JUDGMENT
Srinivasan, J.
1. The writ petition is for quashing the order of the Commissioner of Income-tax made in (C. Nos. 1411, 153 to 157 of 1982-83), dated July 28, 1984. The relevant facts are as follows :
One Mettupalayam-Coonoor Service Private Limited was carrying on transport operations. That belonged to the members of a Hindu undivided family, which consisted of four branches represented by S. A. K. Nanjappa Chettiar and is three brothers, Subramania Chettiar, Elliah Chettiar and Chinnathambi Chettiar. One of the brothers, Subramania Chettiar passed away in 1949 and all the family properties with the exception of the business which was in the name of the company were partitioned. The sons of Subramania Chettiar, one of whom was Nataraja Chettiar, were allotted a fourth share in the properties. In 1962 Nanjappa Chettiar, who was the managing director till then of the company, passed away. On his demise, differences arose between the serving members of the family. Elliah Chettiar and the sons of Subramania Chettiar wanted to dissociate themselves from the business carried on by the company. At that time, the company had a fleet of 50 buses running on various routes. It was decided on September 14, 1961, that 18 vehicles to the value of Rs. 2,00,000 were to be allotted to Elliah Chettiar and six vehicles worth Rs. 50,000 to Subramania Chettiar’s branch. The remaining 26 buses were to represent the shares of the branches of Chinnathambi Chettiar and Nanjappa Chettiar. There were two agreement entered into on that date. One was between Elliah Chettiar and the company with reference to transferring 18 buses. Another was between the company and the three sons of Subramania Chettiar, transferring six buses to them. There was a dispute with regard to the agreement and Elliah Chettiar field a suit O.S. No. 137 of 1965 on the file of the Sub-Court, Coimbatore, for a declaration that he was the owner of the vehicles mentioned in the agreement and for a decree that the joint application filed before the Regional Transport Authority, Coimbatore, for transfer of the permits on March 15, 1962, should not be withdrawn by the company as well as Chinnathambi Chettiar, defendants Nos. 1 and 2 therein. That suit was decreed on April 10, 1969. Pursuant to the decree, the Regional Transport Authority effected transfers of the permits in favour of the decree-holder. He also transferred the permits in favour of Nataraja Chettiar pursuant to the agreement dated September 14, 1961. On the basis of the validity of a similar agreement between Elliah Chettiar and the company, it was also upheld by the court.
2. Thereafter, when the company was assessed to tax with regard to those vehicles, that was challenged by the company on the footing that it was not the owner of the buses. The Income-tax Officer did not accept the contention of the company and proceeded to complete the assessment. Aggrieved by that, the company preferred an appeal before the Appellate Assistant Commissioner of Income-tax, “A” Range, Coimbatore. By order dated March 16, 1978, the Appellate Assistant Commissioner set aside the order of assessment accepting the contention of the company that the buses have been transferred in favour of the two individuals with whom the company had entered into an agreement, viz., Elliah Chettiar and Natarajan. Consequently, the Appellate Assistant Commissioner directed a fresh assessment. Pursuant thereto, a fresh assessment was made with regard to the company and that was challenged in different proceedings by the company with regard to the quantum of tax. The Income-tax Officer issued notices to the writ petitioner under section 148 of the Income-tax Act on September 5, 1981, for the purpose of considering the income in relation to the buses which were transferred to Nataraja Chettiar, as on March 19, 1981. Nataraja Chettiar died and the petitioner is his first son. In compliance with the notice, the petitioner appeared before the officer and represented that the account books maintained by his deceased father were not available and he had no materials with him to file returns or accounts for statement of accounts. The officer proceeded to make a best judgment assessment under section 144 of the Income-tax Act. He proceeded on the footing that the buses were owned by Nataraja Chettiar and assessed the income. The orders of assessment were challenged by the petitioner in revision petitions before the Commissioner of Income-tax. The Commissioner passed an order dated July 28, 1984, rejecting the revision petitions. It is that order which is challenged in this writ petition.
