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Commissioner of Income-tax Vs. Beni Prasad Tandon - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberIncome-tax Reference No. 398 of 1969
Judge
Reported in[1973]89ITR185(All)
AppellantCommissioner of Income-tax
RespondentBeni Prasad Tandon
Appellant AdvocateDeokinandan, Adv.
Respondent AdvocateR.K. Gulati, Adv.
Excerpt:
- .....the order of assessment ' 2. let us give the pertinent facts now. shri b. p. tandon, the assessee, filed returns for the assessment years 1958-59 and 1959-60. the returns were filed in the status of individual disclosing his income from all sources. subsequently, he filed two separate returns. in one return he showed income in the status of an individual. in the other return he showed income as the karta of a hindu undivided family. in the first return his remuneration for services rendered to lala manmohan das trust was shown as his personal income ; in the other return income of the hindu undivided family of which he was the karta was shown. the income-tax officer did not pass any order on the return filed by him in the status of a hindu undivided family. but, he held that the entire.....
Judgment:

Dwivedi, J.

1. The Income-tax Appellate Tribunal has referred for the court's opinion this question :

' ' Whether on the facts and in the circumstances of the case, the Tribunal was right in cancelling the order of assessment '

2. Let us give the pertinent facts now. Shri B. P. Tandon, the assessee, filed returns for the assessment years 1958-59 and 1959-60. The returns were filed in the status of individual disclosing his income from all sources. Subsequently, he filed two separate returns. In one return he showed income in the status of an individual. In the other return he showed income as the karta of a Hindu undivided family. In the first return his remuneration for services rendered to Lala Manmohan Das Trust was shown as his personal income ; in the other return income of the Hindu undivided family of which he was the karta was shown. The Income-tax Officer did not pass any order on the return filed by him in the status of a Hindu undivided family. But, he held that the entire income was assessable in his hands in the status of an individual. He filed two appeals before the Appellate Assistant Commissioner. They were dismissed. On a further appeal, the Tribunal held that the income other than the dividends from the shares held by him as a beneficiary and his remuneration for services rendered to Lala Manmohan Das Trust belonged to the Hindu undivided family of which he was the karta and did not belong to him in the status ofan individual. After the order of the Tribunal, the Income-tax Officer passed an order on the return submitted by Shri B. P. Tandon in the status of a Hindu undivided family of which he was the karta. The Income-tax Officer was of the view that the said return was pending. Against that order Shri B.P. Tandon filed an appeal before the Appellate Assistant Commissioner. The appeal was dismissed. An appeal was taken to the Tribunal. Following the decision of this court in Raghunath Prasad Tandon v. Commissioner of Income-tax, the Tribunal held that although the return filed by Shri B. P. Tandon in the status of a Hindu undivided family was not ' disposed of factually ', it was ' virtually disposed of '. On that view the Tribunal further held that the return was not pending and the Income-tax Officer could not make Any assessment on the basis of it.

3. On the application of the Commissioner of Income-tax, the Tribunal referred the question that we have set forth earlier.

4. In the course of hearing the assessee made an application for admitting two documents. They are assessment orders made by the Income-tax Officer for the assessment years 1958-59 and 1959-60. As they are relevant for deciding the question in issue, we have admitted them by a separate order dated April 28, 1972. We will refer to those documents later.

5. At the outset the reference was listed before a Division Bench. It seems that the Division Bench felt some doubt about the correctness of the decision in Raghunath Prasad Tandon v. Commissioner of Income-tax, [1964] 51 I.T.R. 763, 772 (All.); so it has referred the reference to a larger Bench. In Raghunath Prasad Tandon, Shri Justice Desai said :

' In the instant case the Income-tax Officer had virtually rejected the return of the assessee and it was not pending when he issued the notices under Section 34(1). So long as a return is pending before the Income-tax Officer he may not say that any income mentioned in it has escaped assessment, but virtual rejection of a return may amount to escape of the income mentioned in it from assessment. The return of the assessee cannot be said to have been pending merely because the Income-tax Officer did not pass a specific order rejecting it. When he assessed all the incomes mentioned in it as the income of the Hindu undivided family and did not assess the assessee at all on it, it meant that he had rejected the return and not kept it pending.'

6. The Chief Justice applied the rule of implication to the case before him. On the facts of that case he was of the view that the return should be deemed to have been impliedly disposed of.

