BHAGWATI PRASAD MISRA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS statement of the case under S. 66(2) of the Indian IT Act was made by the Tribunal in consequence of a direction issued by a bench of this Court on the 2nd Feb., 1956, calling upon the Tribunal to refer the following question for the decision of this Court :

(2.) THE relevant facts are as follows. The petitioner and his two sons were members of an HUF of which he was the kartha. The family separated on the 12th March, 1945. At the time of partition a sum of Rs. 10,500 alone was kept in charge of the petitioner though it was not clearly stated for what purpose it was earmarked. On the 21st Jan., 1946, the petitioner's son Narayan Prasad Misra encashed high denomination notes of the value of Rs. 85,000 at Sambalpur treasury after making a declaration to the effect that that sum represented the sale proceeds, including profits, of Bidi leaf business carried on by the joint family consisting of himself, his father and his brother. The IT authorities suspected that this sum of Rs. 85,000 was the concealed income of the petitioner and hence in the assessment year 1946 47 they increased the total assessable income by that sum. The petitioner's case before them was that the sum which originally belonged to the joint family was specially set apart and kept with him at the time of partition for the purpose of (1) paying the total income tax that may be payable by the HUF for the years 1944 45 and 1945 46 (which had not been finally determined then) and (2) the marriage expenses of the petitioner's daughter. He, therefore, contended that the sum was not concealed income at all and that it was spent for the purposes for which it was meant. This explanation was not accepted either by the ITO or by the IT AAC, mainly because it was at variance with the statement made by the petitioner's son while encashing the high denomination notes at Sambalpur treasury and also because in the deed of partition this sum was not at all mentioned. But when the matter was taken up before the Tribunal, that authority was willing to accept a portion of the petitioner's case. The Tribunal thought that the income tax liability for the years 1944 45 and 1945 46 of the joint family may be roughly estimated at Rs. 20,000, at Rs. 10,000 a year, as that was the tax liability of the joint family during the previous years, and to that they added another sum of Rs. 10,000 presumably for the marriage expenses of the petitioner's daughter. They accordingly exempted a total sum of Rs. 30,000 from the sum of Rs. 85,000 and directed that a sum of Rs. 55,000 alone should be held to be unaccounted income for the year in question and as such liable to assessment. They refused to state a case and when the dispute was taken up before a Division Bench of this Court, that Bench thought that the Tribunal committed a serious error of record by omitting to take note of the fact that for the asst. yrs. 1944 45 and 1945 46 of the HUF an assessment of Rs. 78,000 had actually been made by the ITO prior to the date of the Tribunal's order, and that the Tribunal ought to have taken this figure also into account. The Court further observed that the Tribunal should have discussed the evidence relating to the actual payment of income tax by the HUF for the years in question.

(3.) WE now understand that the assessments of the Hindu undivided family for the relevant periods were taken up before the Tribunal and ultimately, on the 13th Dec., 1955, the total income tax payable by the family for the years 1944 45 and 1945 46 was fixed at about Rs. 70,000 only. The Tribunal may take into consideration this final figure of assessment and also the actual amount of income tax paid by the petitioner as the kartha of the family for the years in question, before giving full effect to our order.