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Kaniram Hazarimal Vs. Commissioner of Wealth-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 156 of 1969
Judge
Reported in[1974]96ITR661(Cal)
ActsWealth-tax Act, 1957 - Section 27(1)
AppellantKaniram Hazarimal
RespondentCommissioner of Wealth-tax
Appellant AdvocateA.C. Bhabra and ;R.K. Murarka, Advs.
Respondent AdvocateS. Sen and ;A. Sengupta, Advs.
Cases ReferredBal Krishna v. Ram Krishna
Excerpt:
- .....for the year 1957-58 under the wealth-tax act, 1957, was correctly made on the assessee as a hindu undivided family '2. the reference arises out of the assessment made on the assessee in the status of hindu undivided family for the assessment year 1957-58, for which the relevant valuation date is 2nd of november, 1956. the hindu undivided family known as m/s. kaniram hazarimal was assessed to income-tax in such status up to the assessment year 19.57-58. under section 25a of the indian income-tax act, 1922, the income-tax officer had recorded an order recognising the disruption in the family on 2nd of november, 1956, which was the last day of the accounting period relevant to such assessment. the case of the assessee before the wealth-tax officer, however, was that in respect of the.....
Judgment:

Sabyasachi Mukharji, J.

1. In this reference under Section 27(1) of the Wealth-tax Act, 1957, the following question has been referred to this court :

' Whether, on the facts and in the circumstances of the case, the assessment for the year 1957-58 under the Wealth-tax Act, 1957, was correctly made on the assessee as a Hindu undivided family '

2. The reference arises out of the assessment made on the assessee in the status of Hindu undivided family for the assessment year 1957-58, for which the relevant valuation date is 2nd of November, 1956. The Hindu undivided family known as M/s. Kaniram Hazarimal was assessed to income-tax in such status up to the assessment year 19.57-58. Under Section 25A of the Indian Income-tax Act, 1922, the Income-tax Officer had recorded an order recognising the disruption in the family on 2nd of November, 1956, which was the last day of the accounting period relevant to such assessment. The case of the assessee before the Wealth-tax Officer, however, was that in respect of the instant assessment the Hindu undivided family had been disrupted on 31st of January, 1956, when one of themembers of the Hindu undivided family, Sri Vijoy Kumar Kejriwal had filed a suit for partition in the High Court. The argument was that there was no Hindu undivided family in existence on the relevant valuation date, namely, on the 2nd of November, 1956, for the purpose of wealth-tax assessment. The Wealth-tax Officer did not accept this contention. The Wealth-tax Officer relied on the order under Section 25A of the Indian Income-tax Act, 1922, and stated that the Hindu undivided family did exist until 2nd of November, 1956. The assessee then preferred an appeal before the Appellate Assistant Commissioner. Before the Appellate Assistant Commissioner the contention of the assessee was that as a suit for partition had been filed on 3Ist of January, 1956, the Hindu undivided family had ceased to exist on that date according to Hindu law. Secondly, it was urged that even according to the order of the High Court the Hindu undivided family properties had actually been partitioned on the 2nd of November, 1956, being the said valuation date. Hence, there was no Hindu undivided family on the said valuation date. The Appellate Assistant Commissioner rejected both these contentions. It may be mentioned that the second contention urged before the Appellate Assistant Commissioner was not pressed before us at the hearing of this reference. It appears that there was an award by an arbitrator in the partition suit referred to hereinbefore and the said award had been accepted by the High Court and a decree was passed in accordance with the said award. The award of the arbitrator mentions, inter alia, as follows :

' I award, adjudge and declare that the parties to the said Suit No. 359 of 1956 (Vijoy Kumar Kejriwal v. Indrachand Kejriwal and Ors.) were members of a joint Mitakshara Hindu family up to Dewali Sambat year 2013 (corresponding to 2nd November, 1956) and that on and from 3rd November, 1956, there was a disruption of the said joint family and severance in the joint status of the parties.'

3. The award is dated 4th January, 1960. Relying upon this aforesaid finding in the said award the Appellate Assistant Commissioner determined the date of disruption as 3rd of November, 1956. Since on the valuation date according to the Appellate Assistant Commissioner the Hindu undivided family was in existence he rejected the assessee's appeal. The asses-see, thereafter, preferred an appeal before the Tribunal. It was contended that although the property held by the Hindu undivided family might not have been divided by metes and bounds amongst the various members of the Hindu undivided family on the 2nd of November, 1956, the Hindu undivided family actually ceased to exist on its disruption according to Hindu law on 31st of January, 1956. It was argued that this was long before the Wealth-tax Act came into operation and on the relevant valuation date as there was no Hindu undivided family in existence the assessee was not liable to be assessed to wealth-tax, inasmuch as the assessee had never been assessed to wealth-tax before. The Tribunal did not accept this argument. The Tribunal held that though disruption of the family for the purpose of Hindu law was on the 31st of January, 1956, the date of the suit for partition, yet the Tribunal was of the opinion that there was an arbitration in the suit proceeding and the award had been accepted by the High Court and the decree was passed in accordance thereof. The date mentioned in the decree was 2nd of November, 1956. Therefore, according to the Tribunal it was not open to the assessee to contend contrary to the decree passed against it. The Tribunal also referred to the provisions of Section 20 of the Wealth-tax Act, 1957, and held that the assessment had been properly made.