3. Learned counsel for the petitioner refers to the reasoning of the Commissioner in the impugned order which relies upon the judgment of the Subordinate Judge, Coimbatore, in O.S. No. 137 of 1965. Learned counsel contends that the petitioner’s father, Nataraja Chettiar, was not a party at all to O.S. No. 137 of 1965 and he was also not a party to the agreement dated September 14, 1961, which was the subject-matter of the suit. Learned counsel has taken me through the judgment in that suit and submitted that the judgment nowhere refers to any agreement in favour of Nataraja Chettiar and that the entire judgment related only to the agreement in favour of Elliah Chettiar.
4. No doubt, learned counsel is correct in saying that the Commissioner has placed reliance on the judgment of the Sub-Court in the aforesaid suit. The Commissioner has observed as follows :
“8. The next issue raised is that the judgment of the Sub-Court of Coimbatore is not binding on the petitioner. I do not know how the assessee has come to this conclusion when the Sub-Court in unmistakable terms has held that the agreement dated September 14, 1961, between the three families is valid. The assessee family also was a party to the agreement and this fact has not been disputed by the petitioner. On a perusal of the file of Messrs. M. C. S. (Pvt.) Ltd., the following facts emerge :
9. There were agreements between the three families on September 14, 1961, as per which the company will transfer 15 buses and 6 buses along with the route permits to the families of Shri A. K. Elliah Chettiar and Sri G. S. Nataraja Chettiar, respectively. In consideration, the transferees are to transfer their shareholdings in the company to Sri S. A. K. Chinnathambi Chettiar who in that process will gain absolute control of the company. The board of directors passed a resolution to this effect. On the face of these facts, I am unable to appreciate the claim that the judgment of the Sub-Court of Coimbatore which only had held the abovesaid agreement as valid, is not binding on the petitioner family. On this agreement also, my finding is against the petitioner.”
5. Learned counsel is correct in contending that the Commissioner has not properly understood the judgment in O.S. No. 137 of 1965 and erroneously thought that it would cover also the petitioner’s father, Nataraja Chettiar. But, the Commissioner has not stopped with merely referring to the judgment in the suit. In paragraph 11 of his order, he has proceeded to refer to the order of the appellate authority in Income-tax Appeals Nos. 59-C and 60-C made on March 16, 1978. That was the proceeding taken by the company challenging the assessment made against it on the ground that the buses had already been transferred in favour of two individuals, viz., Elliah Chettiar and Nataraja Chettiar. The said paragraph in the Commissioner’s order reads thus :
“11. It is argued that the buses were not transferred to the petitioner family and such transfer is not registered with the Road Transport Authority. Consequently, it is argued that in spite of the agreement, the assessee family was not the beneficial recipient of the income. In this connection, the following extract from the order of the Appellate Assistant Commissioner in Income-tax Appeals Nos. 59-C and 60-C dated March 16, 1978, will throw ample light.
6. ‘The suit for enforcement of the agreement dated September 14, 1961, having been decreed by the order of the Court of the Subordinate Judge, Coimbatore, in O.S. No. 137 of 1965 on April 10, 1969, it was given effect to by the Road Transport Authority also by their order dated October 31, 1969, whereby the following routes were held to have been transferred to the different disputing parties :
Shri A. K. Elliah Chettiar :
Coimbatore Town Services 12 buses Coimbatore to Mettupalayam 1 bus Coimbatore to Ooty 1 bus Coimbatore to Kotagiri 1 bus Spare bus 2 in Coimbatore Town Service and one route bus. Shri G. S. Nataraja Chettiar and others : Mettupalayam to Gobi 3 buses Mettupalayam to Sathiamangalam 2 buses Spare 1 bus The rest of the routes remained with the appellant-company'."
7. Transfer of the aforesaid buses dated March 15, 1962, having been acceded to and the de facto ownership of the vehicles recognised and regularized with effect from the date of application for transfer on March 15, 1962, by the Road Transport Authorities, I am unable to subscribe any credence to the petitioner’s claim in this respect.”
