FATECHAND AND SONS Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is a reference under Section 66 (2) of the Indian Income -tax Act at the instance of. Messrs. Fatechand & Sons who have been assessed as a Hindu undivided family for the assessment year 1946 -47, the accounting year ending on 31st March 1946. A business styled as Sushil Chandra Jain & Co., was started at Berhampur on 3rd September, 1945. The assessee's case was that this was a partnership business in which Fatechand's family had only ten annas share and one Laduram owned the balance of six annas. While scrutinising the accounts for the assessment year 1947 -48 the Income -tax Officer held that the business did not belong to a partnership firm but was the business of the Hindu undivided family of Fatechand & Sons; the family had their original residence at Ramgarh, an Indian State; but for sometime past they are residing in British India and are carrying on business at Berhampur in the name of the Firm Sushil Chandra Jain & Co., even though the real owners of the business are the Hindu undivided family of Fatechand & Sons.

(2.) IN passing the order of assessment for the assessment year 1947 -48 the Income -tax Officer assessed the income of the year from 1st April 1946 to 31st March 1947 and further ordered that the period from 3rd September 1945 to 31st March 1946 was assessable only for the assessment year 1946 -47. The order was made final, there being no appeal. Accordingly notices under Section 22 of the Act were served upon Fatechand & sons for submitting the return for the year in question. It is important to note here that the asses -see filed a blank return for the assessment year 1946 -47 and showed his previous year to have ended on 3rd September 1945. In forwarding a memo attached to the return for the assessment year 1946 -47, the assessee also noted that they had no independent business for that year.

(3.) THIS Court by its order dated 14th February 1955 called upon the Income -tax Tribunal to state a case on the following questions :