7. Counsel for the department asked us to examine the correctness of the Chief Justice's remarks. It appears to us that it is not necessary to do so in this case. Even assuming that the rule of implication applies, theassessee cannot succeed and the assessment made by the Income-tax Officer should not have been cancelled by the Tribunal.

8. We shall not try to show whether the return filed by Shri B.P. Tandon in the status of a Hindu undivided family can be deemed to have been ' virtually disposed of '. Counsel for the assessee has referred us to the first paragraph of the order of the Income-tax Officer for the year 1958-59. The first paragraph relevantly reads :

' The assessments in this case had, till last year, been made in the status of individual. Even for the assessment year under consideration the assessee filed the return of income showing status as individual and showing therein the income from property, share in various firms, remuneration and beneficiary allowance in the trust and from director's fees. However, subsequently, fresh returns were filed, one showing the status as individual in which the income from remuneration from Lala Manmohan Das Trust and director's fees were shown and the other declaring the status as Hindu undivided family in which the incomes from property and from shares in various firms were shown. The assessee was required to prove the status.'

9. The Income-tax Officer did not accept the assessee's contention that certain incomes were received in the status of a Hindu undivided family. He assessed all incomes in the status of individual. He said :

' I think Shri Beni Prasad Tandon cannot be assessed in the status of a Hindu undivided family .... I shall determine the status of the assessee as individual and complete the assessment in that status.'

10. It is urged by counsel for the assessee that if those passages are taken into consideration, it would irresistibly follow that the Income-tax Officer had disposed of the return in the status of a Hindu undivided family by implication. We are unable to accept this argument.

11. The court may read something by way of implication if it is reasonably plain and necessary. It may be recalled that in the first instance Sri B.P. Tandon had filed a single return in the status of individual. In that return he had disclosed income from all sources. Subsequently, he filed two separate returns'; in one return he showed certain income in the status of individual; in the other return he showed certain other incomes in the status of a Hindu undivided family. When the Income-tax Officer was proceeding to assess tax on Shri B.P. Tandon in the status of individual, it was not necessary for him to look into the other return filed in the status of a Hindu undivided family. The entire income was shown in the first return filed by Shri B.P. Tandon in the status of individual. From that return the Income-tax Officer could find out various incomes earned by the assessee as individual. Had he not filed that return in the first instance, it could have plausibly been argued that in order to find outall incomes the Income-tax Officer must have referred to the subsequent return filed in the status of a Hindu undivided family. In that event it could have plausibly been argued that the Income-tax Officer had disposed of the return filed in the status of a Hindu undivided family. But, as already indicated, on account of the initial single return it was not necessary for the Income-tax Officer to look into the return filed in the status of a Hindu undivided family. Accordingly, it cannot be implied that he had disposed of the assessee's return filed in the status of a Hindu undivided family.

12. It is not reasonably plain from the assessment order of the Income-tax Officer that he had at that time in his mind the return of the assessee filed in the status of a Hindu undivided family. While he was seeking to assess tax on the assessee as an individual, it was argued before him that some of the incomes were earned by the Hindu undivided family. He has discussed that argument. He has not accepted it. But the rejection of the argument does not necessarily show that he has disposed of the return filed in the status of a Hindu undivided family. He might have overlooked this return by oversight or otherwise.

13. The facts in Raghunath Prasad Tandon are radically different from the facts of our case. In Raghunath Prasad Tandon the assessee had filed two separate returns, one in the status of individual and the other in the status of a Hindu undivided family. The Income-tax Officer assessed the Hindu undivided family on the total income shown in the two returns, treating the income of individual as the income of the Hindu undivided family. No order was passed on the return filed in the status of individual. The Chief Justice held that the return filed in the status of individual should be deemed to have been virtually disposed of. It may be observed that in that case it was necessary for the Income-tax Officer to refer to the return filed in the status of individual in order to find out the total income of the assessee in the status of a Hindu undivided family. In our case we have already held that it was not necessary to refer to the return filed by Sri B. P. Tandon in the status of a Hindu undivided family. So Raghunath Prasad Tandon cannot help the assessee.

14. Counsel for the parties have referred us to several cases on the other question whether the rule of implication can be applied or not. We are not deciding that question in this case. So it is not necessary to discuss those cases in this judgment.

15. As a result of the foregoing discussion we answer the question referred to us in the negative. The Tribunal was not right in cancelling the order of assessment. The department shall get costs which we assess at Rs. 200. Counsel's fee is also assessed accordingly.


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