GULABRAI MANOHAR LALL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this case the following question of law has been formulated by the INcome-tax Appellate Tribunal :

(2.) THE material facts according to the statement of the case are as follows : THEre was a partition suit No. 2 of 1942 instituted by Manoharlal Bakrewalla, in the Court of the Subordinate Judge of Singhbhum, Chaibassa. A compromise was effected on 31-3-1943, as a result of winch, Ma-noharial Bakrewalla, his wife Ganga Devi & his five sons, three of whom were minors, agreed to partition the Hindu undivided family and transfer assets, liabilities etc. to a public limited company called 'Gulabrai Manoharlal Co. Ltd.' which had been incorporated on 29-3-1943. A memorandum was subsequently executed on 6-5-1943 between the members of the assessee family as vendors and the limited company as vendee. In consideration of Rs. 5,00,000 worth of shares distributed in 5000 shares to Manoharlal and his family members out of total capital of Rs. 11,00,000 the company took over the assets and liabilities on 1-6-1943. THE final memorandum of agreement is dated 21-5-1943. On a claim being made under 25A the Income-tax Officer recorded an order that the partition had taken place among the members of the undivided family of the assessee. In response to the notice under Section 23 the assessee did not file return of its income nor produced books of account. On 23-6-1947, the Income-tax Officer completed the assessment under Section 23 (4) for the two periods of accounting, viz, the first period being from 20-10-1941 to 8-11-1942 and the second period being from 9-11-1942 to 31-3-1943. Appeals were preferred against the order of assessment to the Appellate Assistant Commissioner and to the Income-tax Appellate Tribunal. THE appeals were dismissed and the assessments made were confirmed. On the application of the assessee the Appellate Tribunal has referred the question of law which has been stated above.