K. Venkataramana Bhat vs Commissioner of Agricultural Income Tax

V.V. Kamat, J.—Whether in the facts and circumstances of the case, the Tribunal was justified in reaching the conclusion that the properties held by the appellant-assessees under leasehold right were his self-acquired or separate properties and that the assessments completed on the basis of the status of the applicant-assessees as individual was correct or not is the question for consideration in these 11 references.

These are the references pertaining to the two brothers. Income Tax References Nos. 62 to 65 relate to the applicant-assessee, Shri K. Venkataramana Bhat and they relate to the assessment years 1979-80 to 1982-83 whereas Income Tax References Nos. 66 to 72 relate to the applicant-assessee Shri K. Iswara Bhat with regard to the assessment years 1977-78 up to 1983-84.

Even then the question relates to the same factual matrix.

The question cropped up before the Agricultural Income Tax Officer, Kasaragode, when he rejected the returns and finalised the assessment on best judgment procedure. In this process, the contention that the applicant-assessees were members of the Hindu joint family came to be rejected and the Assessing Officer regarded them as having the status of an individual.

In regard to the question of status, the assessees contended that the applicant-assessee, K. Ishwara Bhat, originally was the karta of the joint family. This Hindu joint family consisted of himself, his two brothers, namely, Venkataramana Bhat and Gopalakrishna Bhat. All these three brothers are the sons of one Govinda Bhat. It is contended that the properties in the possession and enjoyment of this joint Hindu family came to be partitioned on March 15, 1976, among these three brothers allotting shares due to each other. It is contended that thereafter each of these three brothers came into possession of their respective shares and started enjoying them as a result of the act of partition that occurred on March 15, 1976. Illustratively, this Ishwara Bhat had 11 children and all of them started enjoying the properties that fell to their share as a consequence of the act of partition. It is also contended that in pursuance of the provisions of Section 4 of the Kerala Hindu Joint Family (System) Abolition Act, 1975 (30 of 1976), inevitably a notional partition took place between this Ishwara Bhat and his 11 children as a result of which even then the joint family of K. Ishwara Bhat and his 11 children got disrupted from December 1, 1976.

For establishing this situation, reliance is placed on the documentary evidence which can be described as follows : ''

" 1. a judgment of the Munsif of Kasaragode in O. S. No. 354 of 1958,

a sale deed No. 24 of 1960, and

the order of the Tahsildar, Kasaragode, in K. Dis. 19458 of 1984, dated September 20, 1985, accepting the appellant''s claim that the appellant and his 11 children constitute a joint family by virtue of the Hindu Joint Family (System) Abolition Act of 1976, and that they are holding the property as tenants-in-common with effect from December 1, 1976."

The travel of this proceeding reveals that the Agricultural Income Tax Officer, I Circle, Kasaragode, rejected the contention in this context with reference to the material on record by holding that the properties are not ancestral properties. It is held that the assessees cannot claim the status of a Hindu undivided family in respect of the properties in question. It is also observed that perhaps the applicant-assessee and his sons may constitute a family but in relation to the properties which are now the contention on the basis of a claim that the property is joint cannot be allowed. The assessing authority reached the conclusion in the absence of the material, accounts as well as other evidence in the nature of yield from various crops making it more than difficult to reach the conclusion as sought to be contended on behalf of the applicant-assessees. The first appellate authority--the Appellate Assistant Commissioner of Agricultural Income Tax and Sales Tax, Cannanore, examined the partition deed and found that the assessment by the assessing authority on the basis of the status as an individual is correct as is clear from the preamble of the partition deed itself. The appellate authority has specifically reproduced the contents thereof which are as follows :

" We, the three of us, are in uninterrupted enjoyment of the undermentioned immovable properties which are got transferred by us in our names jointly and severally out of our self-earned income under term of lease of sale of Kuzhikana, etc., joint right and for the convenience of enjoyment we are living in the respective undermentioned properties as described above and performing agricultural operations under joint management, on tenancy-in-common basis."

