# KALWA DEVADATTAM AND TWO OTHERS v. THE UNION OF INDIA AND OTHERS

- **Citation:** [1964] 3 S.C.R. 191
- **Court:** Supreme Court of India
- **Decided:** 1964
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/kalwa-devadattam-and-two-others-v-the-union-of-india-and-others-2877
- **Pages:** 24

## Headnote

:i s.c.R.
SUPREME COURT REPORTS
191
KALWA DEVADATTAM AND TWO OTHERS
v.
THE UNION OF INDIA AND OTHERS
(A. K.
SARKAR,
M. HrnAYATULLAH
and J. c. SHAH JJ.)
I11oome.Taz-AssesB111e11t-Oivil Court
deba"erl
from
utting aside or modifying assessment-Effect of partition on
payment of Income-tax-Mere
execution
or registration of
partition deed not decisive-Question of onus-Gode of Oiwil
Procedure, 1908 (Ar.I V of 1908).-lndian Income-Tax Act,
1922 (11 of 1922), ss. 25·A, 67.
Nagappa and his sons who formed a joint family carri•d
on business and they were assessed to income-tax and super-tax
by the Income-tax authorities. As Nagappa did not pay the
tax assessed, 51
items of immovable property belonging to
the joint family were attached and 38 items were actually sold
A •uit wa• filed by the •ons of Nagappa claimin~ a decree
declarin~ that the assessment orders were unenforceable against
the property attached and the sale of the property bv the
revenue authotities was without jurisdiction, void and illegal
and an order restraining the Union of India and the authorities
of the State of Madra< from selling the scheduled properties
or confirming the sales already held. The plaintiffs contended
that the items 46 to 51 did not belong t<> the joint family at
all as these were acquired by them with funds provided by
their m~ternal gran.i-mother and the remaining itemi of
property were not liable to be attached and sold as those
had been allotted to them on a partition of the joint familv
estate on M.uch 14, 1947, before the order of a.sessment
was made by the Income-tax a:1thoritles.
The contention of the Union of India was that the
plaintiffs were not entitled to question the correctness of the
assessment of tax in a Civil Court because the jurisdi.:::tinn of
the court was excluded by s. 67 of the Indian Income-tax Act,
that the plaintiffs were precluded from setting up the plea
of partition between them and their father as their defence
to the enforcement of liability for the payment of tax in view
of the provisions ofs. 25-A (3), that the partition was sham
and not intended to be operative and items 46 to 51 were not
_ J
the separate estate of the plaintifli.
1963
Af;ril 19
1963
Ealwa D1varfattam
v.
Union of India
192 SUPREME COURT REPORTS [1964] VOL.
In another case, the High Court passed
c-n March 5,
1947, a decree for Rs. 10.000/· against Nagappa and in favour
ofKumaji Sare Mal. On March 14, 1947, a deed of partition
was executed by which the joint family estate of Nagappa
and his s~ns was divided and separate shares were given to
Nagappa and his sons. Kumaji
got
certain· properties
attached in execution proceedings. A suit was filed by the
sons of Nagappa claiming that the debt incurred by Nagappa
being Avyavaharika, the plaintiff• were not liable to satisfy
the debt and Kum a j i was not competent to bring to sale in
execution of the decree obtained against
Na~appa in hi•
individual capacity, the interest of the plaintiff• in the joint
family property after the joint family status was •evered and
the properties of the families were partitioned.
Bel& that
both the suits of the appellants must be
dismissed. The suit against the Union of India must fail
on three independent grounds. The suit
which was in
substance one for setting aside
an assessment was
in
law not maintainable because of s. 67 of the Indian Incometax Act, 1922. In the absence of an order under s. 2 i-A ( 1),
the assessment of the Hindu joint family was properlv made.
Even if an order recordin~ p>rtition wa1 made, the liability
of the plaintiff, to p1y income· tax
assesied on the family
could still be enforced against them jointly and severally under
s. 25-A (2) proviso.
lJnder s. 25-A of the Income-tax· Act, if at the date
when the liability to pay tax arose there was in existence a
joint family, the tax will still be assessed on the joint family
notwithstanding its disruption after the crucial date, The
machinery for rer overy of the tax differs according as an order
regard

## Text

_Characters 0–39,989 of 48,041. This is a partial read: ask again with offset=39989 for what follows._

:i s.c.R.
