COMMISSIONER OF Income Tax, BIHAR AND ORISSA vs LACHMI NARAIN BHADANI.

FAZL ALI, C.J. - This case has been referred to us u/s 66(1) of the Income Tax Act at the Instance of the Commissioner of Income Tax, Bihar and Orissa, and the following question has been formulated for our decision :-

"In the circumstances of the case should the assessee have filed a separate appeal to the Appellate Assistant Commissioner against that part of the order of the Income Tax Officer passed u/s 25A(1) which said that the partition became effect on 25th October 1940."

To understand this question it is necessary to refer to certain facts.

Until 1939-40 a certain firm which styled itself as the firm of Jitan Ram Nirmal Ram was registered u/s 26A with the following specified shares -

(1) Hindu undivided family of Ramchand Ram and Gurusaran Lal - 8 annas.

(2) Hindu undivided family of Lachmi Narain Bhadani, Vishnu Prasad Bhadani and Bhagwan Das Bhadani - 8 annas.

While the assessment for the year 1940-41 was proceeding the assessee, Lachmi Narain Bhadani, filed an application before the Income Tax Officer alleging that there had been a partition between him and the other members of his family on the 9th November 1939 and he also filed a deed of partition dated the 25th October 1940 in support of his application. The application was disposed of by the Income Tax Officer on the 9th November 1941 and his order which was purported to have been made u/s 25A of the Act has been reproduced in these words by the Appellate Assistant Commissioner :-

"The prayer of the second joint family that they had partitioned among themselves has been allowed by the Income Tax Officer u/s 25A. The partnership deed was accepted as a genuine document. Accordingly the firm was registered with the present constitution shown in section A of the application."

The Income Tax Officer held further that the partition had taken place not on the 9th November 1939 but on the 25th October 1940 which was the date of the partition deed relied upon by the assessee and which fell after the termination of the year of accounting. The assessee preferred an appeal to the Appellate Assistant Commissioner against the assessment but he did not prefer a separate appeal against the order of the Income Tax Officer in so far as it decided that the partition took place not on the 9th November 1939 but on the 25th October 1940. The learned Appellate Assistant Commissioner when hearing the appeal against the assessment did not allow the assessee to question the finding of the Income Tax Officer in regard to the date of separation and dealt with the matter as follows :-

"The law clearly provides that the assessee should separately prefer appeal in respect of order of the Income Tax Officer u/s 25A in the prescribed form. But no such appeal has been filed. I must therefore hold that the Income Tax Officers order is correct and that the partition of the family took place on 25th October 1940."

From this order the assessee appealed to the Income Tax Appellate Tribunal and the Tribunal held that the conclusion arrived at the Appellate Assistant Commissioner precluding the appellant from being heard on the question of the actual date of partition was not correct. The view expressed by the Tribunal was that inasmuch as the Income Tax Officer had found that there was a partition in the assessees family his decision was in favour of the assessee on the question of status which was the only question to be decided u/s 25A and there being no refusal by the Income Tax Officer to pass an order u/s 25A(1) his order was to appealable and the assessee was neither competent nor obliged to prefer an appeal from it. The actual observations made by the Tribunal on this point were as follows :-

"A person is aggrieved only from the actual decision and not from the finding. In this case, therefore, when the fact of partition was decided in favour of the appellant and the partition was accepted to have taken place it did not give the appellant any right of appeal u/s 30 of the Income Tax Act to appeal against the finding as to the date."

Upon this decision the Commissioner of Income Tax asked the Tribunal to refer the case to this court and ultimately the question which we are asked to answer was formulated as stated above.

It was contended before us on behalf of the Department that is was incumbent upon the assessee to prefer a separate appeal and reference was made to Section 30 of the Act which provides an appeal from as order u/s 25A as well as to the Forms C 1 and B which are applicable respectively to appeals from an order u/s 25A and from an order of assessment. These forms were prepared under Rule 21 and as the scope of the appeals in the two cases is not the same, the language used in them is, as would be expected, not the same but different. A reference to Form C 1, however, will show that an appeal from an order u/s 25A is contemplated only when there is a refusal to pass an order u/s 25A. In the present case there was no refusal to passed an order u/s 25A and therefore the assessees contention that no appeal lay from the order u/s 25A is not without substance. Section 25A merely provides that where it is claimed that a partition has taken place among the members of a Hindu undivided family the Income Tax Officer shall make an enquiry and if satisfied that there has been a partition, shall record an order to that effect. Such an order was recorded in this case and therefore no question of preferring an appeal from the order arises. But it seems to me that the objection of the Department can be answered even on the assumption that an appeal lay from the order made by the Income Tax Officer on the question of partition. That order was on a subsidiary point and there is nothing in the Act to suggest that the assessee could not prefer a combined appeal or that if he was attacking the whole assessment he should in all cases be precluded from attacking an order made on a subsidiary question. We think that the view taken by the Tribunal is correct and the objection taken by the Department is not only a highly technical one but is also without substance.

I would answer the question referred to us by saying that in the circumstances of the case the assessee need not have filed a separate appeal to the Appellate Assistant Commissioner against that part of the order of the Income Tax Officer u/s 25A(1) which decided that the partition became effective on the 25th October 1940.

The assessee will be entitled to his cost. Hearing fee Rs. 250.

MANOHAR LALL, J. - I agree.

Reference answered accordingly.