COMMISSIONER OF INCOME TAX Vs. LUN KARAN GOYAL

JUDGEMENT

(1.) THE Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, on an application made to it under Section 256(2) of the Income-tax Act, 1961 (for short, "the Act"), by the Commissioner of Income-tax, Jaipur, has drawn up a statement of case and referred the following question of law for the opinion of this court :

(2.) FOR the assessment year 1977-78, the assessee, Shri L.K. Goyal, filed a voluntary return declaring a total income of Rs. 15,510 in the status of a Hindu undivided family. The assessee died on February 25, 1976 (sic), leaving behind four sons, namely, S.S. Goyal, V.P. Goyal, H.C. Goyal and M.C. Goyal. The property owned by the family represented deposits with Messrs. Jaipur Auction House, Messrs. Modern Furniture and Messrs. Goyal and Sons, and the return for the assessment year 1977-78, has been filed by the assessee in respect of the income earned on the above deposits. The Income-tax Officer, in his assessment order dated February 7, 1980, made the assessment on protective basis in the status of a Hindu undivided family as the return was filed in the status of a Hindu undivided family. The Income-tax Officer said that the deceased has always been assessed in his individual capacity and, at no point of time, the question of Hindu undivided family status was raised. He also reached the conclusion that as the deposits were not divided among the legal heirs, the correct status would be that of an association of persons. The assessee filed an appeal against the aforesaid order before the Appellate Assistant Commissioner of Income-tax who, following the decision in the case of M.N. Jain v. ITO I. T. A. No. 125/JP of 1979, decided on November 26, 1980, held that, on the death of Shri L.K. Goyal, the estate devolved upon his four sons by way of inheritance in the capacity of a Hindu undivided family and, therefore, the Income-tax Officer was not right in holding that the correct status of the dependants was that of an association of persons. It was held that the correct status of the assessee should be taken as that of a Hindu undivided family. The Commissioner of Income-tax, Jaipur, filed second appeal to the Income-tax Appellate Tribunal, Jaipur Bench, and the Tribunal upheld the order of the Appellate Assistant Commissioner of Income-tax and dismissed the appeal. An application was filed under Section 256(1) of the Act before the Tribunal to refer the aforesaid question for the opinion of this court. It will be seen that the case of M.N. Jain, which was relied upon by the learned Appellate Assistant Commissioner of Income-tax in taking the view that, on the death of L. K. Goyal, his estate devolved upon his four sons by way of inheritance, was decided on the basis of CIT v. Dr. Babubhai Mansukhbhai [1977] 108 ITR 417 (Guj).

(3.) IT will be seen that the aforesaid view is in consonance with the view of the Allahabad High Court in the case of CIT v. Ram Rakshpal, Ashok Kumar [1968] 67 ITR 164. Similarly, the Madhya Pradesh High Court also examined this aspect of the case in the case of Shrivallabhdas Modani v. CIT [1982] 138 ITR 673 ; [1983] Tax LR 559, and held that if there was no coparcenary subsisting between a Hindu and his sons at the time of death of his father, property received by him on his father's death could not be so blended with the property which had been allotted to his sons on a partition effected prior to the death of the father. The court also referred to the provisions of Section 8 of the Hindu Succession Act and felt that Section 8 of the Hindu Succession Act should be taken as a self-contained provision laying down the scheme of devolution of the property of a Hindu dying intestate. Therefore, the property devolving on a Hindu on the death of his father intestate after the coming into force of the Hindu Succession Act did not constitute Hindu undivided family property consisting of his own branch including his sons. In fact the Madhya Pradesh High Court followed the Full Bench decision of the Madras High Court in the case of Addl. CIT v. P.L. Karuppan Chettiar [1978] 114 ITR 523. The Andhra Pradesh High Court also had occasion to deal with a similar question, though in the context of wealth-tax in the case of CWT v. Mukundgirji [1983] 144 ITR 18 and in view of Section 8 of the Hindu Succession Act said that the property which a son inherited from his father in case the father and his son do not constitute a joint Hindu family in the coparcenary is his individual property.