SUPREME COURT REPORTS
191
KALWA DEVADATTAM AND TWO OTHERS
v.
THE UNION OF INDIA AND OTHERS
(A. K.
SARKAR,
M. HrnAYATULLAH
and J. c. SHAH JJ.)
I11oome.Taz-AssesB111e11t-Oivil Court
deba"erl
from
utting aside or modifying assessment-Effect of partition on
payment of Income-tax-Mere
execution
or registration of
partition deed not decisive-Question of onus-Gode of Oiwil
Procedure, 1908 (Ar.I V of 1908).-lndian Income-Tax Act,
1922 (11 of 1922), ss. 25·A, 67.
Nagappa and his sons who formed a joint family carri•d
on business and they were assessed to income-tax and super-tax
by the Income-tax authorities. As Nagappa did not pay the
tax assessed, 51
items of immovable property belonging to
the joint family were attached and 38 items were actually sold
A •uit wa• filed by the •ons of Nagappa claimin~ a decree
declarin~ that the assessment orders were unenforceable against
the property attached and the sale of the property bv the
revenue authotities was without jurisdiction, void and illegal
and an order restraining the Union of India and the authorities
of the State of Madra< from selling the scheduled properties
or confirming the sales already held. The plaintiffs contended
that the items 46 to 51 did not belong t<> the joint family at
all as these were acquired by them with funds provided by
their m~ternal gran.i-mother and the remaining itemi of
property were not liable to be attached and sold as those
had been allotted to them on a partition of the joint familv
estate on M.uch 14, 1947, before the order of a.sessment
was made by the Income-tax a:1thoritles.
The contention of the Union of India was that the
plaintiffs were not entitled to question the correctness of the
assessment of tax in a Civil Court because the jurisdi.:::tinn of
the court was excluded by s. 67 of the Indian Income-tax Act,
that the plaintiffs were precluded from setting up the plea
of partition between them and their father as their defence
to the enforcement of liability for the payment of tax in view
of the provisions ofs. 25-A (3), that the partition was sham
and not intended to be operative and items 46 to 51 were not
_ J
the separate estate of the plaintifli.
1963
Af;ril 19
1963
Ealwa D1varfattam
v.
Union of India
192 SUPREME COURT REPORTS [1964] VOL.
In another case, the High Court passed
c-n March 5,
1947, a decree for Rs. 10.000/· against Nagappa and in favour
ofKumaji Sare Mal. On March 14, 1947, a deed of partition
was executed by which the joint family estate of Nagappa
and his s~ns was divided and separate shares were given to
Nagappa and his sons. Kumaji
got
certain· properties
attached in execution proceedings. A suit was filed by the
sons of Nagappa claiming that the debt incurred by Nagappa
being Avyavaharika, the plaintiff• were not liable to satisfy
the debt and Kum a j i was not competent to bring to sale in
execution of the decree obtained against
Na~appa in hi•
individual capacity, the interest of the plaintiff• in the joint
family property after the joint family status was •evered and
the properties of the families were partitioned.
Bel& that
both the suits of the appellants must be
dismissed. The suit against the Union of India must fail
on three independent grounds. The suit
which was in
substance one for setting aside
an assessment was
in
law not maintainable because of s. 67 of the Indian Incometax Act, 1922. In the absence of an order under s. 2 i-A ( 1),
the assessment of the Hindu joint family was properlv made.
Even if an order recordin~ p>rtition wa1 made, the liability
of the plaintiff, to p1y income· tax
assesied on the family
could still be enforced against them jointly and severally under
s. 25-A (2) proviso.
lJnder s. 25-A of the Income-tax· Act, if at the date
when the liability to pay tax arose there was in existence a
joint family, the tax will still be assessed on the joint family
notwithstanding its disruption after the crucial date, The
machinery for rer overy of the tax differs according as an order
regarding partition is made or not made. If the Income-tax
Officer is satisfied that the joint family
property has, since
the close of the year of accJunt, been partitioned among the
various members or groups, or rh~rnbers in definite portions) he
must record an order to that effect and thereupon each member
or group of members is liable, in addition to any income~tax
for which he is separately liable, for a share of the tax on the
income so assessed according ti> trte portion of the joint family
property allotted to him. But even after this apportionment
of liability for the tax assessed on the total income of the joint
family, the members of the family or group< thereof remain
jointly and severally liable for the tax asse.,ed on the total
income received by the family as such. If no order is recorded
under s. 25-A (1), the family shall be deemed, for the purpose
of the Income-tax Act, to continue to remain a Hindu undivided
-
~·-
3 S.C.R.
SUPREME COURT REPORTS
i93
family. Section 25-A merely sets up machinery for avoiding
difficulties encountered in levying and collecting tax.