Inevitably, therefore, the appellate authority recorded the conclusion that the partition was entered into between the brothers and it showed its allotment accordingly only to the three brothers. As a consequence it is recorded that the denial of the claim of status as tenants-in-common for the years in question is justified. This took up the matters to the Appellate Tribunal.

Before the Appellate Tribunal, the same contentions were reiterated with greater force. On behalf of the Department, before the Tribunal it was emphasised that a careful scrutiny of the partition deed dated March 15, 1976, would show that the sons of these brothers were not parties to the partition deed at all. It was also emphasised that in the preamble to the deed in question it is emphasised in a pinpointed manner that the properties sought to be partitioned by the deed in question are the self-acquired or separate properties of the three brothers. It was also emphasised with reference to the situation of the returns for the prior years, illustratively year 1976-77 that these applicant-assessees had claimed status as an individual holding property as tenants-in-common. It was emphasised with force that this contention in regard to the claim to the status as an individual is already accepted by the assessing authority and the applicant-assessees are assessed on the said basis for the years in question. It was emphasised in addition that a bare perusal of the partition deed shows that three brothers alone were parties thereto. The Tribunal examined the question and affirmed the decision of the authorities below.

In this process, the Tribunal considered the documents referred to hereinbefore with special reference to the contentions raised before it.

Before the Tribunal it was contended that a still larger joint family was in existence with one Subramaniya Bhat as the karta and the applicant-assessees and other brothers as its members, Govinda Bhat being their father. It was contended that by the unregistered partition deed dated May 29, 1942, the family disrupted into two branches. Ishwara Bhat and his other two brothers who were minors at that time constituted the second branch. It was further contended that whatever the property that was received by these three brothers in partition came to be sold to this Krishna Bhat in 1966 by the sale deed. It is contended before the Tribunal that the document of sale deed of 1966 would be an important testimony to see the real character of the properties and the constitution of the family. It was urged that thereafter the properties continued to be in the possession and enjoyment of the three brothers.

The Tribunal has taken up these aspects for consideration on the basis of the submissions with reference to the material placed on record.

In the process of reasoning, relying on the contents of the letter dated December 1, 1981, of the applicant-assessee, K. Ishwara Bhat, to the assessing authority the Tribunal found that the properties in question appeared to have been originally obtained on lease when the three brothers were joint.

The Tribunal, thereafter, took up for consideration the three documents referred to hereinbefore. With regard to the first one--the judgment of the Munsiff of Kasaragode in O. S. No. 354 of 1958 dated November 29, 1958, the Tribunal has considered the contents of the judgment, the issues framed and on the basis thereof the Tribunal held that the properties referable to the subject-matter of the judgment were part of the properties held under rights from 1949 onwards which came to be assigned to the applicant-assessee by the Land Tribunal under the Kerala Land Reforms Act. It is observed that the applicant-assessee, K. Ishwara Bhat, and his 11 children constituted a Hindu joint family and in pursuance of the provisions of law came to be divided equally amongst the 12 members with effect from December 1, 1976, is also clear. It is also mentioned that even the Tahsildar, Kasaragode, followed this position with regard to the levy of tax and in the process, the opinion of the Additional Government Pleader of Kasaragode was required to be relied upon by the Tahsildar to record the conclusion that the applicant-assessee, K. Ishwara Bhat, and his children constituted the Hindu joint family at the time of the advent of the abolition of the joint family system.

Ultimately, the Tribunal took up the crucial question for decision as to whether the properties in the possession of the appellant under the leasehold rights from 1949 onwards and subsequently being assigned to the applicant-assessee could be understood as properties belonging to the family immediately before the Kerala Hindu Joint Family (System) Abolition Act came into force. In this process, the Tribunal has referred to the contents of the reply to the pre-assessment notice of the Department and on the basis thereof the Tribunal has observed that the applicant-assessees contended therein that the Hindu undivided family cannot be created either by any of the brothers.

