LexM/S. LAKSHMICHAND BAIJNATH versus THE COMMISSIONER OF INCOME-TAX, WEST BENGAL
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(1) S.C.R. SUPREME COURT REPORTS 415 M/S. LAKSHMICHAND BAIJNATH v. THE COMMISSIONER OF INCOME-TAX, WEST BENGAL (T.L.VENKATARAMAAIYAR,P.B.GAJENDRAGADKAR and A. K. SARKAR, JJ.) Income Tax-Partition in Hindu undivided-family-Proceed- ings under s. 25A of the Indian Income-tax Act-Scope-Receipt of amount in accounting year-Assessee's plea of capital receipt rejected -Liability to tax as business receipt-Indian Income-tax Act, I922 (XI of I922), s. 25A. For the assessment year 1946-47 the appellant, a Hindu undivided family carrying on business, filed a petition before the Income-tax Officer, under s. 25A of the Indian Income-tax Act, 1922, claiming that there had been a partition in the family on April 24, 1945. As regards the income assessable under s. 23 of the Act, the appellant's case regarding six sums aggregating to Rs. 2,30,346 shown in the accounts as the sale proceeds of orna- ments, was that at the partition the jewels of the family were sold and that the price realised therefrom was invested in the business. The Income-tax Officer held that the partition was true and that the family had become divided into five groups, but as regards the amount of Rs. 2,30,346 aforesaid he rejected the explanation given by the appellant as to how the amount came to be received and held that the amount was not the proceeds of the family jewels sold but represented concealed profits of the business. He accordingly included the said amount in the taxable income. 'The appellant's contentions, inter alia, before the Appellate Tribunal were (1) that the order passed under s. 25A of the Act by the Income-tax Officer must be held to have decided the factum of a partition in the family as well as the 'possession and division of the jewels, as set up by the appellant, and that it was not open to the Department to con- tend that the amount in question did not represent the value of the family jewels; and (2) that, in any case, there was no evidence to show that the amount represented undisclosed profits. Held, that when a claim is made under s. 25A of the Indian Income·tax Act, 1922, the points to be decided by the Income- tax Officer are whether there has been a partition in the family, and, if so, what the definite portions are in which the division had been made among the members or groups of members. The question as to what the income of the family assessable to tax under s. 23(3) was, would be foreign to the scope of an enquiry under s. 25A, and any finding thereon would not be conclusive in assessment proceedings under s. 23. November 13. . 416 SUPREME COURT REPORTS (1959] Supp. Held, further, that the assessee in the present case having failed to explain satisfactorily the truth of what is a credit in Lakshmichand business accounts, the Income-tax Officer was entitled to draw Baijnalh the inference that the amount credited represents in reality a v. receipt of an assessable nature. Commissioner of c A J c· 1 A Income-lax !VIL PPELLATE URISDICTION : Ivi ppeals NOS. V enkatara#UI Aiyar J. 271-272 of 1955. Appeal by special leave from the judgment and order dated June 19, 1953, of the Calcutta .High Court in Income-tax Reference Neis. 6 & 7 of 1950. A. V. Viswanatha Sastri, A. K. Dutt, S. K. Kapur and Sukumar Ghose, for the appellant. C. K. Daphtary, Solicitor-General of India, R. Gana- pathy Iyer, R.H. Dhebar and D. Gupta, for the respon- dent. 1958. November 13. The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.-The appellant was a Hindu undivided family carrying on business as piecegoods merchants in the city of Calcutta. The present proceed- ings relate to the assessment of its income for the year 1946-47, the previous year thereto being June 12, 1944, to April 24, 1945. In the course of the assessment, the appellant filed a petition under s. 25-A of the Income- tax Act, 1922, claiming that there had been a partition in the family on April 24, 1945. On May 27, 1945, the In- come-tax Officer enquired into both these matters, the factum of partition and the quantum of income charge- able to tax, and pronounced orders thereon on June 30, 1945. On the petition under s. 25-A, he held that the partition was true, and that the family had become divided into five groups. As regards the income assess- able under s. 23, the dispute related to six sums aggre- gating to Rs. 2,30,346 shown in the accounts as the sale p~oceeds of ornaments. Th
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