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PETITIONER: NARENDRAKUMAR J. MODI

       Vs.

RESPONDENT: COMMISSIONER OF INCOME TAX, GUJARAT II,AHMEDABAD

DATE OF JUDGMENT04/08/1976

BENCH: UNTWALIA, N.L. BENCH: UNTWALIA, N.L. KHANNA, HANS RAJ KRISHNAIYER, V.R.

CITATION:  1976 AIR 1953            1977 SCR  (1) 112  1976 SCC  (4) 456

ACT:             Income  Tax  Act,  1922---Section  25-A(3)--Claims   for         partition  and  disruption  of the  Hindu  Undivided  Family         disallowed by I.T.O.--Appeal under the Act filed against the         orders of I.T.O. also dismissed--No reference under the  Act         challenging  the Tribunal’s order dismissing the appeal  was         taken,  but subsequently got a prelminary decree for  parti-         tion,  passed by the civil court during the pendency of  the         appeal--Whether the Income Tax Authorities are bound by  the         subsequent partition decree of the civil court.             Right of management--Hindu Law--Joint  Hindu   Undivided         Family-Whether  a junior member of the family can act  as  a         karta  with  the consent of all the other  members,  if  the         senior member gives up his right.

HEADNOTE:             Bapalal  Purshottamdas Modi was the karta and head of  a         Hindu Undivided Family possessing many immovable  properties         and  carrying on business of various types  including  money         lending.   Bapalal  had five. sons, viz.  Vadilal  Ramanlal,         Jayantilal,  Gulabehand and Kantilal; out of  whom  Ramanlal         and Jayantilal predeceased him in 1933 and 1956 respectively         and the appellant was one of the sons of Jayantilal.  As per         the  general power of attorney dated 5-10-1948, executed  by         Bapalal in his favour, Gulabchand, the third son was  acting         as  a karta and was filing the various tax  returns  without         any objection. whatsoever by the other members of the  Hindu         Undivided  Family.  Bapalal relinquished all his  rights  in         the joint family property on 22-10.54- leaving the corpus of         the  joint family properties to his four surviving sons  and         Rajnikant, son of Ramanlal.  All of them executed on  24-10-         54,  a  memo  of partition disrupting  the  Hindu  Undivided         Family  and partitioning  the  properties the course of  the         proceedings of the income-tax assessment for the  assessment         year  1955-56  against the H.U.F. of  Bapalal  Purshottamlal         Modi,  an application under s. 25A of the Income  Tax.  Act,         1922  claiming partition was made. The claim was  disallowed         by’  the  I.T.O. by his order dated 28-1-1960.   During  the         pendency  of the appeal, a suit for partition was  filed  in         1961  and  a decree for partition was obtained on  June  30,         1965.   The. appeal to the Appellate Assistant  Commissioner

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       was dismissed on September 30, 1965 and the second appeal 10         the  Income  Tax Appellate Tribunal was  also  dismissed  on         March 28. 1969.  The appellants did not ask for a  reference         to  the High Court, as provided under the Act, but  went  on         filing  the returns in respect of the subsequent  assessment         years.  When the Income Tax Officer got attached the  entire         amount in the, Savings Bank A/c towards the tax liability by         an  order  dated May 12. 1970, the appellant  filed  a  writ         petition  challenging the various orders passed in the  pro-         ceedings  under s. 25A for the assessment years  1955.66  to         1965-66  and the several attachment orders.  The High  Court         dismissed  the  writ in limine, but  granted  a  certificate         under Art. 133(1)(b) of the Constitution.         Dismissing the appeal, the Court,             HELD: (1) Sub section (3) of s. 25A provides that  where         an order accept ing partition had not been passed in respect         of  a  Hindu Undivided Family assessed  as  undivided,  such         family  shall be deemed for the purposes of the Act to  con-         tinue to be Hindu Undivided Family.  The Income Tax Officers         who  had their own view to take, were not bound by  the  de-         cree,  since in the instant case the  partition  preliminary         decree came much later and there was no reference under  the         Income Tax Act challenging the order of the Tribunal.   [116         C-D]             (2) A junior member of the family can, with the  consent         of  all  the other members. act as a karta,  if  the  senior         member gives up his right. [116 E]         113

