COMMISSIONER OF INCOME TAX Vs. SOBHAGMAL MISHRILAL SEMLAVADA

JUDGEMENT

(1.) AT the instance of the Department (Commissioner of Income -tax, Bhopal), the Tribunal has referred the undernoted questions of law under Section 256(1) of the Income -tax Act, 1961 (for short 'the Act'), relating to the assessment years 1979 -80, 1980 -81 and 1981 -82 arising out of the orders passed by the Tribunal in I. T. A. Nos. 72 to 74/ Ind of 1987, on the applications registered as R. A. Nos. 198 to 200/Ind of 1990, for our opinion : '(1) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that there could not be valid assessment in the status of an individual when return of income was filed in the status of the Hindu undivided family ? (2) Whether, on the facts and circumstances of the case, the Tribunal was right in holding that the Income -tax Officer having exercised the option to include in the income of the mother the income of a minor child from the admission of the minor to the benefits of the partnership in a firm, could not include the same income in the income of the father?'

(2.) BRIEFLY stated, the facts of the case are that the years of assessment are 1979 -80, 1980 -81 and 1981 -82 for the previous years ending Diwali, 1978, 1979 and 1980, respectively. There was partial partition in the Hindu undivided family on October 26, 1973, that is to say on the last day of the previous year relevant to the assessment year 1974 -75 and certain funds of the Hindu undivided family were allotted to the members thereof. The family consisted of Shri Sobhagmal as karta, his wife, Smt. Tarabai, four sons and a daughter. One of the sons, Paras, was a minor at that time. After the said partition, Shri Sobhagmal started his own business separate from other members of the family and his minor son, Paras, was admitted to the benefits of the partnership firm bearing name and style as 'Chopra Brothers'. The assessments of income of Shri Sobhagmal for the assessment years 1975 -76 to 1977 -78 were completed in the status of individual. However, the assessments of his income for the subsequent years 1978 -79 to 1980 -81 were completed in the status of the Hindu undivided family under Section 143(1) of the Act. Shri Sobhagmal was since assessed in the status of the Hindu undivided family in the later four years (1978 -79 to 1981 -82). The share income received by his minor son, Paras, from Chopra Brothers, was not included in his income under Section 64 of the Act. Instead the income was included in the income of the mother, Smt. Tarabai. Assessments for the years 1979 -80 to 1981 -82 in the status of the Hindu undivided family were considered erroneous and prejudicial to the interests of the Revenue by the Commissioner of Income -tax. He, therefore, by order dated December 17, 1982, passed under Section 263 of the Act set aside the assessments for all these three years with a direction to frame fresh assessments in the status of individual and to include the share income of the minor to his income. The order was appealed before the Tribunal. The Tribunal dismissed the appeals. The Income -tax Officer, on the basis of the same data, framed a consolidated assessment order for all the three years on March 30, 1985, in the status of individual. He also included the share income of the minor in the income of the assessee which was earlier included in the income of the mother. The assessee felt aggrieved and filed appeals before the Appellate Assistant Commissioner who upheld the fresh assessment made by the Income -tax Officer and dismissed the appeals. The assessee then filed second appeals before the Tribunal which were allowed. On application, the Tribunal has referred the aforesaid questions for our opinion.

(3.) INDISPUTABLY the return of income was filed in the status of the Hindu undivided family. That being so, there could not be any valid assessment in the status of individual without noticing the assessee and affording him reasonable opportunity of hearing in that regard. The Tribunal thus does not seem to have committed any error. As regards the income of the minor child, it was admittedly included in the income of the mother. After exercising this option, there was no justification to reverse the position and include the same in the income of the father on fresh assessments.