BHARAT OIL INDUSTRIES Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a consolidated case stated under Section 66(1) of the Income-tax Act (hereinafter referred to as the Act) in respect of assessment years 1958-59 and 1959-60. The question referred is:

(2.) THE material facts are these. THE common ancestor was one Chandu Lal who died hi the year 1918 leaving only two surviving sons Radha Kishan and Sita Ram. THE Appellate Assistant Commissioner found that he had died insolvent. No contrary finding of fact was given by the Appellate Tribunal. After the demise of Chandu Lal, his sons, Radha Kishan and Sita Ram, started a business in 1919 in the name and style of M/s. Radha Kishan Sita Ram. This firm was assessed for the first time in the assessment year 1931-32. THE assessments for the assessment years 1931-32 to 1936-36 did not show the status in which the firm was assessed. THE next two assessments for the years 1936-37 and 1937-38 were made under Section 23(4) of the Act in the status of a Hindu undivided family.

(3.) THEREUPON, the department went up in appeal to the Tribunal it was contended that the finding of the Appellate Assistant Commissioner that the business of Radha Kishan Sita Ram was originally commenced without joint family nucleus and with borrowed capital was unsupported by any evidence. Even assuming that it was so, it was submitted that there was nothing in law to prevent the Karta of a family to impress upon his self-acquired property the character of joint family and convert his property into joint family property. Further, the conduct of Sita Ram in permitting the business to be assessed in the status of a Hindu undivided family and asking for an order under Section 25-A indicated that the self-acquired property was the joint family property, and, therefore, the share he got under the order under Section 25A did not belong to him alone but to the Hindu undivided family consisting of himself and his sons and therefore no valid gifts could be made