JUDGMENT:         CIVIL APPELLATE JURISDICTION: Civil Appeal No. 156 of 1971.             From  the  Judgment and Order dated  19-10-1970  of  the         Gujarat High Court in Special Civil Appln. No. 1177/70.             B.R.L.   Iyengar, S.K.  Dholakia and R.C.  Bhatia,   for         the appellant.         B.B.Ahuja, for respondent No. 1.         The Judgment of the Court was delivered by             UNTWALIA, J.  The appellant’s  writ  petition  filed  in         the High Court of Gujarat was dismissed in limine by a Bench         of the High Court on October 19, 1970.  The Commissioner  of         Income  tax, Gujarat II, respondent no. 1 was the  authority         against  whom several reliefs had been claimed in  the  writ         petition.  Subsequently were added the other members of  the         family of the appellant as respondents to the writ petition.         The  appellant obtained a certified from the High Court  for         appeal  to this Court under sub-clause (b) of clause (1)  of         Article 133 of the Constitution  of India as it stood before         the 30th Constitution Amendment Act.  Hence tills appeal  to         this Court.             Having heard Mr. B.R.L. Iyengar, Senior Advocate for the         appellant  at  some length we found that the  appellant  was         ill-advised  to  file the writ petition and to.  pursue  the         matter  upto  this Court.  The appeal being  devoid  of  any         substance   must fail.  We proceed to state  the  facts  and         discuss the points urged before us very briefly.             One  BapalaI Purshottamdas Modi was the head of a  Hindu         Undivided family.  The joint family possessed many immovable         properties and carried on business of various  types such as         money-lending  etc.  Bapalal had five sons  namely  Vadilal,         Ramanlal,   Jayantilal, Gulabchand and  Kantilal.   Ramanlal         died long ago in or about the year 1933.  Jayantilal died in         1956.  The appellant is one of the sons of Jayantilal.             The  appellant’s  case  in the writ  petition  was  that

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       Bapalal  was  the karta of the Hindu Undivided  family.   He         executed  a general power of attorney on October 5, 1948  in         favour of his third son Gulabchand to manage his (Bapalal’s)         separate property.  On October 22, 1954 Bapalal relinquished         his right, title and interest in the joint family properties         on  taking a sum of Rs.  75,000/-  leaving the  corpus   and         management  of the joint family properties to his four  sur-         viving sons and Rajnikant, son of late Ramanlal.  These five         members  also executed  a memo of partition on  October  24,         1954  disrupting  the  erstwhile Hindu Undivided family  and         partitioning the properties.         In  course of the proceedings for assessment of the  income-         tax for the assessment year 1955-56 against the Hindu  Undi-         vided  family of Bapalal Purshottamlal Modi, an  application         under  Section  25A  of the Income-tax Act,  1922  was  made         claiming partition w.e.f. October 24, 1954.  Notices of  the         enquiry under section 25A were served on all the members  of         the  family.   At  the enquiry  the  statements  of  various         persons including the appellant were recorded by the  Income         tax  Officer.   He,  by his order, dated  January  28,  1960         disallowed the         114         claim under section 25A of the Income-tax Act, 1922.  It  is         asserted that in the year 1961 a suit for partition had also         been  filed  and  the City Civil Court  Ahmedabad  passed  a         decree  for partition on June 30, 1965.  In an appeal  filed         before  the Appellate Assistant Commissioner from the  order         of the Income-tax Officer  dated  January 28, 1960  reliance         was  placed on the Civil Court  partition decree also.   The         Appellate  Assistant  Commissioner, however,  dismissed  the         appeal  by  his order dated September 30,  1965.   A  second         appeal to the Income tax Appellate Tribunal was dismissed on         March  28, 1969.  InCometax assessment was made against  the         Hindu  Undivided family for the year  1955-56.   Assessments         were also made against the Hindu Undivided family, sometimes         treating it as Association of Persons or Unregistered  Part-         nership Firm as per returns filed from time to time, for the         subsequent  years upto the assessment year 1965-66.   Copies         of  all the assessment orders were enclosed with  the   writ         petition   aS Annexure ’I’ collectively.  Appeals  taken  to         the  Tribunal from some of the assessment orders  were  also         dismissed.   Notices  were  being issued  and  served  under         sections  22  and  23 of the Income tax Act,  1922  for  the         assessment  years  which were governed by the said  Act.  In         respect  of the assessment years 196.2-63  onwards   notices         were.  issued and served under sections 142 and 143  of  the         Income tax Act, 1961.  A large sum of tax and penalty became         due as the demands from time to time were partly paid.   The         Income-tax  authorities  took steps for realization  of  the         income  tax  dues against the  appellant’s  family  and  got         attached various properties.  In Civil Suit No. 806 of  1961         in which the preliminary partition decree was passed on June         30,  1965, respondent Kantilal had been appointed as  a  re-         ceiver  Later  on one Mr. Bhatt was appointed  Receiver.   A         Savings  Bank Account No. 412002 was being operated  by  the         Receiver.  The Income-tax Officer attached the entire amount         of  Rs. 56,294.43  in the said account by his  orders  dated         May  12,  1970.   Thereupon, the  appellant  filed-the  writ         petition  challenging the various orders passed in the  pro-         ceeding  under section 25A of the Income tax Act, 1922;  the         assessments made for the years 1955-56 to 1965-66  and   the         attachment  orders on various grounds.  In a   single   writ         petition  rambling  allegations were  made  challenging  the         multifarious proceedings and the orders on various  ground’s         and the  following  prayers were made:

