SRILAL BAGRI Vs. COMMISSIONER OF WEALTH TAX

JUDGEMENT

(1.) The following question under Section 27(1) of the Wealth-tax Act, 1957, has been referred to this court:

(2.) The question is directed against the validity of the wealth-tax assessment made on the assessee Hindu undivided family for the assessment year 1957-58. The Hindu undivided family of M/s. Ricknath Shewkissen was being assessed to income-tax in the status of a Hindu undivided family. It was a Hindu undivided family governed by the Mitakshara school of Hindu law. A suit for partition was filed in this court being Suit No. 322 of 1950, and the final decree was made on 26th March, 1957. The Hindu undivided family had contended in its income-tax assessments that the Hindu undivided family had been disrupted on the passing of the preliminary decree on the 26th June, 1950, and no assessments could be made on the Hindu undivided family after that date. This contention had been consistently rejected by the income-tax authorities. For the assessment years 1951-52 and 1952-53, the Tribunal held that as under the preliminary decree the properties had not been partitioned in definite portions the Hindu undivided family would be deemed to continue to exist under Section 25A of the Indian Income-tax Act, 1922. The Wealth-tax Act came into force on 1st April, 1957. The Wealth-tax Officer served a notice on the Hindu undivided family under Section 14(2) of the said Act. As no return was filed in response to the said notice the Wealth-tax Officer served a notice under Section 16(4) on Shri Srilal Bagri as the karta of the Hindu undivided family, Ricknath Shewkissen. It was contended by Sri Bagii before the Wealth-tax Officer that the Hindu undivided famliy had been dissolved by the preliminary decree passed in 1950, and as such no assessment could be made on it. The Wealth-tax Officer rejected it. The Wealth-tax Officer made an assessment on the Hindu undivided family determining the total wealth at Rs. 7,28,640. In so doing, the Wealth-tax Officer valued the house properties belonging to the Hindu undivided family at 20 times the net annual value.

(3.) On appeal, the Appellate Assistant Commissioner rejected the assessee's contention that there could not be any assessment on the Hindu undivided family. He, therefore, upheld the order of the Wealth-tax Officer but reduced the amount of the total wealth by applying a multiple of 18 instead of 20.