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Sheo NaraIn Duli Chand Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 608 of 1962
Judge
Reported in[1969]72ITR766(All)
ActsIncome Tax Act, 1922 - Sections 66(1)
AppellantSheo NaraIn Duli Chand
RespondentCommissioner of Income-tax
Appellant AdvocateP.N. Pachauri, Adv.
Respondent AdvocateGopal Behari, Adv.
Excerpt:
- - 8. as regards the failure of the assessee to produce books of accounts, it was mentioned in the statement of the case that the hindu undivided family had not maintained any books of accounts. if it is a fact that the assessee did not maintain books of accounts, it can hardly be blamed for its failure to produce account books before the income-tax officer......facts and in the circumstances of the case, the tribunal was right in holding that there was no partial partition in the assessee's family, and the income earned from the business previously carried on by the assessee hindu undivided family continued to be the income of the hindu undivided family after 17th of august, 1955 '2. messrs. sheo narain dalichand is the assessee. this is a hindu undivided family. the year of assessment is 1956-57. the accounting period was the financial year ending on 31st march, 1956. the assessee submitted a return on the footing that there had been a partial partition in the family on 17th august, 1955. under the partial partition, retail business and halwai business were taken over by two branches of the family. the wholesale businees of the family was.....
Judgment:

V.G. Oak, C.J.

1. The Income-tax Appellate Tribunal, Allahabad, has referred the following question to this court:

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that there was no partial partition in the assessee's family, and the income earned from the business previously carried on by the assessee Hindu undivided family continued to be the income of the Hindu undivided family after 17th of August, 1955 '

2. Messrs. Sheo Narain Dalichand is the assessee. This is a Hindu undivided family. The year of assessment is 1956-57. The accounting period was the financial year ending on 31st March, 1956. The assessee submitted a return on the footing that there had been a partial partition in the family on 17th August, 1955. Under the partial partition, retail business and halwai business were taken over by two branches of the family. The wholesale businees of the family was taken over by a firm consisting of four partners, Sheo Narain, Jagram, Hargovind and Pragdas. These four persons were sons of Dulichand deceased. A deed of agreement was drawn up on 20th August, 1955, embodying the terms of the partial partition dated 17th August, 1955. A deed of partnership was prepared on 16th July, 1956. The assessee, therefore, urged that the wholesale business carried on by the firm after 17th August, 1955, could not be treated as the business of the assessee family. This contention of the assessee was not accepted by the Income-tax Officer. He rejected the assessee's case of partial partition. Assessment was made on the footing that there had been no partial partition as alleged. Successive appeals of the assessee were dismissed by the Appellate Assistant Commissioner and by the Income-tax Appellate Tribunal, Allahabad. At the instance of the assessee, the Tribunal has referred to this court the question quoted above.

3. Whether there was partial partition or not is a question of fact. That question of fact cannot be referred by the Tribunal to this court. Mr. P. N. Pachauri, appearing for the assessee, however, urged before us that the contention of the assessee has been that there was no material before the Tribunal for holding that there was no partial partition, and the finding of the Tribunal is perverse. In Oriental Investment Co. Ltd. v. Commissioner of Income-tax, [1957] 32 I.T.R. 664(S.C.) it was explained by the Supreme Court on page 675 that a finding on a question of fact is open to attack under Section 66(1) of the Indian Income-tax Act, 1922, as erroneous in law when there is no evidence to support it or if it is perverse.

4. It is, therefore, necessary to reframe the question referred by the Tribunal. The proper question for consideration of this court would be:

' Whether, on the facts and in the circumstances of the case, the findings of the Tribunal that there was no partial partition in the assessee family, and that the income earned from the business previously carried on by the assessee Hindu undivided family continued to be the income of the Hindu undivided family after 17th August, 1955, are legally sustainable ?'

5. We proceed to answer the question as reframed by us.

6. In support of its case of partial partition, the assessee produced the following evidence before the Income-tax Officer :

(1) the partnership deed dated 16th July, 1956 ;

(2) the agreement dated 20th August, 1955 ;

(3) affidavits of Jagram, Pragdas, Jagdish Narain and Hargovind ;

(4) statements of Sheo Narain and his three brothers; and

(5) statements of two persons, Roshan Lal Soni and Beni Madho on the question of execution of the agreement and the deed of partnership.

7. The Tribunal was not impressed by this evidence produced by the assessee. Annexure ' C' to the statement of the case is a copy of the appellate order of the Tribunal. In paragraph 2 of the appellate order the Tribunal gave its reasons for holding that the alleged partial partition has not been proved. Firstly, the Tribunal observed that the books of the Hindu undivided family had not been produced. Secondly, the Tribunal observed that there was delay in sending intimation of the partial partition to the public. Thirdly, it was observed that the document dated 20th August, 1955, has been ante-dated. Fourthly, the Tribunal remarked that witnesses came forward just to oblige the assessee. This observation was probably with reference to the statements of the two witnesses, Roshan Lal Soni and Beni Madho. Fifthly, the Tribunal observed that extent of the family capital was not fully known.

8. As regards the failure of the assessee to produce books of accounts, it was mentioned in the statement of the case that the Hindu undivided family had not maintained any books of accounts. If it is a fact that the assessee did not maintain books of accounts, it can hardly be blamed for its failure to produce account books before the Income-tax Officer. As regards the extent of the family capital, the Income-tax Officer observed that on 17th August, 1955, stock valuation was made, and the capital invested in the business was ascertained and divided. It was mentioned in the deed of agreement that the capital of the firm was Rs. 62,040-6-3. This was the capital taken over by the new firm from the Hindu undivided family. Apparently, the Income-tax Officer experienced no difficulty on the question of extension of the family capital.

9. The four persons, who are partners of the new firm, were members of the joint Hindu family. So, no serious objection can be taken as regards delay in sending intimation to the public.

10. The Tribunal has not given any particular reason in support of its conclusion that the document dated 20th August, 1955, has been ante-dated. This appears to be purely surmise.

11. Similarly, the Tribunal has not given any particular reason for disbelieving the two witnesses, Roshan Lal Soni and Beni Madho. There is no presumption that witnesses appearing for an assessee come forward to give false evidence to oblige the assessee,

12. In Umacharan Shaw and Bros. v. Commissioner of Income-tax, [1959] 37 I.T.R. 271 (S.C.) it was observed by the Supreme Court that there was no material on which the Income-tax Officer or the Appellate Tribunal could come to the conclusion that the firm was not genuine. There were many surmises and conjectures, and the conclusion was the result of suspicion which could not take the place of proof.

13. The facts and circumstances of the present case are somewhat similar to those in Umacharan Shaw's case. In the instant case the assessee produced oral and documentary evidence in support of its case that there was partial partition on 17th August, 1955. Annexure ' E ' is a copy of the partnership deed dated 16th July, 1956. It was recited in the deed of partnership that parties desired to execute a regular deed of partnership on the requisite stamp paper to ratify what the partners had already done. It appears that the agreement dated 20th August, 1955, had not been written on the requisite stamp paper for a deed of partnership. It was, therefore, considered expedient to execute a formal deed of partnership on 16th July, 1956.

14. All this oral and documentary evidence produced by the assessee has been rejected by the Tribunal mainly on suspicion and conjectures. Under the circumstances, the findings of the Tribunal that there was no partial partition and the income earned from wholesale business continued to be the income of the Hindu undivided family are not legally sustainable.

15. Our answer to the question as re-framed by us is in the negative, and in favour of the assessee. The assessee shall receive from the Commissioner of Income-tax, U.P., Rs. 200 as costs of the reference.


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