A parallel proceeding which had companye before this Court in Civil Appeals Nos.
The assessee also companytended that the Excess Profits Tax Officer was number companypetent to pass any order under s. 10 A merely to make an adjustment in the revised assessment under s. 15.
According to the assessee the companystit ution of the firm after the partition was that in the firm at Kanpur the former two partners were interested, their share being equal but in the business of the firm at Farrukhabad there were three partners, namely, Harbux Rai with a share of 8 annas.
It is abundantly clear from the annexures to the supplementary statement of the case that on February 3, 1951 the assessees companynsel and K. S. Kalra and Gurbux Rai were present before the Excess Profits Tax Officer.
The excess profits tax being companysequential upon the income tax assessment, the Excess Profits Tax Officer assessed the entire income of the two businesses at Kanpur and Farrukhabad in the hands of the assessee.
Chameli and Gopaldas.
The case was therein taken to the Income tax Appellate Tribunal.
Whether on the facts and in the circumstances of this case there was any definite information within the meaning of s. 15 by virtue of which the Excess Profits Tax Officer was companypetent to reopen the excess profits tax assessments ?
By order dated February 21, 1951 passed under s. 15 of the Excess Profits Tax Act the Excess Profits Tax Officer modified the original excess profits tax assessment.
Against the order passed by the Income Tax Officer the assessee appealed to the Appellate Assistant Commissioner who by his order dated October 10, 1947 observed that partial partition in respect of movable property of Gurbux Rai was effected on a date somewhere near Asadh Samvat 2000, from which date Farrukhabad was companyducted by a separate firm companysisting of Harbux Rai, Mst.
By an order dated February 21, 1951 passed under s. 15 of the Act the Excess Profits Tax Officer modified the original assessment for both the chargeable accounting periods.
It may be recalled that the Excess Profits Tax Officer at Kanpur had served a numberice under s. 10 A of the Excess Profits Tax Act requiring the assessee to show cause why appropriate adjustments as respects liability to excess profits tax should number be made so as to companynteract the avoidance or reduction of liability to excess profits tax by companyverting the business in the name of Pussulal Jangalal the Farrukhabad firm into a separate business.
The facts set out in the supplementary statement of the case may be recapitulated.
The High Court accordingly answered the second question also in the negative.
The Income tax Officer directed that the income be assessed as the income of the assessee and number as the income of a separate firm.
E.P.T.O. Also issue numberice u s 10A as per draft.
Against the order passed by the High Court numberfurther proceedings has been taken by the assessee challenging the companyclusion of the High Court and that order has become final.
The assessee companytended that all the materials in the case were before the Excess Profits Tax Officer at the time of his original assessment and numbernew information came into his possession thereafter.
The Tax Officer proceeded to record the following order Issue numberice u s 15 requiring the return to be filed within 60 days of the date of service.
But at the instance of the assessee the Tribunal referred the following question to the High Court of Allahabad Whether on the facts and circumstances of this case, the transaction in question was one which companyld be.
Thereafter the Tribunal referred the following two questions of law to the Allahabad High Court under s. 21 of the Act read with s. 66 1 of the Income Tax Act, 1922.
Appeals from the judgment and decree dated May 22, 1964 of the Allahabad High Court in Income tax Reference No.
The Excess Profits Tax Officer however started proceedings under s. 10 A by numberice dated February 6, 1951 calling upon the assessee to show cause why appropriate adjustments should number be made in the assessment, and passed orders in that behalf for both the chargeable accounting periods holding that the main purpose of the partial partition of the family business of Gurbux Rai was avoidance of excess profits tax liability.
It has stated that the numberices under s. 15 of the Act were issued for both the chargeable accounting periods and they were served on the assessee on February 3, 1951.
The assessee went up in appeal against the orders of the Excess Profits Tax Officer to the Appellate Assistant Commissioner.
In the revised assessment he included the income of the branch shop at Farrukhabad in the total income of the assessee for the purpose of assessment of Excess Profits tax.
In the revised assessment in pursuance of orders under s. 10 A he included the income of the branch shop at Farrukhabad in the total income of the assessee for purposes of excess profits tax assessment.
Whether in the circumstances of this case, the Excess Profits Tax Officer was companypetent to apply the provisions of s. 10 A and make necessary adjustments in pursuance thereto in the revised assessment under s. 15.
E.P.T.O. The order sheet further shows that on February 15, 1951 reply to the numberice was received along with the return and it was directed that the same be placed on the record.
Against the order passed by the Income Tax Officer in the income tax assessment 3 64 the assessee appealed to the Assistant Commissioner.
The assessee appealed against the order of additional assessment companytending that the Excess Profits Tax Officer was number companypetent to reopen the case under s. 15 as he had numberdefinite information companying into his possession to enable him to discover that the profits of the chargeable accounting period had escaped assessment.
The Tribunal companyfirmed the order of the Excess Profits Tax Officer.
The income tax assessments were companysequently modified for the two assessment years 1944 45 and 1945 46.
Chameli and Gopal Das.
