LACHHIRAM BALDEODAS Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) This is a case stated by the Commissioner of Income-tax under the direction of this Court and the question submitted for consideration was "Under the circumstances of this case is the family to be considered joint or separated in law ?" There is no doubt that that question, that is to say; whether the family can be considered joint or separate, is substantially a question of fact ; but it is con- tended shortly by Mr. Jayaswal on behalf of the assessee that in the circumstances of the case there was no evidence upon which the Income-tax Officer, and ultimately the Assistant Commissioner and the Commissioner could decide against the application which was made by the assessee to be registered as a firm under Section 26A, Income Tax Act. The case has been very elaborately argued ; but in my judgment, the matter is resolved by a very simple consideration. Shortly stated the family of Lachhiram had been assessed as a joint Hindu family up to 1931 ; the year of assessment in dispute is the year 1931-1932. Lachhiram's family was carrying on business as a joint Hindu family and in 1931 three members of that firm being the sons of Lachhiram, Baldeodas, Mulchand and Mahabir Prasad, executed what purported to be a deed of partnership. This was on June 1 of that year, and in the mon August, following, they made an application to the Income-tax Officer under Section 26A Income Tax Act to be registered as a firm. In the result the Income-tax Officer decided that the alleged partnership was fictitious, not being acted upon, and that the members of the family still remained a joint Hindu family.

(2.) Now Mr. Jayaswal contends in substance that the apparent state of facts should be taken as real in the absence of any evidence to the contrary and he contends that the inquiries which were made by the Income-tax Officer and upon which he appears to have decided that the family was still joint were not evidence upon which he was entitled to come to the conclusion that this partnership deed was an unreal transaction. The Income-tax Officer relied upon inquiries made from outsiders ; he also found that the parties were messing together, and also a matter which in his opinion, was of considerable importance was the fact that the father Lachhiram did not execute the partnership deed to which I have already made reference. I should be more accurate in saying that the Income-tax Officer stated that the father did not endorse the partnership deed. His statement to that effect was made for obvious reasons. It is nowhere contended that Lachhiram was a partner in the new firm and therefore, it would be unnecessary to execute it ; but the Income tax Officer in making a reference to this fact stated that it was recited in the partnership deed that the members of the family had separated and it is in reference to this statement that the Income-tax Officer was of the opinion, that the endorsement of Lachhiram might have been or was necessary and its absence raised a suspicion, which, added to the facts of the case, and made him come to the conclusion to which I have already referred.

(3.) As I have already stated, whether the partnership transaction was real or not, is purely a question of fact. The matter seems to me to be concluded by what I have already described as one which was of considerable importance for consideration. Mr. Jayaswal would have this Court to hold that the effect of the Income-tax Officer's finding is a finding of fact against the assessee, and in order to come to that conclusion definite evidence is required which in this case it is contended is absent.