GOKUL CHAND Vs. INCOME-TAX OFFICER

JUDGEMENT

(1.) These two petitions under Article 226 of the Constitution of India have been filed challenging the issue of notices under Section 148 of the Income-tax Act, 1961, for the assessment years 1971-72 and 1975-76, whereby the Income-tax Officer, Gonda, required the petitioner to file returns of income for these years as he had reason to believe that the petitioner's income for these years had escaped assessment and he wanted to reassess the same.

(2.) The petitioner's case is that he is a member of a Hindu undivided family of which Umrao Lal, the petitioner's father is the karta. On October 15, 1964, a partial partition took place in the said Hindu undivided family, whereby another Hindu undivided family consisting of the petitioner, Gokul Chand, as karta, his wife, sons and daughter as members, received an amount which constituted the nucleus of this Hindu undivided family of which the petitioner became the karta. On October 16, 1964, this smaller Hindu undivided family became a partner in Messrs. Ram Deo Onkar Mal through the petitioner and the amount received in the partial partition held on October 15, 1964, was invested as the share of the smaller Hindu undivided family. The income so earned by the smaller Hindu undivided family was assessed through the petitioner as karta of this branch of a Hindu undivided family. On October 1, 1968, the smaller Hindu undivided family headed by the petitioner was subjected to a partition so that the amount of Rs. 88,353.78 standing to the credit of this smaller Hindu undivided family in the account books of Messrs. Ram Deo Onkar Mal was partitioned amongst the karta, his wife and sons after making a provision of Rs. 15,000, for the marriage expenses of the karta's daughter. This partition was evidenced by a memorandum of partition executed on October 5, 1968. This partition was recognised by the Income-tax Officer, Gonda, through an order dated November 27, 1971. For the assessment year 1970-71, the share income of the various members of the erstwhile family of the petitioner was determined at Rs. 30,464 and bifurcated between the various members and as a result the income of the petitioner, Gokul Chand, was determined at Rs. 6,093 only, vide assessment order dated November 27, 1971. According to the petitioner, since then all the members of the said Hindu undivided family were being separately assessed. The petitioner's contention is that all the primary facts relating to the aforesaid partition were disclosed before the Income-tax Officer passed the order on November 27, 1971, recognising the partition. On March 30, 1980, the Income-tax Officer issued a notice in the name of the petitioner under Section 148 of the Income-tax Act, 1961, The petitioner's contention is that the notice is invalid as it does not disclose the income that was considered to have escaped assessment. It is further contended that the said notice was served on Umrao Lal, the father of the petitioner, who had no authority to accept the same on his behalf. It is contended that the said notice seemed to have been issued on the assumption that the partition that had taken place on October 1, 1968, has not been acted upon. This assumption is controverted by the petitioner contending that the said partition was duly acted upon. It is further stated that if the partition had not been acted upon then the entire income arising from Ram Deo Onkar Mal in respect of the share of this family would be assessable in the hands of the family and not in the hands of the petitioner in his individual capacity and the notice issued to the petitioner under Section 148 is improper.

(3.) In a counter-affidavit filed in Writ Petition No. 223 of 1980 relating to the assessment year 1971-72, Sri S.R. Tripathi, the then Income-tax Officer set up the respondent's case. It has been contended that it is incorrect that the family share in the partnership firm, Ram Deo Onkar Mal, was partitioned. According to him, the alleged partition and the memorandum of partition was a got up affair which was never intended to be acted upon. It is contended that the amount standing to the credit of the family in the books of the partnership firm, Ram Deo Onkar Mal was never partitioned amongst the members of the family and the entire capital continued as a credit balance in the name of Gokul Chand. The profits arising from the said firm were also credited to the account of the said Gokul Chand. It is stated that in statement, dated February 25, 1980, before the Income-tax Officer, Shri Gokul Chand admitted that he is a partner in the firm in a capacity as a karta of the family. The order under Section 171 of the Act recognising the claim of partition as claimed to have been passed on insufficient facts and believing the case of the petitioner which was subsequently found to be wholly untrue. It is also claimed that the sons of Gokul Chand were minors at the relevant time and were incapable of giving consent to the partition and, therefore, Gokul Chand could not have legally effected the partition. It is alleged that the family of which Gokul Chand was the karta did not keep any books of account prior to October 1, 1968, and the books of account commenced on October 1, 1968, were intended to create evidence only for the alleged partition. It is alleged that the assessments were made under Section 143(1) without any enquiry by the concerned Assessing Officer. In reply to paragraph 19 of the writ petition, in which the petitioner contended that the notice could have been issued to the Hindu undivided family headed by him and not to him in his individual capacity, it has been stated that it needs no reply except that the notice under Section 148 was validly issued in the name of Gokul Chand which is also the name of the family.