· Held also, that properties items 46 to 51 belonged to
the joint family and were liable to be attached and sold in
enforcement of the liability for payment of income-tax, because
the alJeged partition between Nagappa and his sons was a
sham transaction which was not
intended to be operative.
The question of onuB probandi is important in the early
stRges of a case.
It may assume importance where n.J evidence
at all is led on the question in dispute by either side. In such
a contingency, the party on whom the onus lies to prove a
certain fact, must fail. Where, however, evidence had been
led by the contesting parties on the question in issue, abstract
considerations of onus are out of place. Truth or otherwise
of the case must always be adjudged on
the evidence led by
the parties.
SChwebo K.S.R.M. Firm through partner Govindan aliaa
Ramanatham OheUiar v. Subbiah aliaa Shanmugham Oh.ttiar,
I.L.R. 1945 Mad. 138, Wallace Brothers & Go. Ltd. v. The
Oommissic>ner of Income-tax,
Bombay
Oity and
Bombay
Suburban Di•!rict, (1948) L.R. 75 I.A. 86, Sir Sunder Singh
Majilhia v. Commissioner of Income-tax, United and Oentral
Provinces (1942) L.R. 69 I.A. 119; Commissioner of Income-tax
Weal Punjab, North
West Frontier and Delhi Province. v.
Tribune Trust, Lahcre, (1947) L.R, 74 I.A. 306, Kalragadda
China Ramayya v. Ohirwvella Venkanraju, A.LR. 1954 Mad.
864, Ganapo.trao Vishwanathappa v. Bhimrao Sahibrao, I.L.R.
1950 Born. 414 and S.M. Jakati v. S.M. Borkar, [1959] S.C.R.
1311+, referree to.
CIVIL APPELLATE J URISDIOTION : Civil Appeals
Nos. 641 and 642 of 1961.
Appeals from the judgment and decree dated
April 11, 1957, of the Andhra Pradesh High Court
in A.S. Nos. 95 and 520 of 19fi2.
A. V. VisW<matha Sastri, P. V. Ohalapati Rau,
S. N. Andley, and Rameshwar
Nath, for the
appellants.
K. N. Rajagopal Sastri and R, N. Saohthey,
for respondents Nos. 1 to 4 (in C.A. No. 641of1961).
1963
K' a/wa Deoad•ttam
••
Uni11n of 11f<lio
194 SUPREME COURT R.EPORTS[l964] VOL.
IJ6S
0. Kandiah, M.
Rajagopalan and
K.R.
Xlll11HJ o,..d•tten
Ohn.udhri, for respondent No. 1 (in C. A. No. 642 of
Ulli• ~! Itldio
1961 ).
•
1963. April 19.
TheJudgment ofthe Court
was delivered by
51.t/;
SHAHJ.-Nagappa son of Pullanna resident
ef Nandyal carried on business in yarn, drugs and·
forward contracts.
He acquired in that business a
considerable estate which was treated by him as
property of the joint family of him<elf and his sons.
Nagappa and his sons were assessed by the Incometax authorities to pay income·tax and supper-tax
in the status of a Hindu undivided family as set out
in the following table :-
Vear of
Year of
Date of
Income-tax and
account
assessorder.
mper-tax
ending.
ment.
assessed.
---- ---- ---- ------
24,-3-44
1944-45
25-2-48
Rs. 51, 116- 7-0
14-3-45
1945-46
25-2-48
Rs. 21,452- 1-0
2-4-46
1946-47
31-3-48
Rs. 21,012-13-0
Besides this amount of income-tax and supertax he was assessed to pay penalty and excess profits •
tax aggregating to Rs. 26,602/-. The total amount
of tax due for the three years of assessment 1944 .45,
1945-46 and 1946-47 aggregated to Rs. 1,23,233/5/-.
