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Tatawarthy Narayana Murty Vs. Commissioner of Income-tax, Andhra Pradesh. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberCase Referred No. 23 of 1961
Reported in[1963]49ITR766(AP)
AppellantTatawarthy Narayana Murty
RespondentCommissioner of Income-tax, Andhra Pradesh.
Excerpt:
- .....arises under section 66(1) of the indian income-tax act, 1922. penalty was levied against a hindu undivided family of which the petitioner was a member. according to the petitioner after disruption of the joint family status, he preferred the appeal to the income-tax appellate tribunal questioning the levy of penalty. the appellate tribunal held as follows :'according to the assessee, the hindu undivided family, which is the assessee, had become disrupted on october 31, 1957, whereas the penalty was levied on november 5, 1957. for this it relies upon the decision of the income-tax officer in regard to the assessees application under section 25a. therefore, according to the assessee, the legal entity on which the penalty has been levied had ceased to exist on the date of levy of.....
Judgment:

UMAMAHESWARAM J. - This reference arises under section 66(1) of the Indian Income-tax Act, 1922. Penalty was levied against a Hindu undivided family of which the petitioner was a member. According to the petitioner after disruption of the joint family status, he preferred the appeal to the Income-tax Appellate Tribunal questioning the levy of penalty. The Appellate Tribunal held as follows :

'According to the assessee, the Hindu undivided family, which is the assessee, had become disrupted on October 31, 1957, whereas the penalty was levied on November 5, 1957. For this it relies upon the decision of the Income-tax Officer in regard to the assessees application under section 25A. Therefore, according to the assessee, the legal entity on which the penalty has been levied had ceased to exist on the date of levy of penalty. There is no question of any legal entity questioning the validity or the quantum of the penalty levied in any appeal against the order in question since the order is illegal, having been levied on a non-existing legal entity. In view of the above, we consider that there can be no legal entity in existence to come up in appeal to the Tribunal. Hence this appeal is incompetent and, therefore, dismissed.'

The view taken by the Appellate Tribunal is erroneous. If penalty was levied as against a Hindu undivided family and the members of the Hindu undivided family effected partition between them, there can be no doubt that the erstwhile coparceners are entitled to prefer an appeal and question the levy of penalty. The members of the Tribunal erred in taking the view that after the division is effected between the members of the Hindu undivided family none of the erstwhile coparceners are entitled to prefer an appeal and that the levy of penalty should stand.

In Mahindra Kumar Mohanlal v. Commissioner of Excess Profits Tax, a similar question arose for decision. Tendolkar J., delivering the judgment of the Bench, took the same view. He observed at page 364 as follows :

'With great respect to the Members of the Tribunal, the view appears to us to be somewhat revolutionary that an assessment made cannot be challenged in appeal by any person but becomes binding.'

Lower down, he observed as follows :

'If the Tribunals view is correct, an Excess Profits Tax Officer has merely to make an assessment on a disrupted Hindu family. No one has a right to appeal against such an assessment and yet the amount to which the Hindu undivided family is assessed can be recovered from the erstwhile coparceners of the Hindu undivided family. If such were the position in law, it would, prima facie, be a monstrous position; but we see nothing in the law to warrant the view that the Tribunal thought fit to take.'

The learned judge further added :

'It is true that after disruption the family does not exist; but if the taxing authorities chose to ignore this fact and treat it as an existing family, it must of necessity be treated as an existing family for the purpose of the right of appeal. Equally the only persons who could appeal on behalf of the Hindu undivided family would be the erstwhile coparceners of that Hindu undivided family who are in law liable to pay any tax imposed on the Hindu undivided family; and this is why the coparceners of the divided Hindu family got the locus standi to appeal against an order under the Excess Profits Tax Act against a disrupted Hindu family.'

We, therefore, answer the question in the affirmative and hold that an appeal lies to the Appellate Tribunal. The Appellate Tribunal will decide the appeal on the merits. The petitioner is entitled to his costs. The advocates fee is fixed at Rs. 200.

Question answered in the affirmative.


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