Madhya Pradesh H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the income from money lending business after the death of Ishwardin had to be assessed jointly in the hands of the assessee-HUF ?

Counsel Appeared

Nema, for the Assessee : B.K. Rawat, for the Revenue

D. OJHA, C.J.:

The Tribunal, Jabalpur Bench, Jabalpur, has referred the following question to this Court for its opinion under s. 256(1) of the IT Act, 1961 (hereinafter referred to as ” the Act “) : ” Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the income from money lending business after the death of Ishwardin had to be assessed jointly in the hands of the assessee-HUF ? “

The necessary facts in a nutshell giving rise to the aforesaid question are that the assessee is an HUF. A raid was conducted by the Central Excise Department at the business and residential premises of the assessee on October 25, 1975, wherein primary gold, gold ornaments and silver ornaments were seized. The case of the assessee was that there was a partition in the family of Ishwardin Mewalal consisting of late Ishwardin, Ramjiyawan Mewalal and Munnilal in the year 1942 in which the assessee received Rs. 43,500 in cash, cloth and kirana worth Rs. 6,700 and gold and silver ornaments worth Rs. 12,800 each. The case of the assessee further was that the family had been doing business in cloth, kirana, money lending and agriculture before partition, but after partition, Ishwardin started money lending business whereas Mewalal and Munilal started cloth business. The agricultural savings, however, were kept jointly and were utilised partly in cloth business and partly in moneylending business as and when required.

The case of the assessee that the money lending business had been started by Ishwardin in his individual capacity after partition, was rejected by the ITO. He held that the money-lending business also belonged to the HUF which was the assessee. This finding of the ITO was upheld on appeal by the CIT (A) and the plea of the assessee that the money-lending business belonged to Ishwardin in his individual capacity was rejected. Aggrieved by these orders, the assessee went up in second appeal. The Tribunal upheld the order of the CIT assessing the money lending business in the hands of the assessee-HUF in the relevant assessment year even though on reasons different from those of the CIT. However, on an application being made by the assessee in this behalf, the question stated above was referred to this Court by the Tribunal.

It has been urged by learned counsel for the assessee that the Tribunal had erred in law in holding that the income from money-lending business after the death of Ishwardin had to be assessed jointly in the hands of the assessee- HUF. In this connection, our attention has been invited to one of the findings of the Tribunal that some bahis were taken at the time of seizure, but the bahis pertaining to the years earlier than 1973 indicated that money- lending was the individual business of Ishwardin and that that is why the 2 or 3 bahis beginning from 2002 did not refer to the HUF nor did the titles on the basis refer to the name of the HUF. According to counsel for the assessee, the finding of the Tribunal whereby it agreed with the view taken by the ITO was inconsistent with the earlier finding referred to above. It is true that at one place the Tribunal has observed in the manner urged by counsel for the assessee, but, in our opinion, on that basis alone, it cannot be said that the finding of the Tribunal upholding the assessment of the money-lending business in the hands of the assessee-HUF suffers from any error of law.

5. In this connection, it would be seen that the appellate order of the Tribunal in so far as it upheld the assessment of the money lending business in the hands of the assessee-HUF being completely in favour of the Department, it was not open to the Department to make any application for reference to this Court on the ground that the finding relied on by learned counsel for the assessee was uncalled for in view of the admissions made by Mewalal and Munnilal themselves.

In this connection, it would be useful to refer to the order of the CIT which was affirmed by the Tribunal. Dealing with the question of partition in the year 1942, the CIT, inter alia, had placed reliance on the various submissions made on behalf of the assessee. In para. 8 of his judgment, the CIT has stated that in all the income-tax returns filed up to 1973-74 by the appellant family, Ishwardin was shown as ” Karta “. Further, the names of Ishwardin, Mewalal and Munnilal have been mentioned as the major coparceners of the appellant family in all the returns up to 1973-74 which indicated that as a result of the partition of 1942, only Ramjiyawan separated and the other sons of Ishwardin continued to remain with him so that the bigger family of Mewalal and Munnilal and Ishwardin continued thereafter.

6. Again, in para. 9 of his judgment, the CIT has pointed out that both Mewalal and Munnilal in their statements before the ITO, Satna, recorded on December 11, 1975, and November 26, 1975, stated in categorical terms that the result of the partition of 1942 was that only Ramjiyawan separated and that these two brothers continued to live with their father, Ishwardin. The CIT has also pointed out that the case records revealed that in the order-sheet dated February 17, 1962, a question had been raised whether Ramjiyawan was separated or living together, and Mewalal who appeared before the ITO, said that Ramjiyawan had separated earlier, whereas he himself, Munnilal and his father were staying together. On this view, he held that even after the partition of 1942, Ishwardin, Mewalal and Munnilal stayed together as members of the joint Hindu family and were also carrying on business including money lending business of the HUF.

7. In Narayan Bhagwantrao Gosavi Balajiwale vs. Gopal Vinayak Gosavi, AIR 1960 SC 100, it has been held that an admission is the best evidence that an opposing party can rely upon, and though not conclusive, is decisive of the matter, unless successfully withdrawn or proved erroneous.

8. It has not been shown to us that the admissions referred to above were either proved erroneous or successfully withdrawn by the persons who had made those admissions before the IT authorities. In this background, we are not inclined to agree with the submission made by learned counsel for the assessee that the Tribunal committed an error of law in recording the finding aforesaid, viz., that after the death of Ishwardin, the money lending business had to be assessed jointly in the hands of the assessee-HUF.

9. In view of the foregoing discussion, our answer to the question referred to above is that, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the income from money-lending business, after the death of Ishwardin, had to be assessed jointly in the hands of the assessee-HUF. In other words, the question referred to us is answered in the affirmative. In the circumstances of the case, there shall be no order as to costs.

[Citation : 169 ITR 584]