings dragged on and eventually terminated by an order, dated August 22, 1963, by which the Income-tax Officer imposed a penalty on the assessee for concealing its income. THE assessee had while the penalty proceedings were pending claimed a partition of the joint Hindu undivided family as from the 6th May, 1958. THE Income-tax Officer had not accepted the partition but the assessee went up in appeal against that order and the appeal was eventually allowed on the 12th December, 1963, by an order recognising the partition as from 6th May, 1958.

(2.) AGAINST the order of penalty, the assessee filed an appeal by W.T.R. No. 344 of 1969 (Lala Narendra Lal, Shamli v. Commissioner of Income-tax). Rajendra Lal and Narendra Lal are two brothers. The family of Rajendra Lal consists of himself and his wife, Shrimati Shusheela Devi, while that of Narendra Lal consists of himself, his wife, Shrimati Kamla Devi, a major daughter, Manjula Rani, and a minor daughter, Roopa Rani. The family was joint and a partial partition took place on August 7, 1959. In that partition, 2,200 shares of Upper Doab Sugar Mills, Shamli, were divided as under :

(3.) IN order to return an answer to the first question, it would be useful to quote Section 4(1)(a)(i) and (ii) of the Wealth-tax Act, 1957: