JUPUDY KESAVA RAO Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) The question referred to us is, "in the circumstances of this case is the Petitioner herein liable to be assessed under Section 26(2) of the Indian Income-tax Act"?

(2.) The circumstances are these: The Petitioner, J. Kesava Rao, and his deceased father, J. Gangayya constituted a Hindu undivided family deriving income from money-lending business. Gangayya was the Manager of the family and the assessments used to be levied on him as representative of the family. For the assessment of the year 1932-1933 (accounting year 1931-1932) notice was issued to Gangayya under Section 22(2) of the Income-tax Act on the 9 April, 1932, and he filed his return on the 20 May, 1932, showing a net income of Rs. 12,755. Gangayya died on the 15 July, 1932, before assessment could be levied on him. After his death the Petitioner continued to carry on the business. Notices were then issued to him under Secs.22(4) and 23(2) of the Act. He complied with these notices and was finally assessed to income-tax on a total I taxable income of Rs. 50,550. The Income-tax Officer did not levy on him super-tax on the excess over Rs. 30,000 of the total income on the assumption that the Petitioner like his father represented a Hindu undivided family.

(3.) The Petitioner appealed to the Assistant Commissioner objecting to the amount of the assessment. In the course of the appeal he learnt that the Petitioner had no children or brother. In the circumstance he considered that the assessment should have been made on the Petitioner as an individual and not as a Hindu undivided family since in his opinion after the death of the Petitioner's father in July, 1932, the Hindu undivided family ceased to exist and the Petitioner became the sole surviving member of the original Hindu undivided family. He therefore issued a notice to the Petitioner under Section 31(3) proposing to treat him as an individual and levy super-tax accordingly. The Petitioner contended that himself and his wife constituted a Hindu undivided family and that therefore the assessment made on him as a Hindu undivided family was correct. The objection was overed and the super-tax was levied accordingly. The question arising for decision is whether in these circumstances the Petitioner is liable to be assessed under Section 26(2) of the Indian Income-tax Act.