Nagappa did not pay the tax. The revenue authorities of the Province of Madras, at the instance of the
Income·tax Department attached 51 items of immovable property as belonging to the.joint family of
Nagappa and his sons and put up the same for sale
under the Madras Revenue Recovery Act II of 1864.
Out of these 38 items were sold and were purchased
by certain persons .
-
-
'
3 S.C.R.
SUPREME COURT REPORTS
195
Kalwa Devadattam, Kalwa Devarayulu and
Kalwa Nandi Sankarappa (sons of Nagappa)-
hereinafter called collectively 'the plaintiffs'-through
their mother acting as their next friend commenced
suit No. 52 o; 1950 in the Court of the Subordinate
Judge, Kurnool, against the Union of India, the
revenue authorities of the State of .Madras, the
purchasers of the properties at the auction, and
Nagappa, claiming a decree declaring that the
assessment orders made by the Income·tax officer,
Kurnool, for the years 1944-45, 1945-46 and 1946-4 7
were unenforceable against 51 items of property of
the plaintiffs described in the schedule and sale of
their property by the revenue authorities was "without
jurisdiction·, void and illegal", and an order restraining the Union of India and the authorities of the
State of Madras from selling the "scheduled properties" or confirming the sale already held or that
may be held after the institution of the suit. It was
the case of the plaintiffs that items 46 to 51 did not
at any time belong to the joint family, having been
acquired by them with funds provided by their
maternal grandmother Seshamma, and that the
remaining i terns of property were not liable to be
attached and sold since these had been allotted to
them on a partition of the joint family estate before
the order of assessment was made by the Income-tax
authorities.
The suit was resisted by the Union of India and
also by the purchasers on diverse grounds.
The
Union contended, inter alia. that the plaintiffs were
not entitled to question the correctness of the assessment of tax in a Civil Court because the jurisdiction
of the Court in that behalf was excluded by s. 67 of
the Indian Income-tax Act, that the plaintiffs were
in any event precluded from setting up the plea of a
partition between them and Nagappa as a defence to
the enforcement of liability for payment of tax in
view of the provisions of s. 25A ( 3), that the
196!
Ka/ wa D1Daclattam
v.
Union of lnJia
Shah J.
IBO
Kol111•: D1llOMU.m
v.
Unialt of lllliia
8""" /,
'
'
'
196
SUPREME COURT REPORTS [1964] VOL.
partiti?n
was sham and not intended to
be
operative and that items 46 to 51 were not the
separate estate of the plaintiffs as contended by them.
The purchasers (who were impleaded as defendants
5 to 28) contended that there was no invalidity in the
proceedings . for assessment of tax and that they
having purchased those properties for the full amounts
for which they were sold, sales in their favour though
not confirmed were binding upon the plaintiffs.
Suit No. 52 of 1950 was tried with another
suit being suit No. 54 of 1949 of the same Court in
which . also the validity of the partition
dated
March 14, 194 7 fell to be determined, between the
sons of Nagappa and the firm of Kumaji Sare Mal
who were creditors under a money decree against
N agappa. The facts which gave rise to that suit
are t.hese : Kumaji Sare Mal filed suit No. 7 of 1944
in the Court of the Subordinate Judge, Anantpur,
against Nagappa for a decree for
R~. 10,022-10-6
due at the foot of certain transactions in yarn. This
suit was dismissed by the Trial Court on the ground
that the contracts for the supply of yarn were
wagering contracts, but in Appeal No. 174 of 1945
the High Court of Madras di:creed the suit on
March 5, 1947 holding that the contracts giving
rise to the liability though speculative were not of
a w.agering Character. The High Court passed a
....
decree for Rs. 10,000/- with interest at 6 per cent
from the date of suit arid costs.
This decree was
soon followed
by the execution of the deed of .
partition dated March 14, 1947, between Nagappa
and the plaintiffs, by which the joint family estate
valued approximately at Rs. 1,25,000/- was divided
into four shares. To Nagappa was allotted under
that partition property of the val1.1e . of Rs. 31,150/·
and he stood liable to satisfy debts of the value of
Rs. 12,236/4/9. In execution of the decree in suit
No. 7 of 1944 Kumaji Sare Mal attached some of
'
the properties that fell to the share of the plaintiffs
-
3 S.C.R.
SUPREME COURT REPORTS
197
-
-
....,,
under the deed of partition dated March 14, 194 7.
