AKULA VENKATASUBBAIAH Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference relating to the asst. years 1949 50, 1951 52 and 1952 53 we are called upon to determine the following questions :

(2.) THE assessee is a partner in the firm of M/s Akula Venkatasubbaiah Chetty and Sons carrying on business in Cuddapah with two adults and four minor sons. He and his sons constituted an HUF. On 1st April, 1946, they effected a partition of the joint family properties and applied to the Department for recognition of the partition under S. 25A of the IT Act (hereinafter referred to as the Act). Immediately thereafter, the erstwhile male coparceners constituted themselves from 1st April, 1946, into a firm known as Akula Venkatasubbaiah & Sons and the minor sons of the assessee were admitted to the benefits of the partnership. On the basis of the instrument of partnership made of 19th June, 1946, the concerned ITO granted registration on 31st March, 1951, for the asst. year 1947 48 and for subsequent years also on applications made in behalf of the partnership. In the returns submitted by the assessee, the income derived by the minors from the partnership was not included with the result that it was not brought to assessment for the relevant assessment years. Subsequently, the ITO started proceedings under S. 34(1) (a) of the Act to include such income in the assessment of the assessee by a notice issued on 6th Sept., 1956, which was served on the assessee on 10th Sept., 1956. The assessment was completed under s. 34 on 31st Aug., 1957, for the asst. year 1948 49 and on 28th Oct., 1957, for the asst. years 1949 50 to 1955 56 both inclusive.

(3.) IT may at the outset be mentioned that it was conceded by the learned counsel for the petitioner that so far as the assessment year 1951 52 was concerned, the Department properly initiated proceedings under S. 34(1) (a) of the Act as no return was submitted by the assessee. But he urges that, as regards the other two years, there was no case for the Department to invoke S. 34 (1) (a) of the Act. It is argued by him that the present case does not fall within the ambit of S. 34, since the assessee had filed his returns and had disclosed all the material facts necessary for the assessments for the concerned years. According to the learned counsel, the returns contained all the particulars as required by the relevant section of the Act and, therefore, S. 34 could not be attracted to this case.