Statutory tax assessment immunity from civil challenge and colourable partition do not defeat recovery from joint family assets

A statutory income-tax assessment cannot be collaterally challenged in a civil suit where the Act provides appellate and revisional remedies and expressly bars such suits; a mere objection that no effective section 25A claim was made does not render the assessment a nullity. The disputed properties were also found to be joint family assets, because the purchase money came from the family business and the surrounding conduct showed the alleged partition to be benami and colourable rather than a genuine severance. The result was that the assessments remained binding and the properties were treated as liable within the family estate.

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Issues: (i) Whether the assessment proceedings could be impeached in a civil suit on the footing that no effective claim under section 25A of the Indian Income-tax Act, 1922 had been made and that the assessments were therefore not binding. (ii) Whether items 46 to 51 were the joint family properties of the assessee family or were the separate properties of the plaintiffs, and whether the alleged partition was genuine or only a sham and colourable device.

Issue (i): Whether the assessment proceedings could be impeached in a civil suit on the footing that no effective claim under section 25A of the Indian Income-tax Act, 1922 had been made and that the assessments were therefore not binding.

Analysis: A claim under section 25A required more than a mere intimation that partition had taken place; it had to be a request for recognition of the partition and for consequential assessment in the manner provided by the Act. The materials relied on did not show such a claim at the time of assessment. In any event, the Act provided a complete appellate and revisional machinery, and section 67 expressly barred a civil suit to set aside or modify an assessment made under the Act. The remedy sought in substance amounted to a challenge to the assessments themselves, and the assessments could not be treated as a nullity merely because their correctness was questioned.

Conclusion: The challenge to the assessments in civil court was not maintainable, and the assessments remained binding.

Issue (ii): Whether items 46 to 51 were the joint family properties of the assessee family or were the separate properties of the plaintiffs, and whether the alleged partition was genuine or only a sham and colourable device.

Analysis: The evidence showed that the purchase money for items 46 to 51 came from the family business and not from the plaintiffs' maternal grandmother. The surrounding circumstances, including the minority of the ostensible vendees, the pending attachment of family properties, the conduct of the parties after the alleged partition, and the continued management and enjoyment of the properties as before, supported the inference that the purchase was benami in the names of the minor sons for the family. The partition deed was likewise not intended to operate as a real severance but was a colourable arrangement devised to keep family assets beyond the reach of creditors and the revenue authorities.

Conclusion: Items 46 to 51 were held to be joint family properties, and the alleged partition was held to be sham and ineffective.

Final Conclusion: The appeal failed in substance, while the cross-objections succeeded to the extent that the disputed items were brought within the family estate liable for recovery of tax arrears; the decree was modified accordingly.

Ratio Decidendi: A statutory assessment made under the Income-tax Act cannot be collaterally impeached in a civil suit where the Act provides its own appellate remedies and expressly bars such suits, and a partition or transfer shown by the evidence to be merely colourable will not defeat recovery from joint family assets.

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