PETITIONER:
NARENDRAKUMAR J. MODI
Vs.
RESPONDENT:
COMMISSIONER OF INCOME TAX, GUJARAT II,AHMEDABAD
DATE OF JUDGMENT04/08/1976
BENCH:
UNTWALIA, N.L.
KHANNA, HANS RAJ
KRISHNAIYER, V.R.
CITATION:
1976 AIR 1953 1977 SCR (1) 112
1976 SCC (4) 456
ACT
Income Tax Act, 1922---Section 25-A(3)--Claims for
partition and disruption of the Hindu Undivided Family
disallowed by I.T.O.--Appeal under the Act filed against the
orders of I.T.O. also dismissed--No reference under the Act
challenging the Tribunal’s order dismissing the appeal was
taken, but subsequently got a prelminary decree for parti-
tion, passed by the civil court during the pendency of the
appeal--Whether the Income Tax Authorities are bound by the
subsequent partition decree of the civil court.
Right of management--Hindu Law--Joint Hindu Undivided
Family-Whether a junior member of the family can act as a
karta with the consent of all the other members, if the
senior member gives up his right.
HEADNOTE
Bapalal Purshottamdas Modi was the karta and head of a
Hindu Undivided Family possessing many immovable properties
and carrying on business of various types including money
lending. Bapalal had five. sons, viz. Vadilal Ramanlal,
Jayantilal, Gulabehand and Kantilal; out of whom Ramanlal
and Jayantilal predeceased him in 1933 and 1956 respectively
and the appellant was one of the sons of Jayantilal. As per
the general power of attorney dated 5-10-1948, executed by
Bapalal in his favour, Gulabchand, the third son was acting
as a karta and was filing the various tax returns without
any objection. whatsoever by the other members of the Hindu
Undivided Family. Bapalal relinquished all his rights in
the joint family property on 22-10.54- leaving the corpus of
the joint family properties to his four surviving sons and
Rajnikant, son of Ramanlal. All of them executed on 24-10-
54, a memo of partition disrupting the Hindu Undivided
Family and partitioning the properties the course of the
proceedings of the income-tax assessment for the assessment
year 1955-56 against the H.U.F. of Bapalal Purshottamlal
Modi, an application under s. 25A of the Income Tax. Act,
1922 claiming partition was made. The claim was disallowed
by’ the I.T.O. by his order dated 28-1-1960. During the
pendency of the appeal, a suit for partition was filed in
1961 and a decree for partition was obtained on June 30,
1965. The. appeal to the Appellate Assistant Commissioner
was dismissed on September 30, 1965 and the second appeal 10
the Income Tax Appellate Tribunal was also dismissed on
March 28. 1969. The appellants did not ask for a reference
to the High Court, as provided under the Act, but went on
filing the returns in respect of the subsequent assessment
years. When the Income Tax Officer got attached the entire
amount in the, Savings Bank A/c towards the tax liability by
an order dated May 12. 1970, the appellant filed a writ
petition challenging the various orders passed in the pro-
ceedings under s. 25A for the assessment years 1955.66 to
1965-66 and the several attachment orders. The High Court
dismissed the writ in limine, but granted a certificate
under Art. 133(1)(b) of the Constitution.
Dismissing the appeal, the Court,
HELD: (1) Sub section (3) of s. 25A provides that where
an order accept ing partition had not been passed in respect
of a Hindu Undivided Family assessed as undivided, such
family shall be deemed for the purposes of the Act to con-
tinue to be Hindu Undivided Family. The Income Tax Officers
who had their own view to take, were not bound by the de-
cree, since in the instant case the partition preliminary
decree came much later and there was no reference under the
Income Tax Act challenging the order of the Tribunal. [116
C-D]
(2) A junior member of the family can, with the consent
of all the other members. act as a karta, if the senior
member gives up his right. [116 E]
113
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 156 of 1971.
From the Judgment and Order dated 19-10-1970 of the
Gujarat High Court in Special Civil Appln. No. 1177/70.
B.R.L. Iyengar, S.K. Dholakia and R.C. Bhatia, for
the appellant.
B.B.Ahuja, for respondent No. 1.
The Judgment of the Court was delivered by
UNTWALIA, J. The appellant’s writ petition filed in
the High Court of Gujarat was dismissed in limine by a Bench
of the High Court on October 19, 1970. The Commissioner of
Income tax, Gujarat II, respondent no. 1 was the authority
against whom several reliefs had been claimed in the writ
petition. Subsequently were added the other members of the
family of the appellant as respondents to the writ petition.
The appellant obtained a certified from the High Court for
appeal to this Court under sub-clause (b) of clause (1) of
Article 133 of the Constitution of India as it stood before
the 30th Constitution Amendment Act. Hence tills appeal to
this Court.