4. As mentioned hereinbefore, the assessee had not been subjected to wealth-tax before as the Wealth-tax Act came into existence from the 1st of April, 1957. It has been held by the decision of this court in the case of Srilal Bagri v. Commissioner of Wealth-tax, : [1970]77ITR901(Cal) , that Section 20 of the Wealth-tax Act was only a machinery section directed towards assessment, where at the time the liability to pay wealth-tax arose the family was joint but it had disrupted at the time of the assessment. It was further held that the section did not empower assessment of a Hindu undivided family which had ceased to be a Hindu undivided family prior to the relevant valuation date according to the Hindu law. Where the family had never been assessed as a Hindu undivided family and a preliminary decree had been passed, Section 20 did not authorise assessment of the members of the family as a Hindu undivided family after the preliminary decree. Similar position was also reiterated in the decision of this court in the case of Bijoy Kumar Barman v. Income-tax Officer, : [1972]84ITR71(Cal) . Therefore, the relevant question for determination in this case is whether on the valuation date, that is to say, on the 2nd of November, 1956, the Hindu undivided family was in existence or not.

5. Counsel for the assessee contended that filing of a suit for partitionby a member of the Hindu undivided family was the expression of intention to separate and, as such, brought about the disruption of the familyfrom that date and, therefore, the subsequent award made by the arbitrator declaring that the family would continue until 3rd of November,1956, did not affect the position. The family in the eye of law had beendisrupted on and from 31st of January, 1956, when the partition suit wasfiled by Sri Vijoy Kumar Kejriwal. It has been recognised by the JudicialCommittee and the Supreme Court that the institution of a suit for partition by a member of the joint family governed by the Mitakshara law wasan unequivocal intimation of his intention to separate and, secondly, there is a severance of his joint status from the date when it is instituted. Reliance may be placed on the decision in the case of Kawal Nain v. Budh Singh, [1917] L.R. 44 LA. 159 (P.C.) and the decision of the Supreme Court in the case of A. Raghavamma & Co. v. A. Chenchamma, A.I.R. 1964 S.C. 136, the decision in the case of Syed Kasam v. Jorwar Singh, [1922] L.R. 49 I.A. 358 (P.C.), Girja Bai v. Sadashiv Dhundiraj, [1916] L.R. 43 I.A. 151 (P.C.) and also the decision of the Supreme Court in the case of Puttrangamma v. M. S. Ranganna, A.I.R. 1968 S.C. 1018. It is true that an unequivocal expression of intention by a member of a joint family brings about the severance of his status and creates the disruption in the joint family so far as he is concerned. A controversy arose in this case whether a suit for partition or an expression of intention to separate by one of the members of the Hindu Mitakshara family creates a severance only of the person seeking separation while the others remain joint or whether it disrupts the coparcenary and brings the joint status to an end for all the members.

6. It was contended by counsel for the revenue on the authority of the Supreme Court decision in the case of A, Ragkavamma & Co, v. A. Chenchamma, that the general principle undoubtedly was that the Hindu undivided family was presumed to be joint unless the contrary was proved, but where it was admitted that one of the coparcenary did separate himself from the other mumbers of the joint family and had his share in the joint property partitioned off for him there was no presumption that the rest of the coparcenary continued to be joint. It was further observed by the Supreme Court that there was no presumption on the other hand that because one member of the family had separated himself there had been separation with regard to all. The Supreme Court observed that it would be a question of fact to be determined in each case upon the evidence relating to the intention of the parties whether there was a separation amongst the other coparcenary or that they had remained united. The burden was certainly on the person who had set up partition to prove the said fact.

7. Counsel for the assessee on the other hand drew our attention to the observations of the Privy Council in the case of Balabux Ladhuram v. Rukhmabai, [1903] L.R. 30 I.A. 130, I.L.R 30 Cal. 725 (P.C.), to the effect that there was no presumption when one coparcenary separated from the others that the latter remained united and an agreement amongst them should be proved either to remain united or to reunite. Reliance was placed on the observations of Lord Davey at page 137. Counsel also drew our attention to the observations of the Judicial Committee in the case of Bal Krishna v. Ram Krishna, [1931] L.R. 58 I.A. 220 (P.C.), It is however, not necessary for us in this reference to embark upon this controversy whether in a Mitakshara Hindu family institution of a suit by one of the coparceners disrupts the whole family or only creates severance of status so far as the party seeking separation is concerned. It is admitted in this case that the family had been disrupted. The only controversy is from which date this family should be considered as disrupted. The principle seems to be that the unequivocal expression of intention to separate creates disruption and it is also true that institution of a suit for partition is expression of such unequivocal expression of intention. In normal cases, therefore, such expression of intention to separate by institution of the suit would be considered to be conclusive and the date of disruption of the family or separation of the member from the family should be considered from that date of the institution of the suit but whether there has been a disruption of the family from a particular date or whether in a particular case there has been an unequivocal expression of intention to separate, is essentially a question of fact to be decided in the facts and circumstances of each case. In the instant case, the suit undoubtedly is a very relevant piece of evidence and if it was considered by itself then the matter would have been concluded. But in this case there is an award of the arbitrator made subsequently which records that the Hindu undivided family had disrupted from 3rd of November, 1956, and its members had continued therefore to have been joint up to that date. That award had been made a subject-matter of a decree of this court to which the present assessee is a party as well as the members of the family.

8. There are also other factors like filing of the returns. It may be that the Tribunal was not correct to say that it was not open to an assessee to contend after the award anything contrary but the Tribunal is right in considering the entirety of evidence and it appears to us the Tribunal has considered the entire evidence available on the question, viz., when did the Hindu undivided family separate or disrupt and when this unequivocal intention of separation was really expressed. Therefore, having considered the entirety of evidence, the Tribunal has recorded that the Hindu undivided family had continued up to 2nd November, 1956, and there is no question of challenging the finding on the ground of perversity or lack of material. In our view, therefore, the decision of the Tribunal cannot be assailed.

9. In the aforesaid view of the matter, the question referred to this court must, therefore, be answered in the affirmative and in favour of the revenue.

10. In the facts and circumstances of the case, each party will pay andbear its own costs.

Hazra, J.

11. I agree.


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