COMMISSIONER OF INCOME TAX Vs. RADHA KISHAN CHOUDHURY

JUDGEMENT

(1.) THESE two references relate to the assessment years 1963-64, 1964-65, 1965-66 and 1966-67 in respect of the assessee, Shri Radhakishan Choudhury, and shall be answered by this common judgment.

(2.) THE assessee was earlier a partner of the firm, M/s. Boitram Debidutt, until he retired from April 12, 1962, and after his retirement, his son, Shri Prabhudayal Choudhury, was taken into the firm as a partner, bringing in a capital of only Rs. 5,000, but was given a profit share of 31 1/2%. Radhakishan Choudhury, however, left his entire interest amounting to Rs. 46,931 in the firm even after his retirement. THE ITO for the assessment year 1963-64, taking the view that Prabhudayal Choudhury was only a benamidar or representative of his father, the assessee, who was considered the real or beneficial owner of 31 1/2% of the profits of the firm, included the share of profits of Rs. 5,085 from the, said firm in the income of the assessee. For the same reason Rs. 9,052 for 1964-65, Rs. 8,272 for 1965-66 and Rs. 8,938 for 1966-67 were included in the income of the assessee. THE assessee having appealed, the AAC allowed the appeals for the assessment years 1963-64 and 1964-65 by his consolidated order dated March 18, 1971, relying on the order dated April 16, 1968, of his predecessor in appeals in respect of the assessment years 1961-62 and 1962-63 to the effect that the ITO was not justified in assessing the share income from the firm, M/s. Boitram Debidutt, in the hands of the assessee. He, therefore, deleted the additions of Prabhudayal's share income for 1963-64 and 1964-65. As regards assessment year 1965-66, he ordered fresh assessment according to his instructions. THE department appealed therefrom in I.T.A. Nos. 5166(Gau), 5167 (Gau) and 5168(Gau) of 1971-72 before the Income-tax Appellate Tribunal, Gauhati (hereinafter " the Tribunal "), and, in respect of assessment year 1966-67, in I.T.A. No. 174(Gau) of 1974-75. THE first three appeals were disposed of by a consolidated order dated August 28, 1973, and the last by order dated March 22, 1975. All the appeals were rejected and the deletions of inclusions of Prabhudayal's share income of the firm of M/s. Boitram Debidutt in the total income of the assessee were upheld, holding that the AAC was correct in deleting the amounts of share income. At the instance of the department, the Tribunal referred the following question of law in Income-tax Reference No. 8/75 (relating to 1963-64, 1964-65 and 1965-66):

(3.) THE submission, at first blush, appears to be logical. In CIT v. A. Abdul Rahim and Co., 1965 55 ITR 65, it, was held (Headnote) :