Joint family business liability: manager non speculative allied ventures bind minor coparceners; civil challenge to tax assessments barred by statutory remedies.

The text addresses (i) whether businesses started by adult coparceners after the father's death formed part of the joint family business and bound minor coparceners, and (ii) whether a civil suit seeking declaration and injunction against sale of properties to recover income tax arrears is barred. It summarizes the principle that in a trading Hindu family the family manager may lawfully commence allied, non speculative ventures that bind minors, and that a plaint framed to annul or frustrate tax assessments is barred where statutory remedies before tax authorities and in partition exist, rendering the suit ineffective.

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Issues: (i) Whether the businesses started by adult members after the father's death were joint family businesses binding on minor members; (ii) Whether the suit seeking a declaration and injunction against sale of properties for recovery of income-tax arrears is barred by section 67 of the Income-tax Act.

Issue (i): Whether the new businesses conducted by adult members formed part of the joint family business and thereby rendered the minors liable for the tax assessed on profits.

Analysis: The Court examined evidence regarding sources of capital and the nature of family trade. Applying the established distinction between trading and non-trading Hindu families, the Court found that in a trading family the manager has wide powers to start allied or non-speculative new ventures which bind minors. There was no proof that the adult members used independent funds or that the ventures were speculative. The wirenail business was found allied to the ancestral hardware trade, and other ventures were not shown to be speculative or funded independently.

Conclusion: The businesses were held to be joint family businesses and the minors were bound by the liabilities arising therefrom; this conclusion is against the appellants.

Issue (ii): Whether the plaintiffs' suit for a declaration and injunction is barred by section 67 of the Income-tax Act.

Analysis: The Court considered the statutory scheme providing for claims and objections before the tax authorities (including provisions under sections 23 and 25A) and held that the substance of the plaintiffs' relief amounted to challenging the assessments. The plaint framed as a declaration could not evade the statutory bar. The Court noted available remedies before the tax authorities and in partition proceedings which were not pursued.

Conclusion: The suit was held to be barred by section 67 of the Income-tax Act; this conclusion is against the appellants.

Final Conclusion: Both issues being decided against the appellants, the appeal is dismissed and the tax assessments and steps for realisation stand unimpaired.

Ratio Decidendi: In a trading Hindu family the family manager may lawfully start non-speculative businesses that bind minor coparceners, and a civil suit seeking to cancel or effectively nullify an income-tax assessment is barred by section 67 of the Income-tax Act where statutory remedies before the tax authorities exist.

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