The Tribunal has also considered the document--sale deed No. 24 of 1966 and from the manner in which the amount of consideration is shown to have been distributed, inter alia, with reference to other aspects also recorded a conclusion that the above document is not helpful to arrive at a conclusion that the property belonged exclusively to the Hindu undivided family.

The Tribunal has also considered yet one more aspect on the basis of the basic proposition that ancestral properties are properties handed from ancestors to or inherited by a Hindu. The Tribunal has emphasised the undisputed position that the properties are not ancestral in character because evidently the properties are leasehold in character. The Tribunal has proceeded with a rigour of logic that the leasehold properties are self-acquired properties and, therefore, normally cannot partake of the character of ancestral properties. It has also referred to the established proposition that the sons or heirs of a Hindu do not have a pre-existing right over the properties acquired by their father unlike in the case of ancestral properties. In the process of further discussion in regard to the question reference is made to the declaration in regard to the assessment year 1976-77 showing the status as "tenants-in-common" which was on behalf of the three members.

The Tribunal reached the conclusion that there cannot be any error in the determination of the status of the applicant-assessees as individual in contradistinction with their claim to have the status as members of the coparcenary under the joint family system.

These matters were argued in extenso by learned counsel. Learned counsel laid special emphasis amongst other aspects discussed above which were urged before the Tribunal, on the recitals of the sale deed in question. Learned counsel took us through the contents of the sale deed (annexure "VI"--24 of 1966) to contend that this is a sale deed of 1966 showing all necessary parties as vendors. He contended that Ishwara Bhat, Gopalakrishna Bhat and Venkataramana Bhat and other children are shown as can be seen. Learned counsel took us through the further contents of the sale deed in question. He referred to the recital to the effect that the properties sought to be transferred under the document are recited to be belonging jointly on absolute jenmom right and is in uninterrupted enjoyment, paying land tax as ejman of the joint family. He laid stress on the averment that on the basis of the unregistered partition deed dated May 29, 1942, in respect of the earlier larger joint family, to contend that the original status shows that it was of a Hindu joint family of a larger magnitude. With regard to the particulars in the matter of distribution of the amount of consideration learned counsel submitted that the exigencies of the occasion compel parties to distribute the amount and by mere method of distribution an inference of the situation cannot be drawn and should not have been drawn by the Tribunal.

Apart from the reasoning of the Tribunal being of a formidable character difficult to be assailed, in our judgment certain features floating on the surface of the record would prevent us from thinking otherwise of the question on the material on record. Firstly, it is seen that the property is leasehold. Secondly, it is seen that there is no material on record with regard to the nucleus of the joint family. There is a mere reference to the unregistered document and even though the document shows as stated hereinbefore the existing larger joint family came to be dissolved. It is also to be seen that even the partition deed dated March 15, 1976, if even cursorily perused shows that apart from these three brothers there is none else even to cast a shadow of the existence of a Hindu joint family. On the contrary even from the contents of the said document it could be seen that the three brothers are in uninterrupted enjoyment of the under-mentioned properties. Added to this the conduct of the applicant-assessees with regard to the previous years shows that they displayed themselves as tenants-in-common and not as joint tenants. Therefore, in addition to the careful and cautious reasoning of the Tribunal even taking an independent view of the matter it is more than difficult to think of any other view than the one taken by the Tribunal.

For the above reasons, the question that is posed for our consideration is answered in the affirmative, in favour of the Revenue and against the assessee, confirming the order dated January 24, 1986 (annexure "III"), of the Agricultural Income Tax Appellate Tribunal, Additional Bench, Kozhikode.

A copy of this judgment under the seal of this court and the signature of the Registrar shall be sent to the Agricultural Income Tax Appellate Tribunal, Additional Bench, Kozhikode, for passing consequential orders.