HARI RAJ SWARUP Vs. STATE OF UTTAR PRADESH

JUDGEMENT

(1.) THIS is a reference under Section 24(4) of the U. P. Agricultural Income-tax Act, and the question referred for the opinion of this court is:

(2.) THREE brothers, Hari Raj Swarup, Brahma Raj Swarup and Gopal Raj Swarup, along with their respective wives and sons constituted a joint Hindu family. In assessment proceedings for the year 1359 Fasli, under the U. P. Agricultural Income-tax Act, it was urged by the assessees that the joint Hindu family had suffered partition resulting in the complete disruption of the family as a result of which all the members had become separate from each other. It was claimed that the agricultural income should be assessed separately in the hands of each divided member according to his share. The assessing officer accepted the partition as one between the three branches of the family, each branch consisting of a brother, his wife and sons and did not accept the further plea that there was a separation also between the members inter se of each branch. The assessing officer found that the accounts were maintained jointly and the assets and liabilities were also shown jointly. He referred to the fact that the balance-sheet disclosed the share of each member separately but relied on the circumstance that it was audited jointly. He also referred to the statement of Jyoti Prasad, mukhtar-e-am of the assessees, that the agricultural land was cultivated jointly while the income was divided separately. The mukhtar-e-am also stated that the various business transactions relating to the family were carried on jointly by its members. In cross-examination, he stated that the sons and wives of the brothers were living and messing together. The assessing officer found that the members were living and messing together and that the partition of the family was a fiction designed merely to evade agricultural income-tax. Accordingly, he assessed the agricultural income in the hands of the three separated branches of the family according to the share of each branch.

(3.) WE are of the view that the Board has erred. There was evidence before the Board that suits for partition had been filed by the members of each branch praying for a partition decree between them, and that partition decrees had been passed by the civil court in each suit resulting in the disruption of each branch. It is settled law that a joint Hindu family may be partitioned by the institution of a suit for partition, and when the civil court decreed each suit the partition decrees were strong evidence of such partition. In order to displace such evidence it was necessary to show by reliable and pertinent evidence that the partition proceedings were a mere sham and there was no intention to effect partition. The circumstances upon which the Board has relied do not, in our opinion, constitute such evidence. There is nothing to prevent the divided members of a family continuing to live and mess jointly and to carry on their business jointly. Partition is effected by a mere division of the shares in the joint family property and it is not necessary that there should be an actual division of the property by metes and bounds. In the instant case, apart from the partition decrees, there was material to show that although the management and cultivation was joint and the assets and liabilities as well as the accounts were maintained jointly, the agricultural income was shown according to the shares of different members. That was a circumstance which has not been correctly appreciated by the Board. As regards the joint Jiving and messing by the members, it is difficult to hold that in order to effect partition it is necessary for the members to live and mess separately. Living and messing separately, while no doubt constituting an important circumstance evidencing partition, nevertheless, is not conclusive. Considerations of personal convenience may persuade the divided members of a family to live and mess together. So, also, considerations of economy and convenience may persuade the divided members to carry on their management and cultivation jointly and, therefore, to maintain joint accounts, and show their assets and liabilities jointly. The several considerations taken into regard by the Board do not, in our opinion, considered either individually or cumulatively lead necessarily to the conclusion that the partition proceedings in the civil court were a sham.