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                   "(a) declaring void and illegal and quashing the                  proceedings  of the income tax  authorities  making                  assessments on Hindu Undivided Family,  Association                  of persons and unregistered partnership firm afore-                  said  for the years beginning from  the  assessment                  year  1955-56  and  also the  proceedings  for  the                  recovery of the taxes so assessed, and                     (b)  quashing the orders of the  income-tax  Au-                  thorities refusing to record partition and  direct-                  ing  the Respondent and his Subordinates to  record                  under   Section 25A of the Act that  the  erstwhile                  joint  family property has been divided  or  parti-                  tioned in definite portions, each member getting an                  equal  share,  on October, 1954;                  115                     (c)  directing the respondent and his   subordi-                  nates   to cancel o.r withdraw the impugned  orders                  and all steps taken for the recovery of the amounts                  so. assessed;                     (d)  directing the respondent and hi.s  subordi-                  nates not to take any further steps for the  recov-                  ery of the tax so assessed;                     (e)  quashing  all the penalty orders  and  such                  other orders passed in pursuance of the  assessment                  proceedings aforesaid;                  (f) quashing all the orders of attachment or in the                  nature                  attachment passed by the Income tax Authorities  in                  these  proceedings for the assessment year  1955-56                  onwards, and                  (g)  to pass such other and further orders as  your                  Lordships  deem just and expedient in the  circurm-                  stances of the case."                      It  seems  to us that the  High  Court  rightly                  dismissed  the  appellant’s  petition  in   limine.                  Since  the  valuation under Article  133(1)(b)  was                  beyond  Rs. 20,000/-, the appellant was  granted  a                  certificate as a matter of course.                      It was pointed out to. the appellant’s  counsel                  that  so many proceedings and orders could  not  be                  challenged in one writ petition and he was asked to                  make  his submissions in the appeal  confining  the                  writ petition to one matter only.  Counsel chose to                  confine it to the attack on the attachment order of                  the  Income  tax Officer in respect  of  the  money                  lying in the Savings Bank Account.  While doing so,                  he traversed the entire allegations in the petition                  by adopting an ingenious method.  Counsel submitted                  that  the attachment had been made for  realization                  of  the income tax dues based upon  various  orders                  which were void and ultra vires.  All those  orders                  could be attacked collaterally while attacking  the                  attachment order.                  Mr.  Iyengar urged the following points  in,support                  of the appeal.                      (1 ) That the orders of the various authorities                  rejecting the claim of the partition under  section                  25A   of   the Income tax Act,  1922  were  without                  jurisdiction  and on their face suffered from  many                  infirmities of law.                      (2) That after Bapalal relinquished his  inter-                  est  in  the joint family properties and ceased  to                  be  the  karta, there was no karta of the   family.                  Gulabchand--a junior member of the family could not                  act as a karta. Other members of the family did not