Objections to the attachment preferred under 0.21
r. 58 Code of Ci vii Procedure by the plaintiffs were
dismissed by the executing Court on July 12, 1948.
The plaintiffs then filed suit No. 54 of 1949 for a
decree setting aside the summary order passed in the
execution
proceeding,
claiming that the
debt
incurred by
Nagappa being
avyavaharika, the
plaintiffs were not liable to satisfy the debt, and that
the firm of Kumaji Sare Mal was incompetent to
bring to sale in execution of the decree obtained
against Nagappa in his individual capacity, the
interest of the plaintiffs in the joint family property
after the joint family status was
severed and the
properties of the family were partitioned. Common
evidence was recorded in the two suits.
The Trial Judge held that the
properties
items 1 to 45 belonged in the relevant years of
assessment to the joint family of Nagappa and his
sons, and in the absence of an order recording
partition under s. 25A ( l) of the Indian Income-tax
Act, the Income-tax Officer was bound to assess
the undivided family even
after partition on the
footing that the family still continued to be joint.
He further held that by virtue of s. 67 of the Indian
Income-tax Act, no action questioning the assessment
could be entertained by the Courls, and that there
was no irregularity in the proceedings for sale. But
the Court held that on March l 4, 194 7 division of
property of the undivided family was in fact made
between N agappa and
the
plaintiffs : that the
pertition was effected with the object of defeating
the claims of the creditors including the Income-tax
authorities,
but
it
was nevertheless
partition
which
was
intended
to
be overative.
The
Court further held
that
items 46 to 51 were
not proved by the defendants to be the joint family
property of the plaintiffs and Nagappa. In suit
No. 54 of 1949 the learned Judge held
followin~
Jl6J
Kalwo D-datl•m
..
u,,;,,,, •! bulia
Shalt J.
1963
Kalwa Devadatt•m
v.
Union of India
Shah J,
198 SUPREME COURT REPORTS [196<1] VOL.
Schwebo K.8.R.M. Firm through'Partner Govindan,
alias · Ramanathan
Ohettiar
v.
Subbiah
alias
Shanmugham Ohettiar (1), that after a partition between the members of the joint Hindu family the
sons' share
in the joint family property cannot be
proceeded against in execution so as to enforce the
pious obligation of the sons to satisfy their father's
debts under a decree passed against the father alone.
The learned Judge accordingly. decreed suit No. 54
of 1949 holding that the· only remedy of the firm
Kumaji Sare Mal was to proceed by a suit to enforce
the pious obligation of the plaintiffs to discharge
the pre-partition debts.
The plaintiffs appealed against the decree in suit
No. 52 of 1950 to the High Court of Madras and the
Union filed cross-objections to the decree appealed
from. Firm Kumaji Sare Mal also appealed against
the decree dismissing their suit No. 5'1 of 1949. The
High Court of Andhra Pradesh to which the appeals
stood transferred for
hearing under the States
Reorganisation Act 1956 held agreeing with the
Trial Court that a suit to set aside the assessment of
income-tax was
not maintainable
against
the
Union, and that in any event in the absence of an
order under s. 25A(l) of the Indian Income-tax Act,
recording a partition, the Income-tax authorities
were bound to assess tax on the Hindu undivided
family as if that status continued. The High Court
also held that the partition set up by the plaintiffs
was a transaction which was nominal and sham, and
that the evidence established that itmes 46 to 51
were purchased with the aid of joint family funds
and not with the funds supplied by Seshamma and
therefore all the properties itmes l to 51 were liable
to satisfy the tax liability of the joint family. The
High Co.urt also held that the firm Kumaji Sare Mal
was entitled to recover the debt due to them in
execution proceeding, there being no real partition
(!) I. L, R. ~19*5) Mad; 158,
-
-
...
I --
-
•
3 S.C.R
SUPREME COURT REPORTS
199
between Nagappa and the plaintiffs prior to the
date of attachment. The High Court accordingly
dismissed both the suits.
We will reserve for separate consideration the
common quest10n which arose in these two appeals,
namely, whether the partition by the deed dated
March 14, 1947 between Nagappa and his sons the
plaintiffs was a sham transaction.
Even on the
footing that the partition was real and intended to be
operative, suit No. 52 of 1950 filed bv the plaintiffs
against the Union was bound to fail for more reasons
than one.
