LexINCOME-TAX OFFICER, A-WARD, LUCKNOW versus BACHULAL KAPOOR
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,',,,__;. \ .. ·INCOME-TAX OFFICER, A-WARD, LUCKNOW .. · v. BACIIULAL KAPOOR December 14, 1965 [K.-SmlBA RAO, J.C. SHAH ANDS. M. SIKRI, JJ.] Indian Income-tax Act, 1922, (11 of 1922), s. 34-Hindu undivided _·family~Partition-Members assessed separately-Notice to reassess the family-If can be given. A B The respondent used to be assessed to income-tax as karta of a Hindu « undivided family. In a suit filed by members of his family against the _ re·spondent a compromise decree was passed. The Income-tax officer c accepting the respondent's claim under s. 25A of the Income-tax Act that the family was partitioned, assessed the members of the family as indivi- duals. Later the Income-tax Officer issued a- notice under s. 34 of the Act to the respondent as karta of the Hindu undivided family requiring ~m to file a return for a year in which the members· had been assessed as individuals on the ground that the respondent's income h3<l escaucd assessment. . Thereupon the respondent filed- a \'\.Tit petition -in the· High Court for quashing the said notice. As the assessment of the same in- - D come in the hands cf the members of the family- for the same year was not set as:de the High Court held that the notice was invalid as the same income could not be assessed again in the hands of_ the Hindu undivided family by taking proc~dings under s. · 34 of the Act. In appeal to this Court: 1-IELD : (i) The Income-tax Officer had jurisdiction to initiat-3 pro- ceedings under s. 34 of the Act against the respondent as the karta of the E Hir~du undivided family. " A HinC.u undivided family is a separate unit of assessment. It ii; a ·d!W.act assessable entity. It is a 'person' \Vithin i!S definition-iLJ the Act. It is liable to be assessed to income-tax in respe:ct of its income. A member. of that Hindu undivided family is not liable to pay any tax in respect of any sum which be receives as a member of that family out of the income of that family. If the sa;d H'ndu n~divided f4mily ha5 escaped am5'!- -mcnt for any year, the Income-tax Officer, subject tO the cOoditions laid dov.rn in s. 34(1) of lhio! Act, n1ay issue a notice thereunder calling U!YJil the said Hindu undivided family to submit a· return of its income for that year and proceed to assess it in terms the:-e.of. It is manifest from a combined reading of ss. 3, 14(1) & (2), 22(1) and 34(1) that tlie Income-tax Officer can issue a notice to a Hindu undivided family under s. 34 of the Act on the ground that it has escaped assessment. [72 F-H] F The exercise of the option by an Officer to do one or other .. of the G _two alternatives (viz., to assess either the Hindu undivided family or members thereof separately) assumes knowledge on his part of the ·existence of the t~·o alternatives. If the case of the Revenu-e be true, the Income-tax Officer at the time he assessed the individual members of the family had no knowledge that a united -family existed; he presumably proceeded on the basis that the said family had really ceased to e:j'.ist under the terms of ,the compromise decree. This was, there.fore, not a case of election between two alternative units of assessment, but an H attempt to bring to tax the income of an as.Scssable entity °"'·hich had ·escaped assessment. The apart, under s. 3 of the Act, in the matter of :assessment, there is no question of any election between a Hindu undivided • • .. ,.. • .. • • • ... A B c D ;~-._-.--?-; ·,.,--- -, ~- 'r.T.O. v. BACHULAL (Subba Rao,_/.)~ family .;,d a member thereof iil respect of the income of the family. If a Hindu undivided f.lmi_ly exists under s. 3 of the Act the Income-tax Officer has to assess it in respect of its incom·~. Indeed, under s. 14(1) of the Act, any J?•rt of t'!e income received by. its member cannot be assessed over again, · \Vh1le s. 3. confers an option on the Income-tax officer to assess either the association of persons or the members of the association individually, no such option is conferred on him thereunder in the· case of a Hindu undivided family, and its existence excludes the liability. Of its members in respect of the ii:tcome of the former "rece:ived by the latter. [74 C-F] Conunissioner of /nco1ne-tax, U.P. v. KanP-Ur Coal Syndicate, (1964) 53 I.T.R. 225 : [1964) 8 S.C.R. 85 distinguished. If the assessment proceediilgs initiated-under s. 34 of-the Act culmi- · nates in the assessment of t
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