MAHENDRA KUMAR AGRAWALLA Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THESE ten writ applications under Articles 226 and 227 of the Constitution have been heard together as the facts are common and identical questions of law have been raised in all of them. All the ten writ applications are, therefore, being disposed of by this common judgment.

(2.) THE petitioner, Shri Mahendra Kumar Agrawalla, has filed these writ applications for quashing the notices, copies whereof have been made annexure "3" to the writ applications, issued by the Income-tax Officer, Ward B, Colliery Circle, Dhanbad, under Section 148 of the Income-tax Act, 1961, for the assessment years 1960-61, 1961-62, 1962-63, 1963-64, 1964-65, 1965-66, 1966-67, 1967-68, 1968-69 and 1969-1970. THE notices in respect of the assessment years 1960-61, 1961-62, 1962-63, 1963-64, 1964-65 and 1965-66 were issued on the 31st March, 1969; the notices in respect of the assessment year 1966-67 were issued on the 31st March, 1971, and the notices in respect of the assessment years 1967-68, 1968-69 and 1969-70 were issued on the 3rd of December, 1971.

(3.) IN that case it was suggested on behalf of the revenue that "the real test is the existence of a common source of income in which two or more persons are interested as owner or otherwise and it is immaterial whether their shares are specific and definite or whether there is any scheme of management or not". It was further submitted that "if the persons so interested come to an arrangement, express or tacit, by which they divide the income at a point of time before it emanates from the source, then the association ceases ; otherwise it continues to be an "association". It was held by the Supreme Court that the test suggested by learned counsel for the revenue was neither conclusive nor determinative of the question before it. IN that case the facts were as follows. The co-widows of a Hindu governed by the Mitakshara law inherited the estate of the deceased which consisted of immovable properties, shares, money lying in deposit and share in a registered firm. The question was whether the widows could be assessed in the status of an "association of persons" within the meaning of Section 3 of the INdian INcome-tax Act, 1922, in regard to the income derived from the properties inherited by them. The Appellate Tribunal had found that they had not exercised their right to separate enjoyment and that except for receiving the dividends from the shares and the interest from the deposits jointly, they had done no act which had helped to produce the income. It was held by the Supreme Court that as there was no finding that the three widows had combined in a joint enterprise to produce income and as they had done no act which had helped to produce the income, it could not be held that they had the status of an "association of persons" within the meaning of Section 3 of the INdian INcome-tax Act, 1922. Learned counsel, appearing for the petitioner, strongly relied on the decision of the Supreme Court in the above-mentioned case and submitted that in the absence of any material to show that the petitioner and his brother, Sri Yogendra Kumar Agrawalla, had combined in a joint enterprise to produce income, it cannot be held that they had the status of an "association of persons". IN my opinion, the question whether there has been a combination on behalf of the petitioner and his brother to produce income, profits and gains or not is a pure question of fact. There is nothing in the decision of the Supreme Court on the basis of which it can be urged that an "association of persons" to produce income cannot be formed on behalf of a minor. IN the case of J.V. Saldhana v. Commissioner of INcome-tax, 1932 6 ITC 114 [FB] the Madras High Court held that where a guardian or trustee carried on a business, though the persons ultimately deriving the benefit of the business may be some wards or beneficiaries or partly the guardian and partly the minors, the business can be regarded as a business carried on by the trustees or guardian and can be assessed as a single business., IN a case, however, where no business is carried on and the trustees or guardians act as bare trustees or guardians merely receiving the incomes and handing them over to the wards or beneficiaries, these considerations will not be available.