AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
1958 (11) TMI 3
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....e under section 23, the dispute related to six sums aggregating to Rs. 2,30,346 shown in the accounts as the sale proceeds of ornaments. The case of the appellant with reference to these sums was that at the partition the jewels of the family were sold in six lots, that the price realised therefrom was invested in the business, and that the credits in question related thereto. The Income-tax Officer declined to accept this explanation. He observed that while the books of the appellant showed that what was sold was ornaments, the accounts of Chunilal Damani to whom they were stated to have been sold showed sale of gold. He also pointed out that while the weight of the ornaments according to the partition agreement, exhibit A, was 3,422 tolas, the weight of gold which was actually sold to the purchaser was 3,133 tolas. The explanation given by the appellant for this discrepancy was that the jewels in question had come down to the family through several generations, and were not pure. The Income-tax Officer rejected this explanation, because he held that the weight which was actually deducted for impurities in the accounts of the purchaser was almost negligible, and that what was sold....
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....relating thereto in some detail. On February 20, 1945, the members of the family entered into an agreement, exhibit A, to divide their joint properties among the five branches, of which it was constituted. In schedule B to this document are set out the jewels to be divided, and their total weight is, in round figure, 3,422 tolas. Then we have the proceedings book, and that purports to be a record of the decisions taken by the members of the family from time to time for implementing exhibit A. The minutes of the meeting held on February 23, 1945, show that the pearls and stones imbedded in the jewels were to be removed and divided among the members, and that a goldsmith called Inderban was engaged for the purpose of breaking up the jewels. Then we have the minutes of a meeting held on February 28, 1945, and therein it is recited that the weight of the pearls, stones and copper removed was, again in round figure, 289 tolas, and deducting this out of 3,422 tolas, being the weight of the jewels set out in exhibit A, the gold which was available for partition was 3,133 tolas. It is recorded that this quantity should be sold in the market and the sale proceeds credited in the capital acc....
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...., and that as, according to the appellant, the partition consisted in the division, inter alia, of family jewels weighing 3,422 tolas the Income-tax Officer must be held to have decided that the family was in possession of the jewels mentioned in exhibit A and had divided them in the manner set out in exhibit B, and that as that order had become final, it must conclude the present question in favour of the appellant. The Tribunal repelled this contention on the ground that the order under section 25A only decided that there was partition in the family, and that it had no bearing on the issues which arose for decision in the assessment proceedings. In the result, both the appeals were dismissed. Pursuant to an order of the High Court of Calcutta dated December 7, 1950, passed under section 66(2) of the Act, the Tribunal referred the following questions for its opinion : " (1) Whether the Income-tax Appellate Tribunal was bound by the findings of fact of the Income-tax Officer relating to the nature and division of the assets of the joint family in question which he arrived at in his enquiry under section 25A(1) of the Indian Income-tax Act ? (2) Whether there was any material ....
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.... at that point of time, there was no undivided family in existence which could be taxed, though when the income was received in the year of account the family was joint. Nor could the individual members of the family be taxed in respect of such income as the same is exempt from tax under section 14(1) of the Act. The result of these provisions was that a joint family which had become divided at the time of the assessment escaped tax altogether. To remove this defect, section 25A enacted that until an order is made under that section, the family should be deemed to continue as an undivided family. When an order is made under that section, its effect is that while the tax payable on the total income is apportioned among the divided members or groups, all of them are liable for the tax payable on the total income of the family. What that tax is would depend on the assessment of income in proceedings taken under section 23, and an order under section 25A would have no effect on that assessment. It is in this context that we must read the observations in the order under section 25A relied on for the appellant. In fact, that order does not expressly decide that the family had the jewels ....
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....ttan Bagri the accountant of Chunilal Damani. (iv) Statement of Lakhmichand Bhiwaniwalla and Pannalal Bhiwaniwalla, member of the assessee family." This statement is signed by the counsel for the appellant. It is clear from the above that the proceedings book was not relied on as evidence on the character of the receipts making up the sum of Rs. 2,30,346. The fact appears to be that the appellant produced the proceedings book in support of his petition under section 25A for the purpose of establishing that there was a completed partition, and relied only on the minutes of the meeting held on April 21, 1945, in proof thereof, and that is why that alone was translated in English and marked as exhibit B. It is also to be noted that there is no reference in the order of assessment by the Income-tax Officer under section 23(3) to the minutes of the meetings prior to April 21, 1945, and that they were not even translated, as was the record of the meeting dated April 21, 1945. The obvious inference is that they were not relied on by the appellant and were therefore not considered by the Officer. It is also significant that the order of the Income-tax Officer refers to sale of ornament....