Having heard Mr. B.R.L. Iyengar, Senior Advocate for the
appellant at some length we found that the appellant was
ill-advised to file the writ petition and to. pursue the
matter upto this Court. The appeal being devoid of any
substance must fail. We proceed to state the facts and
discuss the points urged before us very briefly.
One BapalaI Purshottamdas Modi was the head of a Hindu
Undivided family. The joint family possessed many immovable
properties and carried on business of various types such as
money-lending etc. Bapalal had five sons namely Vadilal,
Ramanlal, Jayantilal, Gulabchand and Kantilal. Ramanlal
died long ago in or about the year 1933. Jayantilal died in
1956. The appellant is one of the sons of Jayantilal.
The appellant’s case in the writ petition was that
Bapalal was the karta of the Hindu Undivided family. He
executed a general power of attorney on October 5, 1948 in
favour of his third son Gulabchand to manage his (Bapalal’s)
separate property. On October 22, 1954 Bapalal relinquished
his right, title and interest in the joint family properties
on taking a sum of Rs. 75,000/- leaving the corpus and
management of the joint family properties to his four sur-
viving sons and Rajnikant, son of late Ramanlal. These five
members also executed a memo of partition on October 24,
1954 disrupting the erstwhile Hindu Undivided family and
partitioning the properties.
In course of the proceedings for assessment of the income-
tax for the assessment year 1955-56 against the Hindu Undi-
vided family of Bapalal Purshottamlal Modi, an application
under Section 25A of the Income-tax Act, 1922 was made
claiming partition w.e.f. October 24, 1954. Notices of the
enquiry under section 25A were served on all the members of
the family. At the enquiry the statements of various
persons including the appellant were recorded by the Income
tax Officer. He, by his order, dated January 28, 1960
disallowed the
114
claim under section 25A of the Income-tax Act, 1922. It is
asserted that in the year 1961 a suit for partition had also
been filed and the City Civil Court Ahmedabad passed a
decree for partition on June 30, 1965. In an appeal filed
before the Appellate Assistant Commissioner from the order
of the Income-tax Officer dated January 28, 1960 reliance
was placed on the Civil Court partition decree also. The
Appellate Assistant Commissioner, however, dismissed the
appeal by his order dated September 30, 1965. A second
appeal to the Income tax Appellate Tribunal was dismissed on
March 28, 1969. InCometax assessment was made against the
Hindu Undivided family for the year 1955-56. Assessments
were also made against the Hindu Undivided family, sometimes
treating it as Association of Persons or Unregistered Part-
nership Firm as per returns filed from time to time, for the
subsequent years upto the assessment year 1965-66. Copies
of all the assessment orders were enclosed with the writ
petition aS Annexure ’I’ collectively. Appeals taken to
the Tribunal from some of the assessment orders were also
dismissed. Notices were being issued and served under
sections 22 and 23 of the Income tax Act, 1922 for the
assessment years which were governed by the said Act. In
respect of the assessment years 196.2-63 onwards notices
were. issued and served under sections 142 and 143 of the
Income tax Act, 1961. A large sum of tax and penalty became
due as the demands from time to time were partly paid. The
Income-tax authorities took steps for realization of the
income tax dues against the appellant’s family and got
attached various properties. In Civil Suit No. 806 of 1961
in which the preliminary partition decree was passed on June
30, 1965, respondent Kantilal had been appointed as a re-
ceiver Later on one Mr. Bhatt was appointed Receiver. A
Savings Bank Account No. 412002 was being operated by the
Receiver. The Income-tax Officer attached the entire amount
of Rs. 56,294.43 in the said account by his orders dated
May 12, 1970. Thereupon, the appellant filed-the writ
petition challenging the various orders passed in the pro-
ceeding under section 25A of the Income tax Act, 1922; the
assessments made for the years 1955-56 to 1965-66 and the
attachment orders on various grounds. In a single writ
petition rambling allegations were made challenging the
multifarious proceedings and the orders on various ground’s
and the following prayers were made:
"(a) declaring void and illegal and quashing the
proceedings of the income tax authorities making
assessments on Hindu Undivided Family, Association
of persons and unregistered partnership firm afore-
said for the years beginning from the assessment
year 1955-56 and also the proceedings for the
recovery of the taxes so assessed, and
(b) quashing the orders of the income-tax Au-
thorities refusing to record partition and direct-
ing the Respondent and his Subordinates to record
under Section 25A of the Act that the erstwhile
joint family property has been divided or parti-
tioned in definite portions, each member getting an
equal share, on October, 1954;
115
(c) directing the respondent and his subordi-
nates to cancel o.r withdraw the impugned orders
and all steps taken for the recovery of the amounts
so. assessed;
(d) directing the respondent and hi.s subordi-
nates not to take any further steps for the recov-
ery of the tax so assessed;
(e) quashing all the penalty orders and such
other orders passed in pursuance of the assessment
proceedings aforesaid;
(f) quashing all the orders of attachment or in the
nature
attachment passed by the Income tax Authorities in
these proceedings for the assessment year 1955-56
onwards, and
(g) to pass such other and further orders as your
Lordships deem just and expedient in the circurm-
stances of the case."
