PURSHOTTAM DAYAL VARSHNEY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE petitioner No. 1, Sri Purshottam Dayal Varshney, was at the material time the karta of a Hindu undivided family known as " P. D. Varshney & Brothers" which is the petitioner No. 2. On December 29, 1956, a sum of Rs. 30,000 was gifted to Smt. Ganga Devi, the widowed mother of Sri P. D. Varshney, out of the funds of the Hindu undivided family and with this amount she purchased 30 ordinary shares of Rs. 1,000 each of M/s. S. K. Glass Works Ltd., Kandra. She received a dividend of Rs. 15,000 on October 14, 1957, and the second dividend of Rs. 18,000 was received by her in the year 1958. She filed her return lor the year 1959-60, showing therein dividend income of Rs. 18,000. THE Hindu undivided family also filed its return for that year and the dividend income received by Smt. Ganga Devi was not included in that return. On March 9, 1960, the Income-tax Officer passed an assessment order against the Hindu undivided family for the year 1959-60, clubbing the income of Smt. Ganga Devi with that of the Hindu undivided family on the ground that she held the shares benami for the Hindu undivided family. THE Hindu undivided family filed an appeal against the assessment order objecting to the inclusion in its income of the dividends received by Smt. Ganga Devi. THE appeal was rejected by the Appellate Assistant Commissioner of Income-tax. THEre was a second appeal to the Income-tax Appellate Tribunal which was allowed on May 17, 1962. THE Tribunal came to the conclusion that the approach of the Income-tax Officer was not correct, inasmuch as the onus lay upon the department which the Income-tax Officer made no attempt to discharge by placing relevant material on the record, to show that Smt. Ganga Devi was benamidar for the Hindu undivided family with regard to the shares held by her. THE Tribunal, therefore, remanded the case to the Income-tax Officer in the following words :

(2.) THE Income-tax Officer passed a fresh assessment order after about six years on April 27, 1968. This time the dividend income was excluded from the assessment of the Hindu undivided family. After the completion of the assessment order a sum of Rs. 14,556 was refunded to the Hindu undivided family on July 9, 1968. THEreupon, the petitioner by an application dated January 30, 1970, requested the Income-tax Officer to pay interest under Section 244 of the Income-tax Act, 1961.

(3.) CHAPTER XIX of the Income-tax Act, 1961, deals with refunds. Section 240 provides :