RAMESWAR SIRKAR Vs. INCOME TAX OFFICER A WARD

JUDGEMENT

(1.) The petitioner carries on business under the name and style of Messrs. P. B. Sirkar & Sons, at 89, Chowringhee Road, Calcutta. The petitioner stated that the business styled as Messrs. P. B. Sirkar & Sons, at 89, Chowringhee Road, Calcutta, was started as a proprietary concern by one Gour Mohan Sirkar, who, it is further stated, met with a tragic death as a result of gun shot wounds in the year 1957. After the death of Gour Mohan Sirkar serious differences and disputes arose according to the petitioner amongst the members of the family consisting of the heirs of the said Gour Mohan Sirkar, namely, Sm. Chhabi Rani Sirkar and others, Jagatjyoti Sirkar, Ratanlal Sirkar, Kanchanlal Sirkar, Rameswar Sirkar and the youngest brother and also their mother, Smt. Sarashi Bala Sirkar. Rameswar Sirkar is the petitioner in this case. Smt. Sarashi Bala Sirkar, it is stated, filed a partition suit as a result of the said dispute in this court in February, 1957, being Partition Suit No. 532 of 1957. In course of the said suit an arbitrator was appointed by an order of this court and in order to avoid the disputes the business at 89, Chowringhee Road, Calcutta, was treated according to the petitioner as part of the joint family property. Thereafter, all the parties to the said suit effected a settlement to which all of them agreed. Such a mutual and amicable settlement of the properties including the business was decreed by this court in the said partition suit and the business styled as Messrs. P. B. Sirkar & Sons, at 89, Chowringhee Road, Calcutta, was allotted to the petitioner and the petitioner was given possession in June, 1958, by the receiver appointed by the High Court and since then he had become the sole proprietor of the concern. According to the petitioner the said joint family affairs used to be controlled from 131/B, Bowbazar Street, Calcutta, which was also the family residence where Smt. Sarashi Bala Sirkar, his mother, used to reside. It has been stated that Smt. Sarashi Bala Sirkar died in or about February, 1966. It was further stated in the petition that it was the case of the income-tax department that a notice under Section 148 of the Income-tax Act, 1961, was served in respect of the said joint family on the 31st March, 1964, by affixation. In the affidavit on behalf of the Revenue it was stated that it was served on the petitioner by affixation. That unfortunately is an incorrect statement about which I would refer later in detail. It appears to have been served by affixation at the address of Bepin Behary Ganguly Street. The petitioner, it is stated, received another notice dated the 13th February, 1968, under Section 142(1) of the Income-tax Act, 1961, asking the petitioner to appear. In this application under Article 226 of the Constitution the initiation" of the proceedings by the service of the notice under Section 148 of the Income-tax Act, 1961, on the said joint family has been challenged. The assessment year is 1955-56. The partition suit was filed in February, 1957, and in June, 1958, the receiver in the said partition suit handed over the said properties to the petitioner. Smt. Sarashi Bala Sirkar died in 1966. The notice under Section 148 of the Income-tax Act, 1961, was served by affixation on the 31st March, 1964. It has to be stated that the said Hindu undivided family was never assessed to tax before. It has further to be borne in mind that this Hindu undivided family is governed by the Dayabhaga system of Hindu law.

(2.) In this application under Article 226 of the Constitution it was challenged that there was no reason for re-opening the said assessment. I am unable to accept this contention. It is not disputed by the petitioner in the petition that the Hindu undivided family of which family the petitioner was a member at the relevant time did have taxable income. It has also not been stated that any return of the said Hindu undivided family was filed for the relevant assessment year. Therefore, it cannot be disputed that for the failure of the assessee, that is to say, the Hindu undivided family, to file the return and to disclose fully and truly all materials and relevant facts, there has been escapement of income and there were materials for the Income-tax Officer to issue the notice under Section 148 of the Income-tax Act, 1961. This point though taken in the petition was not seriously urged in this application. Counsel for the petitioner then urged that the Hindu undivided family after its dissolution could not be taxed. It was further urged that after a suit for partition had been filed, the Hindu undivided family had been dissolved. Counsel for the Revenue, on the other hand, contended that in the case of families governed by the Dayabhaga system of Hindu law the dissolution of the Hindu undivided family did not take place merely on the institution of a suit for partition or declaration of shares of the parties. In order to effectuate a severance of a Hindu undivided family under the Dayabhaga School of law, something more was required, it was urged. In the context of the facts of this case this broad contention is not necessary to be decided. In the instant case the assessment was sought to be re-opened in respect of a Hindu undivided family which had been admittedly a joint family. Counsel for the petitioner drew my attention to the Division Bench judgment in the case of Srilal Bagri v. Commissioner of Wealth-tax, to which I was a party. That was a case under Section 20 of the Wealth-tax Act. That was also a case where assessment was sought to be made in respect of the assessment year in which a Hindu undivided family had disrupted. In the instant case, the assessment sought to be re-opened was in respect of a year when undoubtedly there was a joint undivided family. Disruption is claimed to have taken place after the institution of the partition suit in 1957, that is to say, subsequent to the relevant accounting year for which the proceedings for re-opening have been taken. In the premises it is not necessary for me to consider the aforesaid decision in detail. It is not a case of attempting to assess a Hindu undivided family after disruption in respect of a year in which it had disrupted. The instant case is a case where it is sought to assess admittedly a family in respect of a year when it was joint but at the time when the proceedings for assessment have been taken up, it had disrupted. In this instant case there was a suit for partition of properties in respect of which a receiver was appointed and, furthermore, partition had taken place and the receiver had handed over to the petitioner the business which was separated from the joint family. Therefore, the question whether in the case of Hindu undivided family, governed by the Dayabhaga School of Hindu law, something more than a mere declaration of shares was necessary to cause the disruption of the Hindu undivided family, is not necessary to be decided in this case. Counsel for the Revenue drew my attention to the decision in the case of Bijoy Kumar Burman v. Income-tax Officer, E-Ward, Dist. IV. That again was a case where facts were different. That was also an attempt to tax the income of a year in which disruption had taken place. That was also a case of a family governed by Mitakshara School of Hindu law. But the fundamental question that requires consideration in this application is whether a Hindu undivided family which had never been assessed before under the Indian Income-tax Act, 1922, or the Income-tax Act, 1961, can be assessed as such after the partition of the said Hindu undivided family. Incidentally it calls for decision as to whether the individual members of the Hindu undivided family can be made liable for the alleged income, if any, of the Hindu undivided family during the period when the Hindu undivided family was in existence if that Hindu undivided family had never been taxed before. This is the main contention that was urged in respect of this application. Counsel for the petitioner states that there is no machinery or method by which such assessment can be made.

(3.) Section 297, Clause (d)(ii) of the Income-tax Act, 1961, provides that in respect of any income chargeable to tax which had escaped assessment within the meaning of that expression in Section 147 and no proceedings under Section 34 of the repealed Act in respect of any such income are pending at the commencement of the said Act, a notice under Section 148 may, subject to the provisions contained in Section 149 or Section 150, be issued with respect to that assessment year and all the provisions of said Act shall apply accordingly. Therefore, in respect of the relevant assessment year the Act of 1961 has to be applied. In this connection reference may be made to Section 171 of the Income-tax Act, 1961. The relevant portion of Section 171 provides as follows: