Case: Sashi Prasad Barooah Vs. The Agriculture Income-Tax Officer, Shillong,Assam &amp; Ors

The High Court held that the facts of this case were covered by the above quoted rule. The High Court also repelled the challenge to the vires of the ruleThe appeals arise out of seven petitions filed under articles 226 and 227 of the Constitution of India by the appellant which were dismissed by a common judgment. The matter relates to assessment years 1946-47, 1947-48, 1948-49, 1949-50, 1950-51, 1951-52 and 1955-56. Each writ petition related to one of these years. We may set out the facts relating to the assessment year 1946-47, as it is the common case of the parties that the decision about the writ petition relating to that year would govern the other writ petitions alsoThe appellant, Sashi Prasad Barooah, was the karta of a Hindu undivided family styled as S. P. Barooah and others. The family was governed by the Dayabhaga school of Hindu law and consisted of three members. The family owned certain tea estates and carried on the business of tea plantation. It was assessed under the Act in respect of its income derived from manufacture and sale of tea. The case of the appellant is that there was a partition of the family on January 1, 1945, and as a result of that partition, some of the tea estates fell to the share of the appellant and he became exclusive owner thereof from the date of the partitionA general notice dated April 3, 1946, was published in the Assam Gazette and local newspapers in terms of sub-section (1) of section 19 of the Act calling upon persons whose agricultural income exceeded the limits of taxable income to furnish returns within the specified time. On March 24, 1947, the appellant addressed a letter to the Agricultural Income-tax Officer praying for extension of time for submission of the return. Another letter dated May 10, 1947, was addressed by the appellant to the Agricultural Income-tax Officer stating that he was trying to expedite the submission of the return. On February 15, 1951, the Agricultural Income-tax Officer addressed a communication to the appellant asking him to file the return by March 14, 1951. The appellant by letter dated March 16, 1951, informed the said officer that he would meet him at Shillong. In his letter dated July 21, 1951, the appellant informed the Agricultural Income-tax Officer that he would file his return as soon as some matters were settled. On March 25, 1955, the appellant addressed another letter to the Agricultural Income-tax Officer stating that he had not received the relevant assessment orders made by the Income-tax Officer (the Income-tax Officer under the Indian Income-tax Act, 1922) relating to the assessment years 1946-47 onwards. On July 11, 1959, the following two notices were sent by the Agricultural Income-tax Officer to the appellant" I am to inform you that following the dissolution of family business of Sashi Prasad Barua and others in the year 1945, you are liable to furnish a return of agricultural incomes including those from the tea estate under your ownership from the assessment year 1946-47Please also note that the returns along with certified copies of Central income-tax assessment should reach this office on or before August 15, 1959. In default, you will be liable for summary" Whereas I have reason to believe that your total agricultural income from sources chargeable to agricultural income-tax in the year ending the 31st March, 1947, to 1959--(a) has wholly escaped assessment ;(b) I therefore propose--(i) to assess the said income that has escaped assessmentI hereupon require you to deliver to me not later than August 15, 1959, or within 30 days of the receipt of this notice, a return in the attached form of your total agricultural income during the previous year ending the 31st March, 1946 to 1958."Accompanying the two notices sent by the Agricultural Income-tax Officer was also a notice under section 19(2) and section 30 of the Act. The appellant failed to submit a return or to furnish certified copies of the Central assessment orders. The Agricultural Income-tax Officer, as per order dated June 22, 1961, assessed the total agricultural income of the appellant for the year 1946-47 to be Rs. 1, 45, 994. An amount of Rs. 19, 321.44 was held to be recoverable from the appellant. The appellant filed an appeal against that order but the same was dismissed by the Assistant Commissioner of Taxes on December 27, 1962. Revision filed by the appellant was dismissed by the Commissioner of Taxes as per order dated September 28, 1964. Certificate of public demand showing an amount of Rs. 3, 74, 087.89 as due from the appellant for the seven years in question was then issued by the Agricultural Income-tax Officer. Proclamation for the sale of the property of the appellant was thereafter issued for the recovery of the amount due from the appellant. The appellant thereupon filed, as mentioned earlier, seven writ petitions. Prayer made in the writ petitions was to quash the impugned assessment orders dated June 22, 1961, the notice of demand dated July 4, 1961, and the proclamation of sale dated December 31, 1964From one of the notices addressed by the taxation authorities to the appellant as well as from the return filed on their behalf, it would appear that the taxation authorities were not averse in the event of partition among the members of the Hindu undivided family, to assess the appellant in his individual capacity in respect of the agricultural income arising from those tea estates which had fallen to his share. Such a course, it seems, was also not acceptable to the appellant. His stand at the same time was that no assessment could be made in the name of the Hindu undivided family as according to him the same had been disrupted as a result of partition. The appellant thus wanted a complete immunity from payment of agricultural income-tax during the years in question even though agricultural income had arisen from tea estatesAlthough a number of grounds were taken in the writ petitions, at the hearing before the High Court only two grounds were pressed on behalf of the appellant. The first ground was that after the dissolution of the Hindu undivided family, no assessment order could be made under the Act in respect of such disrupted Hindu undivided family. The second submission advanced on behalf of the appellant was that in case it be held that the matter was covered by rule 23 reproduced above, in that event the said rule was ultra vires the powers of the State Government to frame rules under the Act. The High Court, as already mentioned, decided on both the points in favour of the revenue and against the appellant

Court's reasoning:
After giving the matter our consideration, we are of the opinion that the two contentions advanced by Mr. Sen on behalf of the appellant are not well-founded. It is consequently not necessary for us to go into the question as to what is the effect of the omission of the appellant to refer to the partition in the communications sent by him to the Agricultural Income-tax OfficerThe rule clearly states that where an order apportioning the liability to the tax on the basis of partition has not been passed in respect of a Hindu family hitherto assessed as undivided or joint, such family shall be deemed for the purposes of the Act, to continue to be a Hindu undivided or joint family. It would, therefore, follow that unless an order apportioning the liability to the tax on the basis of partition is passed in respect of a Hindu undivided family which was hitherto assessed as such undivided family, the said family shall be deemed for the purpose of the Act to continue to be a Hindu undivided family. Admittedly, no order apportioning the liability to the tax on the basis of the alleged partition has been passed in respect of the Hindu undivided family of which the appellant was the karta. As such, the aforesaid family shall continue to be treated, for the purposes of the Act, as Hindu undivided family. We are unable to subscribe to the submission of Mr. Sen that the above rule would apply only in those cases where the Hindu undivided family has already been assessed under the Act and the only thing which remains is the recovery of the tax in pursuance of the said assessment order. Such cases, in our view, are covered by the other part of rule 23. We are, however, not concerned with that part. So far as the part of rule 23 which has been reproduced above is concerned, its language is clear and unambiguous. The language clearly warrants the conclusion that in the absence of an order apportioning the liability to the tax on the basis of partition in respect of a Hindu undivided family hitherto assessed as undivided or joint, such family shall be deemed for the purposes of the Act to continue to be a Hindu undivided familyThe answer to this question, in our opinion, should be in the affirmative. What the rule contemplates in that unless an order was made on the basis of the alleged partition of a Hindu undivided family, such family shall be deemed for the purposes of the Act to continue to be a Hindu undivided family. The rule thus relates to the working of the Act. Section 3 of the Act is the charging section and creates liability for tax in respect of the total agricultural income of every individual, Hindu undivided family, firm and other association of persons. Such a liability having already been created by the above provision, rule 23 reproduced earlier deals with the question as to who should be the person as defined in the Act who should be assessed in respect of the agricultural income arising from property in respect of which the Hindu undivided family was assessed hitherto. The rule provides that such family shall continue to be deemed as Hindu undivided family for the purposes of the Act unless an order is made on the basis of the partition amongst the members of the family. This is a matter of detail to carry out the purposes of the Act and the State Government, in our opinion, was well within its competence to make the impugned rule in exercise of its powers under sub-section (1) of section 50 of the ActThere is also nothing novel in a Hindu undivided family being taxed as such in spite of a claim of its disruption unless an order on the basis of the partition is made by the taxing authorities. Sub-section (1) of section 171 ofthe Income-tax Act, 1961, provides that a Hindu undivided family hitherto assessed as undivided shall be deemed for the purposes of the Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under that section in respect of the Hindu undivided family. The fact that, unlike the Income-tax Act, there is no statutory provision in the Act with which we are concerned and the matter is dealt with by the rules framed under the Act would not make any material difference. The rules would be as much binding as would be the statutory provision in this respect. The only requirement is that the rules should be validly made in exercise of the powers conferred by the Act. So far as this aspect is concerned, we have already held above that the rule in question was validly made as it was within the competence of the State Government to make such ruleThe above decisions clearly lend support for the conclusion arrived at by the High Court in the judgment under appeal that the State Government was within its competence to make rule 23 reproduced above