It seems to us that the High Court rightly
dismissed the appellant’s petition in limine.
Since the valuation under Article 133(1)(b) was
beyond Rs. 20,000/-, the appellant was granted a
certificate as a matter of course.
It was pointed out to. the appellant’s counsel
that so many proceedings and orders could not be
challenged in one writ petition and he was asked to
make his submissions in the appeal confining the
writ petition to one matter only. Counsel chose to
confine it to the attack on the attachment order of
the Income tax Officer in respect of the money
lying in the Savings Bank Account. While doing so,
he traversed the entire allegations in the petition
by adopting an ingenious method. Counsel submitted
that the attachment had been made for realization
of the income tax dues based upon various orders
which were void and ultra vires. All those orders
could be attacked collaterally while attacking the
attachment order.
Mr. Iyengar urged the following points in,support
of the appeal.
(1 ) That the orders of the various authorities
rejecting the claim of the partition under section
25A of the Income tax Act, 1922 were without
jurisdiction and on their face suffered from many
infirmities of law.
(2) That after Bapalal relinquished his inter-
est in the joint family properties and ceased to
be the karta, there was no karta of the family.
Gulabchand--a junior member of the family could not
act as a karta. Other members of the family did not
accept him to be the karta.
(3) That even after the death of Bapalal in the
year 1958 various notices under the Income tax Act
were issued and served in the name of Bapalal
Purshottamdas Modi--a dead person--and hence the
entire proceedings and assessment orders were
nullities.
116
(4) That the appellant had no opportunity of
taking any part in the income tax proceedings and
his property cannot be made liable for realization
of the dues determined in such proceedings.
None of the points urged on behalf of the
appellant merits any detailed discussion. We were
taken through the power of attorney executed by
Bapalal in favour of Gulabchand, the deed of relin-
quishment executed by him on October 22, 1954 and
the alleged memorandum of partition of October 24,
1954; the orders of the Income tax officer, the
Appellate Commissioner and the Tribunal in the
proceedings under section 25A of the Income tax
Act, 1922. In our opinion. the orders do not
suffer from any infirmity of law or any such defect
which will make them void. Notice of the enquiry
had been given to all the members as admitted by
the appellant himself. He had been examined in the
proceedings. Sub-section (3) of Section 25A pro-
vides. that where an order accepting partition had
not been passed in respect of a Hindu family as-
sessed as undivided such family shall be deemed for
the purposes of the Act to continue to be Hindu
undivide family. A partition preliminary decree
came much later. The income tax authorities had
their own view to take. They were not bound by the
decree. No reference was taken under the income tax
Act challenging the order of the Tribunal dismiss-
ing the appeal.
It was clear from some of the assessment orders
that Gulabchand was acting as a karta even during
the life time of Bapalal as he had retired to live
in Brindaban. At the relevant time no body disput-
ed his authority to act as karta. His eldest
brother Vadilal was an old man of about 70 years of
age. His eider brother Jayantilal--father of the
appellant died in the year 1956. In these circum-
stances he appears to have acted as the karta with
consent of all the other members. A junior member
of the family could do so. See Mulla’s Hindu Law
296, fourteenth edn. Where occurs the following
passage:
"So long as the members of a family remain
undivided, the senior member of the family is
entitled to manage the family properties," includ-
ing even charitable properties (q); and is presumed
to be the manager until the contrary is shown(r).
But the senior member may give up his right of
management, and a junior member may be appointed
manager(s) ."
Notices were being issued in the name of the family
which was carrying on the business in the assumed name of
Bapalal Purshottamdas Modi. They were neither issued to nor
served on Bapajal the dead person. In response to the
notices returns were being filed by the managing member of
the family. At no stage before the income tax authorities a
contention was raised that the notice was served on a dead
person. There is no substance in the third point. Coming
to the fourth and the last point urged on behalf of the
appellant we find that the appellant is bound by the assess-
ment made in respect of the income of his family which
continued in the eye of law to be joint. The share
117
of the appellant’s properties received by him from the joint
family or the income thereof is liable for the income tax
dues in question. The appellant, as we have said above, was
ill-advised to file a misconceived petition on wholly un-
tenable grounds.
In the result the appeal fails and is dismissed with
costs to respondent no. 1.
S.R. Appeal
dismissed.
118