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                accept him to be the karta.                      (3) That even after the death of Bapalal in the                  year 1958 various notices under the Income tax  Act                  were  issued  and  served in the  name  of  Bapalal                  Purshottamdas  Modi--a dead person--and  hence  the                  entire  proceedings  and  assessment  orders   were                  nullities.                  116                       (4)  That the appellant had no opportunity  of                  taking  any part in the income tax proceedings  and                  his property cannot be made liable for  realization                  of the dues determined in such proceedings.                      None  of  the  points urged on  behalf  of  the                  appellant merits any detailed discussion.  We  were                  taken  through  the power of attorney  executed  by                  Bapalal in favour of Gulabchand, the deed of relin-                  quishment  executed by him on October 22, 1954  and                  the alleged memorandum of partition of October  24,                  1954;  the  orders of the Income tax  officer,  the                  Appellate  Commissioner  and the  Tribunal  in  the                  proceedings  under  section 25A of the  Income  tax                  Act,  1922.   In  our opinion. the  orders  do  not                  suffer from any infirmity of law or any such defect                  which  will make them void. Notice of  the  enquiry                  had  been given to all the members as  admitted  by                  the appellant himself.  He had been examined in the                  proceedings.   Sub-section (3) of Section 25A  pro-                  vides. that where an order accepting partition  had                  not  been passed in respect of a Hindu  family  as-                  sessed as undivided such family shall be deemed for                  the  purposes  of the Act to continue to  be  Hindu                  undivide  family.  A partition  preliminary  decree                  came  much  later. The income tax  authorities  had                  their own view to take. They were not bound by  the                  decree. No reference was taken under the income tax                  Act challenging the order of the Tribunal  dismiss-                  ing the appeal.                      It was clear from some of the assessment orders                  that  Gulabchand was acting as a karta even  during                  the life time of Bapalal as he had retired to  live                  in Brindaban.  At the relevant time no body disput-                  ed  his  authority  to act as  karta.   His  eldest                  brother Vadilal was an old man of about 70 years of                  age.   His eider brother Jayantilal--father of  the                  appellant died in the year 1956.  In these  circum-                  stances he appears  to have acted as the karta with                  consent of all the other members.  A junior  member                  of  the family could do so.  See Mulla’s Hindu  Law                  296,  fourteenth edn.  Where occurs  the  following                  passage:                        "So  long as the members of a  family  remain                  undivided,  the  senior  member of  the  family  is                  entitled to manage the family properties,"  includ-                  ing even charitable properties (q); and is presumed                  to  be the manager until the contrary is  shown(r).                  But  the  senior member may give up  his  right  of                  management,  and a junior member may  be  appointed                  manager(s) ."             Notices  were  being issued in the name  of  the  family         which  was carrying on the business in the assumed  name  of         Bapalal Purshottamdas Modi.  They were neither issued to nor         served  on  Bapajal  the dead person.  In  response  to  the         notices  returns were being filed by the managing member  of         the family.  At no stage before the income tax authorities a         contention  was raised that the notice was served on a  dead

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       person.   There is no substance in the third point.   Coming         to  the  fourth and the last point urged on  behalf  of  the         appellant we find that the appellant is bound by the assess-         ment  made  in  respect of the income of  his  family  which         continued in the eye of law to be joint. The share         117         of the appellant’s properties received by him from the joint         family  or the income thereof is liable for the  income  tax         dues in question.  The appellant, as we have said above, was         ill-advised  to file a misconceived petition on  wholly  un-         tenable grounds.             In  the  result the appeal fails and is  dismissed  with         costs to respondent no. 1.         S.R.                                                  Appeal         dismissed.         118