COMMISSIONER OF INCOME-TAX Vs. KMNNSWAMINATHAN CHETTIAR

JUDGEMENT

(1.) This reference by the Income-tax Appellate Tribunal, Madras Bench, under Section 66 (I) of the Indian Income-tax Act, 1922, arises out of the assessment for the year 1939-40 made under Section 34 on one K. M.N.N. Swaminathan Chettiar, Karaikudi (hereinafter referred to as the asssessee) who was the karta of his joint family till the 21 January, 1940, when there was a partition of the family property among the members. For the year 1939-40 the assessee was separately assessed as the karta of the family and in his individual capacity in respect of the income of the family and his own private income respectively, but this reference concerns only the assessment of the family income. Before the Income-tax Officer the assessee contended that the income which had accrued to the family without British India in 1938-39 should not be included in the assessment as he, and therefore the family, was "not ordinarily resident". The contention, though rejected by the Income-tax Officer, was upheld on appeal by the Appellate Assistant Commissioner as a result of which a fresh assessment was made on the 23rd August, 1940, excluding the foreign income

(2.) In the assessment proceedings for the succeeding year 1940-41 the assessee put forward the claim that a partition having taken place among the members of the family, no assessment on the family as such should be made for that year. This claim was rejected by the Income-tax Officer on the 23 December, 1941, but the assessee again succeeded before the Appellate Assistant Commissioner who by his order dated the 17 August, 1942, accepted the partition put forward and directed an assessment to be made on that basis.

(3.) Meanwhile, the Income-tax Officer, having come into possession of materials showing that the family was "ordinarily resident" in British India in the year 1938- 39, issued a notice dated the 6 July, 1942, under Section 34 of the Act addressed to "K. M.N.N. Swaminathan Chettiar, Sembanur " stating inter alia that "your income" for the year ending 31 March, 1939, had been both underassessed and assessed at too low a rate, and that it was therefore proposed to re-assess such income. The notice accordingly required the addressee to deliver " a return in the attached form of your total income and income assessable for the said year ending 31 March, 1940." In compliance with that notice which the assessee understood as relating to the family income, he made a return of the same income as before describing his "status" as "Hindu undivided family not ordinarily resident," and signing as " K.M.N.N. Swaminathan Chettiar, Manager, H.U.F." (i.e., Hindu undivided family). This was on the 29 August, 1942. It is important to note that, although he had by that time obtained an order from the Appellate Assistant Commissioner recording the partition in connection with the assessment proceedings for 1940-41, he raised no contention that by reason of that partition, the joint family had ceased to exist and could no longer be re- assessed for the year 1939-40 in respect of any part of its income in the previous year whether such income had escaped assessment or not. On the contrary, he made a return of the family income of that year describing himself as " Manager, Hindu Undivided Family " and repeating the previous claim that the family was not " ordinarily resident." The Income-tax Officer, however, rejected this claim and purported to make a supplemental assessment on the family " as resident and ordinarily resident," computing the tax payable at Rs. 13,466 and directing the sum to be "collected by adjustment of the refund due to the assessee for 1941-42 assessment."