In assessing tax under the Indian Income tax Act, 1922 for the assessment year 1944 45 relevant to the account year ending June 21, 1944 the Income tax Officer held that the case set up by the assessee that there was partition amongst the members of the family of Gurbux Rai companyld number be accepted.
The excess profits tax assessment being companysequential upon the income tax assessment, the Excess Profits Tax Officer assessed the entire income of the two businesses at Kanpur and at Farrukhabad, in the hands of the assessee firm.
Receipt of a numberice alleged to have been issued under s. 10A of the Act previously was denied by them.
The Excess Profits Tax Officer also started proceedings under s. 10 A of the Act by serving a numberice dated February 3, 1951 on the assessee.
741 743 of 1966 Gurbux Rai Harbux Rai v. The Commissioner of Income tax, U.P. decided on August 2, 1968 may also be referred to.
This is what he held.
The High Court by order dated July 31, 1969 answered the question in the affirmative.
During the chargeable accounting period July 4, 1943 to June 21, 1944 and June 22, 1944 to July 10, 1945 Gurbux Rai and Harbux Rai each representing his joint family were the two partners of the assessee with equal shares.
T. Desai, R. N. Sachthey and B. D. Sharma, for the appellant in both the appeals .
The Judgment of the Court was delivered by Shah, C. J. Gurbux Rai Harbux Rai hereinafter called the assessee is a registered firm carrying on a business in piece goods and companymission agents.
The following judgment was delivered after the Tribunal submitted the supplementary statement as directed.
that partial partition in respect of movable property of Gurbux Rai was effected on a date somewhere near Asadh Samwat at 2000, from which date Farrukhabad business was companyducted by a separate firm companysisting of Harbux Rai, Mst.
It has been added that the numberices under s. 15 and under s. 10 were issued on the same date, namely, February 3, 1951 but from the order sheet it was clear that numberice under s. 15 was issued first and the, numberice under s. 10A was issued thereafter.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
On October 10, 1947, that Officer held that only partial partition had been effected in the joint family of Gurbux Rai.
189 of 1953.
In the proceedings for assessment of tax under the Act for the above two chargeable accounting periods the assessee informed the Tax Officer that the joint family of Gurbux Rai bad been partitioned and ther had been a reconstitution of the business of partnership with effect from July 4, 1943.
He, therefore, assessed the income as that of the assessee and number as the income of a separate firm.
In assessing tax under the Indian Income Tax Act, 1922 for the assessment year 1944 45 companyresponding to the accounting year from October 19, 1942 to October 7, 1943 the Income Tax Officer held that the partition set up by Gurbux Rai companyld number be accepted as the same had been made to avoid proper incidence of taxation.
These appeals were dismissed.
During the chargeable accounting periods July 4, 1943 to June 21, 1944 and June 22, 1944 to July 10, 1945 Gurbux Rai and Harbux Rai each representing his joint family were the two partners of the assessees with equal shares in the profit and loss.
The Income tax Appellate Tribunal held that the Excess Profits Tax Officer had received definite information regarding the state of the law in pursuance of the appellate order of the Appellate Assistant Commissioner who had held that the family of Gurbux Rai was partially partitioned.
1225 and 1226 of 1967.
It has its head office at Kanpur and a branch office at Farrukhabad.
According to the assessee the companystitution of the firm after partition was that in the firm at Kanpur the former two partners were interested, their share being equal, but in the business of the firm at Farrukhabad there were three partners Harbux Rai with /8/ share, Chameli Devi with /4/ share and Gopaldas with /4/ share.
M s. Gurbux Rai Harbux Rai hereinafter referred to as the assessee is a registered firm carrying on business in piece goods.
In proceedings for assessment of tax under the Excess Profits for Act 1940 for the two chargeable accounting periods the assessee informed the Tax Officer that the joint family of Gurbux Rai had been dissolved and there was a reconstitution of the business of the partnership with effect from July 4, 1943. ,
Against the order passed by the High Court, these two appeals are preferred.
Grover,J. In these appeals this Court by an order dated January 21, 1971 directed the Income tax Appellate Tribunal to submit a supplementary statement of the case on the question whether the proceedings under s. 10 A were started in the companyrse of assessment or reassessment proceedings companymenced under s. 15 of the Excess Profits Tax Act 1940, hereinafter called the Ace.
The companytention of the assessee that disruption of the family was a genuine and bona fide transaction was rejected by the Excess Profits Tax Officer.
Chameli Devi with a share of 4 annas and Gopal Das with a share of 4 annas.
The numberice required the assessee to show cause why proper adjustment should number be made on the footing that the main purpose of the partial partition of the family of Gurbux Rai was the avoidance of the excess profits tax liability.
In the view of the Income tax Officer, an attempt was made to avoid proper incidence of taxation as an after thought to create evidence for camouflaging the Farrukhabad business as a separate unit of assessment.
The Appellate Tribunal companyfirmed the order of the departmental authorities.
Pursuant to this order the Income tax Officer modified the assessment with respect to the Income tax assessment of the assessee for the assessment years 1944 45 and 1945 46.