For the assessment ye~r 1943-44 the
Hindu undivided family of Nagappa and his sons
was assessed to income-tax.
In the years 1944-45,
l945·4ti and 1946-'1,7 the family was also assessed to
pay income-tax, super-tax and excess profits tax, as set
out herein before.
N agappa maintained his accounts
according to the Telugu year, and the last year of
account corresponding to the assessment year 1946-47
ended on April 2, 1946.
Under the India~ Income
Tax Act liability to pay income· tax arises on the
accrual of the income, and not from the computation
made by the Taxing authorities in the course of
assessment proceedings: it arises at a point of time not
later than the dose of the year of account. As pointed
out by the Jurlicial Committee of the Privy Council in
Wallace Brothers and Go. Ltd. v. The Commissioner
of Income-tax, Bombay Oity and Bombay Suburban
District(') :
"fhe general nature of the charging section is
clear.
First, the charge for tax at the rate
fixed for the year of assessment is a charge in
respect of the income of the 'previous year,' not
a charge in respect of the income of the year
of as~essment as measured by the income of the
prev10us year.
x
x
x
x
Second the rate of tax for the year of assessment may be fixed after the close of the previous
(I) (IU48) L. R. 75 I. A. Q6.
19'3
K«lma D11aJ•tt•
v.
u.;..v- r..i;.
Shai J.
1963
KaJwa D1oadattam
••
Union of Indis
Shah J,
200 SUPREME COURT REPORTS (1964] VOL.
-
year and the assessment will necessarily be
made after the close of that year. But the
liability to tax arises by virtue of the charging_
section alone, and it arises not later than the
close of the previous year though quantification
of the amount payable is postponed."
Liability of the Hindu undivided family of Nagappa
and his sons therefore arose not later th~n the close
of each account year and account period for which
the tax was assessed and it is not the case of the
plaintiffs that the family estate was partitioned
before the liability of the undivided family to pay
tax arose. There is no dispute in the suit filed by
the plaintiffs against the Union that the business
carried on by N agappa was the business of the joint
family.
It is on the footing that the business carried
on by Nagappa was of the joint family, and the
income earned in the conduct of the business and
the property was joint family income that the
plaintiffs have filed this suit. Under s. 25A of the
Income·tax Act, if at the date when the liability to
pay tax arose there was in existence a joint family
which has subsequently disrupted, the tax will still
be assessed on the joint family.
The machinery for
recovery of the tax however differs according as an
order recording partition is made or not made. If.
the Income-tax Officer is satisfied on a claim made
·by a member of the family that the joint family
property has, since the close of the year of account
been partitioned among the various members or
groups of members in definite portions, he must
record an order lo that effect and thereupon notwith·
standing anything contained in sub-s. (1) of s. 14 of
the Act each member or group of members is liable
in addition to any income-tax for which he is
separately liable for a share of the tax on the income
so assessed according to the. portion. of the joint
family property allotted to him or 1t. But even
after this apportionment of liability for the tax
-
,
I
3 S.C.R.
SUPREME COURT REPORTS 201
assessed on the total income of the joint family, the
members of the family or groups thereof remain
jointly and severally liable for the tax assessed on
the total income received by the family as such. If
no order is recorded under sub·s. (1) of s. 25A, by
virtue of sub-s. (3) the family shall be deemed, for
the purposes of' the Act, to continue to remain a
Hindu undivided family.
Section 25A merely sets
up machinery for avoiding difficulties encountered in
levying and collecting tax, where since the income
was received the property of the joint family has
been partitioned in definite portions, while at the
same time affirming the liability of such members or
gronp of members, jointly and severally to satisfy
the total tax in respect of the income of the family
as such.
The section seeks to remove the bar
imposed bys. 14 (1) against recovery of tax from an
individual member of a joint Hindu family in
respect of any sum which he receives as a member
of the family, and to ensure recovery of tax due,
notwithstanding partition. The incidence of tax,
but not the quantum is readjusted to altered
conditions.
The Judicial Committee of Privy Council in
Sardar Bahadur Sir Sunder Singh Majithia v.
Commissioner of Income-tax, United and Central
Provinces (1), analysed the scheme of s. 25A as
follows:-
"Section 25A is directed to the difficulty which
arose when an undivided family had received
income in the year of account but was no
longer in existence as such at the time of
assessment.
