Patna High Court
Hukam Chand Duni Chand vs Commissioner Of Income Tax, Lahore. on 28 March, 1941
Equivalent citations: [1941]9ITR313(PATNA), [1941]9ITR616(PATNA)
JUDGMENT
ALMOND, J.C. - This is an application by the firm Hukamchand Dunichand for an order requiring the Income-tax Commissioner to state and refer a case under Section 66 of the Income-tax Act. The points on which they request that the Income-tax Commissioner should state the case are as follows :-
1. Whether in the circumstances of the case the Income-tax Officer and the Appellate Assistant Commissioner were in law right in holding that the petitioners were not a firm but the business of firm Hukamchand Dunichand was solely owned by a joint Hindu family represented by Dunichand.
2. Whether the Income-tax Officer was legally justified in adding the income of Dunichand partner to the income of the petitioners firm and making one joint assessment.
3. Whether in the circumstances of the case the loss of Rs. 917 in forward transactions in cotton was rightly disallowed.
4. Whether in view of the facts stated the Income-tax Officer acted judicially in assuming the income from Sarafi at Rs. 4,000 against Rs. 1,490 disclosed by the accounts.
5. Whether there is any legal justification
(a) in adding Rs. 500 in Afghani account.
(b) in applying a flat rate of 2% on the sale of Warwatta account, and
(c) in disallowing Rs. 656 being the shortage in piecegoods account.
It will be convenient to treat the first two of these grounds together and the last three together.
The allegation of the plaintiffs firm is that one Devki Nandan is a member of the firm Hukamchand Dunichand. It is quite obvious that the question whether a certain person is a member of a partnership firm or not is a question of fact and if there was evidence on which the Income-tax Commissioner could come to his finding that Devki Nandan was not a member of the firm but that the firm was a joint Hindu family firm, then there is no reason for calling upon him to state a case. That the Income-tax Commissioner had such grounds, is apparent from the second paragraph of his order in which he refused to state a case on the application of the petitioners. The evidence in support of the petitioners claim was summarised as follows :-
1. An entry in the register of firms maintained under the Indian Partnership Act which shows L. Dunichand and P. Devki Nandan as partners.
2. A letter from the Imperial Bank stating that Dunichand and P. Devki Nandan operate on the firms account, and
3. Statements of certain residents of Peshawar that they recognized the alleged partnership.
Against that evidence the Commissioner took into consideration the following facts :-
1. that there is no partnership deed.
2. That there is no evidence of any distribution of profits between the partners.
3. That it is incredible that P. Devki Nandans share in the firm would not have been mentioned in any of the earlier years, if he had in fact been a partner since 1917 as is now alleged.
It is therefore clear that the Income-tax Commissioner had some grounds for arriving at his decision and whether the decision thereon is correct or incorrect is not a question for this Court to decide. There appears to me to be no question of law involved on this point.
The remaining points are clearly covered by the provisions of Section 13 of the Act. The Income-tax authorities have held that the books which have been kept by the petitioners firm are not sufficiently well kept to enable the income of the firm to be correctly assessed. It is provided in Section 13 of the Act that "if the method of accounting employed by the assessee is such that, in the opinion of the Income-tax Officer, the income, profits and gains cannot properly be deducted therefrom, then the computation shall be made upon such basis and in such manner as the Income-tax Officer may determine".
The Income-tax Officer in this case was of opinion that he could not correctly assess the income of the petitioners on the method of accounting which they followed and he was therefore justified under that section in making the assessment in such manner as he might determine.
There is in my opinion no substance in this application which is accordingly dismissed with costs. Pleaders fee Rs. 50.
Application dismissed.