Smt. Durgadevi vs Commissioner of Income Tax

SB. Sakrikar, J.—At the instance of the applicant/assessee, the Tribunal, stated the case and referred the undernoted question for answer with reference to consolidated order passed on 30-3-1990 in IT Appeal Nos. 1081 and 1082(Indore) of 1985 for the assessment years 1980-81 and 1981-82: Whether, on facts and in the circumstances of the case, the Tribunal was justified in holding that three minor sons of late Harpaldas inherited the share of Shri Harpaldas in the firm in their individual capacities and, as such, their share income was includible in the income of their mother ?

Brief facts of the case are that Deelason Mfg. Co., a partnership concern, was originally constituted by three persons, namely, Deelamal and his two sons, Shri Jaipaldas and Shri Harpaldas. Harpaldas died on 14-2-1978 and other partner Deelomal also retired from the firm. The firm was reconstituted with effect from 18-2-1978, which was evidenced by a deed of partnership dated 22-2-1978. The partners of the newly- constituted firm were Jaipaldas and his son Chandra Kumar. Three minor sons of late Harpaldas, namely, Rajendra Kumar, Surendra Kumar and Bhupendra Kumar were admitted to the benefits of partner ship. The legal heirs of Harpaldas are his widow Smt. Durgadevi (who is the assessee in the case) and aforesaid three minor sons. The assessments for the years 1980-81 and 1981-82 in the case of Smt. Durgadevi were completed u/s 143(1) of the Act. Later, they were reopened u/s 147 of the Act on the ground that income of the three minor sons of the assessee from their admissions to the benefits of partnership in the said firm should have been included in her income and it escaped the assessment. The assessments for these years were also reframed and the share income of the minor sons was clubbed with the income of the assessee. Copies of the reassessment orders are marked as Annexures A/1 and A/2.

The assessee went in appeal against the order of the ITO, before the AAC who by consolidated order dated 21-8-1985 dismissed the appeal confirming the order of the ITO. Copy of the order of the AAC is marked as Annexure B. The assessee then came in appeal before the Tribunal. The stand of the assessee before the Tribunal was that right, title and interest of the deceased Harpaldas, in the said firm, devolved on his three minor sons in the status of HUF on which their mother, namely, the assessee, was the karta. The case of the assessee is that the minor sons of the assessee were admitted to the benefits of partnership not in their individual capacities but as a member of HUF and the provisions of section 64(1)(iii) of the Act were not attracted. The submission of the petitioner was negatived by the Tribunal and the appeal was dismissed. Copy of the order of the Tribunal is marked as Annexure C.

Aggrieved by the order of the Tribunal, the applicant/assessee filed the application u/s 256(1) of the Act referring certain questions of law arising out of the order of the Tribunal. On the application of the assessee, the Tribunal stated the case and has referred the aforesaid questions of law for the opinion of this Court.

None appeared for the applicant/assessee. Shri A.M. Mathur, the learned senior counsel with Shri Ashok Kumar Shrivastava appeared for the Department. He is heard.

The learned counsel submitted that the applicant at whose instance reference is made has chosen to remain absent and has, thus, not enabled the hearing of this reference. Under these circumstances, this Court is not under an obligation to answer the reference and he, accordingly, prayed that we should decline to answer the reference. In support of his contention, the counsel placed reliance on the case reported in Jamunadas Khanchand Vs. Commissioner of Sales Tax,

In the case of Jamunadas (supra) considering the legal position on the point, this Court has held as under :

For the foregoing reasons, we are of the opinion that if the party at whose instance the reference is made, fails to appear at the hearing or fails in taking steps for preparation of the paper-books so as to enable hearing of the reference, this Court is bound to answer the reference. We refuse to answer the reference and also saddle the assessee with the costs of the department quantified at Rs. 150.

In the case at hand, the applicant/assessee at whose instance reference is made has chosen to remain absent and has, thus, not enabled the hearing of this reference. This Court is not under obligation to answer the reference. In the circumstances, the objection raised on behalf of NA is proper and deserves to be permitted to prevail. The same view was reiterated by us in Azad Bus Service v. CIT [MCC No. 42 of 1989] and CIT v. Ghisaram [MCC No. 303 of 1991].

We, therefore, accept the contention raised by the counsel for the NA and, accordingly, refuse to answer the reference. The reference is, thus, not answered. There shall be no orders as to costs. The Tribunal be informed accordingly. This reference application is, thus, disposed of. Counsel''s fee for the N.A. is fixed at Rs. 750.