The difficulty was the more acute
by reason of the provision - an important
principle of the Act-contained ins. 14 (1):
"The tax shall not be payable by an assessee
in respect of any sum which he receives as a
member of a Hindu undivided family."
(I) (IKZ) L1 R, ii I, A, 11»,
1963
Kq/wo D1vadatlom
v.
Unio'fl of l1dio
Shah J.
196~
Kalwa D1vadatt•m
v.
Unirm of India
'hah J.
. 202
SUPREME COURT REPORTS[l964] VOL .
"Section 25A deals with the difficulty in two
ways, which are explained by the rule, applicable to families governed by the Mitakshara,
that by a mere claim of partition a division ·
of interest may be effected among coparceners
so as to disrupt the family and put an end to
all right of succession by survivorship. It is
trite Jaw that the filing of a suit for partition
may have this effect though it may take years
before the shares of the various parties are
determined or partition made by metes and
bounds.
Meanwhile the family property will
belong to the mem hers as it does in a Dayabhaga
family-in effect
as tenants in common.
Section 25A provides that if it be found that
the family property has been partitioned in
definite portions, assessment may be made,
notwithstanding s. 14 (1), on each individual
or group in respect of his or its share of the
profits made by the undivided family, while
holding all the members jointly and severally
liable for the total tax."
In the present case no order under s. 25A (1) was
recorded.
It is trw: that Nagappa had made before
the Income-tax Officer on January 19, 1948 the
following statement :
"I am at present living singly.
My sons
divided from me about ten months back.
There is a documrnt to this effect. The
document was registered.
My sons are as
follows" :
After recounting the names of his three sons and their
respective ages, he proceeded to state :
"The guardian to these minor children is my
wife. I divided my family properties between
myself and my children.
The properties
-
'
•
3 S.C.R.
SUPREME COURT REPORTS
203
-
•
belonged to our joint family.
The business
196'
also belonged to my joint family."
Kolwo v,..da11om
It may be assumed that by this statement within the
meaning of s. 25A it was claimed "by or on behalf
of any member of a Hindu family hitherto ass,~ssed
as undivided" that a partition had taken place among
the members of his family and that the Income-tax
Officer was bound to make an inquiry contemplated
by s. 25A.
But no inquiry was in fact made and
no order was recorded by the Income-tax Officer
about the partition : by. virtue of sub-s. (3) the
Hindu family originally assessed as undivided had to
be deemed for the purposes of the Act, to continue
to be a Hindu undivided family. If by the assessment of the family on the footing that it continued to
remain undivided, Nagappa or his sons were aggrieved their remedy was to take an appropriate appeal
under s. 30 of the Indian Income-tax Act and not a
suit challenging the assessment.
The method of
assessment and the procedure to be followed iu that
behalf are statutory, and any error or irregularity in
the assessment may be rectified in the manner
provided by the statute al_one, for s. 67 of the Indian
Income-tax Act bars a suit in any Civil Court to set
aside or modify any assessment made under the Act.
The Income-tax Officer made the assessment of tax
under the Act : granting that he committed al).
error in making the assessment without holding an
inquiry into the partition alleged by Nagappa, the
error. could be rectified by resort to the machinery
provided under the Act and not by a suit in a Civil
Cou~t.
In
Oommis.~ioner of Income-tax,
West
PunJab,
North-West Frontier and Delhi Provinces
Lahore v. Tribune Trust, Lahore ('), the Judicial
Committee observed :
" x
x
x
x the only remedies open
to the tax-payer, whether in regard to appeal
against assessment or to claim for refund are
(I) {19f7) L. R. 7U. A. 3011, 316,
v.
Union of India
Shoh J.
196'
·Kalwa De'U41d4ttam
••
Union of India
Shah J.
204 SUPREME COURT REPORTS (1964] VOL.
-
to be found within the four corners of the Act.
This view of his rights harmonises with the
provisions of s. 67,
x
x
x that no suit
shall be brought in any Civil Court to set aside
or modify any assessment made under the Act.
It is the Act which prescribes both the remedy
and the manner in which it may be enforced."
The suit filed by the plaintiffs against the
Union must therefore fail on three independent
grounds, each of which is sufficient to non-suit them.
