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1957 Supreme(Pat) 102
PATNA HIGH COURT
V.Ramaswami and Raj Kishore Prasad JJ.
Janki Sao
Versus
Commissioner Of Income Tax
Miscellaneous Judicial Case No. 368 of 1955 ;
Decided On : APRIL 04, 1957
In the case of a Hindu joint family, where a nucleus of joint family property is proved or admitted, a presumption arises that the whole of the property of the joint family is joint including any acquisition by a member of the joint family.
Headnote:
INCOME TAX - Hindu Undivided Family - Secrecy of Income - Presumption of Joint Family Property - Burden of Proof - Inference from Material on Record - Jurisdiction of High Court to Interfere with Finding of Fact by Tribunal.
Fact of the Case:
The assessee, a Hindu undivided family, was found to have invested in a house property in the name of one of its members, Punulal. The Income-tax authorities held that the investment was made from the secreted profits of the family business and was, therefore, taxable in the hands of the family. The Appellate Tribunal upheld the finding of the authorities.
Finding of the Court:
The High Court held that there was material before the Appellate Tribunal to support the inference that the investment was made from the secreted profits of the family business. The Court also held that the Tribunal had not misdirected itself in law in reaching this finding and that, therefore, the High Court had no jurisdiction to interfere with the Tribunal's conclusion.
Issues: 1. Whether there was any material to hold that the amounts of Rs. 18,000.00 and Rs. 11,500.00 should be taxed as secreted income of the Hindu undivided family for the two assessment years 1949-50 and 1950-51. 2. Whether the High Court had jurisdiction to interfere with the finding of fact by the Tribunal.
Ratio Decidendi: 1. In the case of a Hindu joint family, where a nucleus of joint family property is proved or admitted, a presumption arises that the whole of the property of the joint family is joint including any acquisition by a member of the joint family. 2. The burden lies upon the member claiming any portion of the property as his separate property to show that it was acquired by him in circumstances which would constitute it his separate property. 3. If the member adduces no evidence, the presumption that the property was joint family property must prevail. 4. The mere fact that the property was purchased in the member's name and that there are receipts in his name respecting it does not render the property his separate property. 5. The High Court has no jurisdiction to interfere with the finding of fact by the Tribunal unless the finding is based upon no material or the Tribunal has misdirected itself in law in reaching the finding.
Final Decision: The question referred to the High Court by the Appellate Tribunal was answered against the assessee and in favour of the Income-tax Department.
1. In this case the assessee is a Hindu undivided family. The assessment relates to the assessment years 1949-50 and 1950-51, the relevant accounting years being Sambat 2004-05 and 2005-06. Janki Sao is the Karta of the Hindu undivided family. Ho has two sons, Lakhanlal and Punulal. The business of the Hindu undivided family was the manufacture of gold and silver ornaments. It was found by the taxing authorities that on the llth of February, 1948, a sum of Rs. 18,000.00 was advanced on usufructuary mortgage of a house. On the 29th of June, 1949, the same property was purchased by Punulal for a sum of Rs. 29,500/-. A part of the consideration was the satisfaction of the mortgage debt and the balance of the amount, namely, Rs. 11,500.00 was paid in cash.
Both the documents, namely, the usufructuary mortgage bond dated the llth of February, 1948, and the sale-deed dated the 29th of June, 1949, were in the name of Punulal. On the 29th of June, 1949, there was an agreement between all the members of the Hindu joint family to the effect that the house property was really purchased by Punulal and the Hindu joint family had nothing to do with it. On the 1st of July, 1949, Janki Sao executed, a kerayanama in favour of Punulal, agreeing to pay a rent of Rs. 247- per month for the use of the house for the purpose of the family business. On the 29th of November, 1950, there was a deed of family arrangement between Janki Sao and his two sons, Lakhan Lall and Punulal.
It was recited "in this document that the house property was purchased by Punulal from his individual funds and that Janki Sao and Lakhan Lal had nothing do with it. Certain other properties were divided between the father and his two sons. In a proceeding taken under Sec.34 of the Income-tax Act the Hindu undivided family was asked to explain the source of the two amounts, namely, Rs. 18,000 and Rs. 11.500. In the course of these proceedings under s. 34 Punulal and certain other witnesses were examined by the Income-tax authorities. Punulal admitted that he had no profession and no independent source of income. He explained that he was married twice, once to the daughter of Lakshmi Sao and again to the daughter of Baldeo Sao.
It was stated by Punulal that at the time of his first marriage he got 150 tolas of gold and Rs. 2,000.00 in cash, and at the time of his second marriage he got 32 tolas of gold and 1,000 tolas of silver, from his father-in-law Baldeo Sao. But the statement of Punulal has been falsified by the statements of Lakshmi Sao and Baldeo Sao. The evidence of Lakshmi Sao was that he gave Punulal at the time of marriage 50 tolas of gold and 150 to 175 tolas of silver. He also presented him 6 tolas of gold chain and 60 tolas of silver ornaments. Baldeo Sao stated that he presented about 15 tolas of gold ornaments and 135 tolas of silver ornaments to his daughter at the time of her marriage.
The Income-tax authorities held that the evidence of Lakshmi Sac was unreliable and that the explanation of Punulal that the source of money was the sale of ornaments belonging to his two wives was absolutely false. The Income-tax Appellate Tribunal rejected the evidence of Punoilal and other witnesses and held that Punulal has given a false explanation and that there was evidence to support the inference that, the two amounts of Rs. 18,000.00 and Rs. 11,500.00 represent- ed the secreted profits of the business of the Hindu undivided family and was therefore, liable to be taxed in the hands of the Hindu undivided family for the two assessment years in question. The views of the Income-tax Appellate Tribunal are summarised in paragraph 10 of the appellate order, which is in the following terms : "10. Whether, onus as a determining factor of the whole case can only arise, if the Tribunal finds the evidence pro and con so evenly balanced that it can come to no sure conclusions. Then the onus will determine the matter. But if the Tribunal after the material on record comes t
