PREMSUKHDAS JAGNANI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN these cases the assessee is a Hindu undivided family in the name of Noopchand Magniram, of which the karta is Premsukhdas Jagnani. It appears that the other coparceners of the Hindu undivided family were Girdhari Lall Jagnani, Benarsi Lall Jagnani and Ram Vallabh Jagnani. IN these cases we are concerned with two assessment years, 1948-49 and 1949-50. IN the course of proceedings for assessment the assessee claimed that there was disruption of the Hindu joint family. It was, however, held by the INcome-tax Office in his order under section 25A made on the 30th October, 1950, that the description of the Hindu joint family must be taken to have occurred on the 5th January, 1949. The result, therefore, was that for the two assessment years 1948-49 and 1949-50 the assessee was taxed in the status of a Hindu undivided family. The case of the assessee is that in the assessment years 1944-45 the four coparceners of the assessee family carried on business of the Mahabir Oil Mill with the partnership of two other persons, Mahadeo Prasad and Kashi Ram. The shares of the partners in the alleged partnership were as follows : <FRM>JUDGEMENT_376_ITR46_1962Html1.htm</FRM>

(2.) AS directed by the High Court, the Income-tax Appellate Tribunal has stated a case on the following question of law under section 66(2) of the Indian Income-tax Act :

(3.) IT was also pointed out that the assessee family has realised rent to the extent of Rs. 4500 from the partnership. This fact, however, does not necessarily suggest that the Hindu undivided family itself had entered into the partnership business as one of the partners. On the contrary, it is also consistent with the inference that the assessee family was carrying, on transaction with the Mahabir Oil Mill. On this point the Appellate Tribunal has observed that in the absence of the family books of accounts it was not possible to say whether the goods worth Rs. 10,542 and odd were taken away from the assessee family when the mill was started or whether they represent the supplies made by the family later. IT is, therefore, manifest that an examination of the books of account does not unequivocally support the finding of the Appellate Tribunal that the Hindu undivided family itself was a partner of the business named Mahabir Oil Mill. Reference has also been made by the Appellate Tribunal in this connection to the circumstance that for the previous assessment years, 1946-47 and 1947-48, the assessee did not object to being assessed for the 8 annas profit of the partnership business and the assessee did not take an appeal from the decision of the Income-tax Officer making the assessment on the basis that the Hindu joint family was really the owner of the 8 annas share of the partnership business. But this is not a valid reason for the finding of the Appellate Tribunal because it is well established by numerous authorities that the principle of estoppel or res judicata has no application to income-tax cases (see the decision of Lord Carson in Broken Hill Proprietary Co. Ltd. case, the decision of this High Court in Sirdar Bahadur Indra Singh v. Commissioner of Income-tax and also of the Lahore High Court in Jitumal Chamanlal v. Commissioner of Income-tax). The last circumstance to which the Appellate Tribunal has referred is a decision of the Income-tax Officer under section 25A, dated the 30th October, 1950, wherein it has been held that there was disruption of the joint family status with effect from the 5th January, 1949, because on that date there was an effective physical division of the joint family. This reasoning of the Appellate Tribunal has really no relevance for determining the question of law raised in this case because the question for determination is not at what point of time there was disruption of the Hindu joint family under section 25A of the Income-tax Act. Even on the assumption that there was a disruption of the Hindu joint family for the purpose of income-tax on the 5th January, 1949, the question really is whether the four members of the Hindu joint family had entered into a partnership with the Mahabir Oil Mill in their individual capacity or as representing the Hindu joint family. For the decision of that question it is manifest that the finding of the Income-tax Officer in his order dated the 30th October, 1950, under section 25A, has no relevance.