CASE NO.: Appeal (civil) 23 of 1950 PETITIONER: LAKSHMINARAIN BHADANI RESPONDENT: C.I.T. BIHAR & ORISSA DATE OF JUDGMENT: 11/09/1951 BENCH: H.J. Kania (CJI) & M.P. Sastri & S. R. Das & N.C. Aiyar & V. Bose JUDGMENT:
JUDGMENT
AIR 1953 SC 429
The Judgment was delivered by KANIA, C. J.
KANIA, C. J.
This is an appeal from a judgment of the High Court at Patna. It arises out
of an income-tax reference made to the High Court under section 66(1) of
the Indian Income-tax Act Briefly stated the facts are that a joint Hindu
family, of which the present appellant was the karta, was assessed to
income-tax for the year 1939-40. In 1944 the Income-tax Officer considered
that certain income of the family taxable in 1939-40 had escaped
assessment. In the meanwhile, the joint family had become divided and
necessary steps had been taken by the members to have an order passed under
section 25A(1) of the Income-tax Act. The Income-tax Officer issued a
notice in the name of the joint Hindu family and served it on the appellant
under section 34 read with section 22 of the Income-tax Act to make a
return in respect of the escaped income and the appellant sent a return in
response to that notice. Thereafter, the Income-tax Officer made an
assessment on the escaped income of Rs. 37,098 and issued a notice of
demand on the appellant as the karta and on the two other members of the
joint family. The notice was to require payment of the full amount of tax
due on the escaped income and did not apportion the liability for it
amongst the three members of the family. The assessee contended that the
proceedings were irregular and that he was not liable to pay anything. His
contention was rejected by the Income-tax Officer, the Appellate Assistant
Commissioner, and the Income-tax Appellate Tribunal. He prayed that a
question of law may be referred to the High Court for its opinion.
Accordingly the Income-tax Appellate Tribunal referred the following
question for the High Court’s opinion :–
“Whether in the circumstances of this case proceedings under section 34 in
respect of the assessment year 1939-40 were validly initiated and completed
against the Hindu undivided family, which had ceased to exist then, and an
order under section 25A(1) accepting the partition of the Hindu undivided
family had already been passed.”
The High Court expressed the view that there were irregularities both in
initiating the proceedings and in completing the same but as there was no
prejudice to the appellant, they answered the question in the affirmative
and ordered the assessee to pay the costs of the reference. The assessee
has come in appeal before us
Mr. Umrigar, on behalf of the appellant, argued only one point for our
consideration. He contended that as the High Court had held that the
proceedings were irregularly initiated and completed they were invalid and
no order for assessment could be made. For this contention he relies on the
wording of section 25A(1). In our opinion, this contention is unsound and
the opinion of the High Court that the proceedings were initiated
irregularly is also unsound. It does not appear necessary, when proceedings
are initiated under section 34 read with section 22 of the Income-tax Act,
to issue notice to every member of the family. The position is as if the
Income-tax Officer was proceedings to assess the income of the Hindu
undivided family as in 1939-40. In our opinion, therefore, that contention
must be rejected
The next contention urged by Mr. Umrigar was that section 25A(2) requires
that the assessment should be made against each member of the joint family
for a proportionate share of the tax and it is only after one of them had
failed to pay such share that the Income-tax Officer could proceed to
recover it from the others. The argument so formulated cannot be accepted.
On a true construction of section 25A(1), it appears that the Income-tax
Officer in the first place has to make an assessment of the total income as
if no partition had taken place. That means that he has to find out what
the total income was and calculate the amount of tax payable thereon as if
it was payable by one unit. Having done that, it is the duty of the Income-
tax Officer under the section to apportion the amount payable by the unit
amongst the members of the joint family according to the portion of the
joint family property allotted to each of them. That duty also appears to
be imperative having regard to the concluding words of section 25A(2). In
the present case, the Income-tax Officer has omitted to make any
apportionment. That fact is noticed in the judgment of the High Court and
also by the Income-tax Appellate Tribunal. In the judgment of the High
Court it has been stated that this could be put right. In our opinion, it
is necessary that the Income-tax Officer should issue the notice of demand
against each the members of the family in accordance with the concluding
words of section 25A(2) and that should be doneWe are unable to accept the
second part of the argument of Mr. Umrigar that it is only on the failure
or default of payment by one of the members that the Government has the
right to recover that portion of the amount from others. The proviso to
section 25A(2) makes the position very clear. In contrast with that the
proviso to section 26 shows that when the Legislature wanted to give power
to the Income-tax authority to recover from others only on failure of
payment by a party, it said so expressly. The absence of similar words in
the proviso to section 25A(2) must result in the rejection of this part of
Mr. Umrigar’s argument
As the appeal has failed substantially the appellant is ordered to pay the
costs of the appeal.
