Judgement

RAMASWAMI, J.: Karuppan Chettiar his son Muthukaruppan and the latter s minor sons all together formed a Hindu undivided family which was assessed as such till the end of the assessment year 1948-49. In the course of assessment proceedings for 1949-50 the family claimed on February 7, 1951 that the several businesses of the family had been partitioned between Karuppan Chettiar on the one hand and Muthukaruppan Chettiar and his sons forming a separate family on the other. Following up this claim the returns in response to the notice under Section 22 (2) of the Income-tax Act, 1922 (hereinafter called the Act) issued to the family for the assessment years 1950-51, 1951-52 and 1952-53 were made by Karuppan Chettiar in his individual capacity showing the income from the several sources that fell to his share. The Income-tax Officer rejected the claim of partition and assessed the Hindu undivided family for the aforesaid three years treating Karuppan Chettiar s returns as the proper returns for the family. An appeal was made by the assessee to the Appellate Assistant Commissioner in which complete partition as required by Section 25A of the Act was accepted by the Appellate Assistant Commissioner by his order dated December 18, 1954. In keeping with this order he also cancelled the assessments of the family for the aforesaid years. In the course of his order he observed:

"I therefore hold that there is no asset left in the hands of the H. U. F. which can be brought to tax and that the H. U. F. is no longer in existence. As such the present assessment requires to be annulled and the income considered in this assessment requires to be considered in the hands of the separating coparceners. I therefore annual these assessments."

2. Meanwhile Muthukaruppan and his minor sons forming the family, the assessee in this case, filed returns for the Tamil years Virothi, Vikruthi and Kara as the previous year for assessment years 1950-51, 1951-52 and 1952-53 as follows:

Assessment Returns under Section Date of return

year (voluntary)

1950-51 22(3) 8- 2-1951

1951-52 22(2) 5- 2-1952

1952-53 22(2) 2-12-1952

The Income-tax Officer closed the assessments as no assessments by his notes in the order sheet dated June 18, 1953 reproduced below:

"The assess is a member of the family of A. M. K. M. K. Karuppan Chettiar, assessed in F.1005-A. I have held in the family file in my order for income tax year 1949-50 that there have been no division between father and son. This being the case, there is no source of income to be separately assessed in the assessee s hands. The return of income in this file relates to the alleged share of income consequent on partition. Since partition has not been accepted, this file has only to be clubbed with the father s file. If, for any reasons, it is ultimately held on appeal that a separate assessment should be made, it will be no doubt be possible to take action under provision of Section 34 as now amended. Since there is no separate income, the pending proceedings will be closed as N. A. and for Income-tax year 1953-54 the file will be removed and clubbed with the family file F.1005-A".

The Income-tax Officer in giving effect to the aforesaid order of partition under Section 25-A of the Act and cancelling consequentially the family assessments, simultaneously issued notices under Section 34 on March 2, 1957 for the three assessment years 1950-51, 1951-52 and 1952-53 to the assessee family after obtaining the previous approval of the Commissioner. In response to the notice the assessee submitted its returns on April 9, 1957 for the three assessment years under protest. On the basis of these returns the Income-tax Officer assessed the assessee by his order of the same date for all the three years, ignoring the protest. The assessee appealed to the Appellate Assistant Commissioner but the appeal was dismissed. The assessee took the matter in appeal to the Appellate Tribunal but was unsuccessful. The Appellate T