8. Learned senior counsel for the Income-tax Commissioner has invited my attention to the order dated March 16, 1978, passed by the Appellate Assistant Commissioner of Income-tax, ‘A’ Range, Coimbatore. A perusal of the order shows that the appellate authority had not rested its conclusion merely on the judgment passed by the civil court but also on the subsequent order passed by the Regional Transport Authority transferring the vehicles in favour of Nataraja Chettiar and Elliah Chettiar. That order was passed at the instance of the company. The order also contains the following observations :
“7. The Income-tax Officer strenuously contended that the income earned from the buses run by Shri A. K. Elliah Chettiar and Shri G. S. Natarajan has been voluntarily offered by them as the income of the appellant as per the returns filed on April 4, 1968, and March 31, 1970, in respect of the assessment years 1967-68 and 1968-69, and, therefore, the appellant cannot now be permitted to agitate that they were income accruing to different persons. He fears there will be loss of revenue as the other persons have not offered the income in their assessments. Shri Seethapathy, the learned representative on the other hand, contends that the appellant did not object to such inclusion because at the material time it was resisting, in the suit filed, the transfer of registration certificates and also the route permits. The facts, however remain, it is urged by the learned representative that both in law and in fact the buses numbering 24 did not belong to the appellant. It was submitted that de facto 18 buses were in the possession of Shri A. K. Elliah Chettiar and 6 buses with Shri G. S. Natarajan from 1962 and the legal title had also been confirmed on them by virtue of the court orders in April, 1969, and implemented by the Road Transport Authorities in October, 1969, with retrospective operation.”
9. Thus, it is clear that the appellate authority had, on the earlier occasion in the proceedings instituted by the father, had an occasion to go through the relevant records and find that the vehicles have been transferred actually in favour of Elliah Chettiar and Nataraja Chettiar. It is not open to the petitioner herein who claims under Nataraja Chettiar to contend that the ownership continued to be with the company and Nataraja Chettiar never became the owner of the vehicles. It is not in dispute that Nataraja Chettiar was a director of the company and it is only the company which had instituted the proceedings referred to above and got an order in its favour. Thereafter, it is not open to the directors of the company to contend otherwise and claim that individual assessment cannot also be made.
10. There is no merit in the contention of learned counsel for the petitioner that the impugned order only relies upon the civil suit and Nataraja Chettiar not being a party to the suit, the order is vitiated. I have already pointed out that the order of the appellate authority was not solely based on the civil suit, but in turn on the relevant records produced before them.
11. When the matter came earlier before another learned judge of this court on April 6, 1994, he passed an order recording an undertaking given by the Government Pleader to produce the records of the Regional Transport Officer relating to the application for transfer of buses dated March 15, 1962. The Government Pleader has represented before me now that the Regional Transport Officer has sent a communication that no records are available with him in connection with the writ petition. It is also stated by him that no application for transfer of ownership in respect of permits of vehicles owned by the company is pending in his office. It is quite natural that at this distance of time, the records are not available with the Regional Transport Officer. But, the petitioner cannot get over the order of the appellate authority passed as early as on March 16, 1978. That order expressly refers to the transfer of vehicles of the company in favour of Elliah Chettiar and Natarajan. In those circumstances, there is absolutely no merit in the contention that the petitioner is not liable for the assessment made by the Income-tax Department. It is also submitted that Nataraja Chettiar having died in 1981, proceedings could not have been instituted thereafter for making an assessment. There is no substance in the contention. The proceedings were validly initiated and the petitioner had ample opportunity to contest the proceedings. It is because he represented that no materials were available with him the authorities proceeded to assess the petitioner on the basis of best judgment.
12. Learned counsel for the respondent draws my attention to an affidavit filed by Nataraja Chettiar, the father of the petitioner in C.M.P. No. 11538 of 1970, in A.S. No. 480 of 1969 on the file of this court. In that affidavit, he had admitted that he was running five buses with one spare bus as follows :
Mettupalayam to Gobichettipalayam 3 buses Mettupalayam to Sathyamangalam 2 buses Spare 1 bus. 13. In view of the said admission on the part of the petitioner's father which could not be explained by the petitioner, there is no merit in the contention of the petitioner. It is obvious that the petitioner is suppressing material facts in order to deny his liability to pay tax. 14. There is absolutely no merit in this writ petition. It is dismissed. There will be no order as to costs.