(I) The suit which was in substance one for
settimg aside an assessment was in law not
maintainable because of s. 67 of the Indian
Income·tax Act ;
(2)
That in the absence of an order under
s. 25A (I) assessment of the Hindu joint
family was properly made ; and
(3) Even if an order recording J?artition was
made the liability of the plamtiffs to pay
income-tax assessed on the family could
still be enforced against them jointly and
severally under s. 25A(2) proviso.
The plea of irregularity in holdtng the sale procee·
dings set up in the Trial Court was negatived by the
Trial Court as well as the High Court, and has
not been canvassed before this Court.
-
About the title of the plaintiffs to items 46 to
51 in the schedule annexed to the plaint, the High
Court disagreed with the Trial Court.
These pro·
perties were purchased in the names of two of the
three plaintiffs by the sale deed Ext. A-230 dated
March 15, 1944. The consideration of the sale deed
was Rs. 23,500/-of which Rs. 5,019/ -had been paid
jn advance in four instalments before March I 5, 1944,
I
-
3 S.C.R.
SUPREME COURT REPORTS
205
and the balance of Rs. 18,481/- was paid before
the Sub-Registrar to the vendors who conveyed the
properties to Devadattam and Devarayulu two of the
three plaintiffs acting by their mother Narayanamma as their guardian. The properties having been
purchased in the names of the two plaintiffs the
!Jurden prima facie lay upon the Taxing authorities
to establish that the sale deed was taken for and on
behalf of the joint family or with the aid of joint
family funds. Evidence was led by both the sides
to support their respective versions. The Trial Court
held that the plaintiffs' case that their grandmother
Seshamma
provided the consideration was not
proved, but there was also no evidence to show that
the consideration was provided by the joint family,
and as the burden of proof lay upon the Union, their
case must fail.
The High Court however held that
the burden which lay upon the Union to prove that the
properties were purchased out of the joint family funds
was duly discharged. The question of onus probandi
is certainly important in the early stages of a case. It
may also assume importance where no evidence at
all is led on the question in dispute by either side;
in such a contingency the party on whom the onus
lies to prove a certain fact must fail. Where however evidence has been led by the contesting parties
on the question in issue, abstract considerations of
onus are out of place; truth or otherwise of the
case must always be adjudged on the evidence led by
the parties.
But in support of the case that Seshamma had
provided the consideration three witnesses P.W. 4,
P.W. 5, and P.W. 8 were .examined. Seshamma
had died a few months before evidence was recorded
in the suit. That evidence was found by the Trial
Court as well as the High Court to be discrepant and
in essential p:lrticulars so improbable that it could not
_.-'
be relied upon. P.W. 4 Narayanamma-plaintiffs'
mother-deposed that the properties had been
196J
K•lwa D1oaUtt,,,.
v.
Uni111 of lndir.
Shq J.
/963 -·
Kalwa Uevodattam
v.
L1nion of India
Sflali J.
206 SUPREME COURT REPORTS [1964) vot.
purchased for the plaintiffs by her mother Seshamma
"with the money . given to Seshamma" by her husband.
This money according to Narayanamma
was given to Nagappa and Nagappa paid it to the
vendors in the presence of the Sub-Registrar. But
this story stands wholly discredited by her admission
that Seshamma's husband and his brothers were joint
in business and estate till the former's death. Again
there is on the record a statement made by Seshamma,
before the Income-tax authorities, wherein she had
stated that when her husband died, she might have
had with her about Ks. 4,000/- to Rs. 5,000/- which
she gave to her daughter. Nagappa was questioned
in regard to this statement and he suggested that the
statement was obtained by coercion from Seshamma
by the Income-tax authorities.
The story that
Seshamma owned a large amount of cash, is not
supported by any documentary evidence and it is
difficult to believe that a trading family would not
have invested the amount, if it was in truth devised to
Seshamma by her husband. In cross--examination
Narayanamma altered her version. She stated that
Seshamma's uncle had left everything to her as he had
no children or family but ·he did not execute any
document in favour of Scshamma and that at the
time of his death he stated orally that Seshamma
should take all the properties and that Seshamma
and her brother knew about what- she received from
her paternal uncle. P.
W. 5 Venkatsami who was
originally a clerk of Nagappa, said that he was acting
as a clerk in the employment of Narayanamma. He
swore that he had seen Seshamma ·giving Rs,6,000/-
to Narayanamma about four years ago and that
a month later Seshamma brought Rs. 3,000/- aud
gave them to Narayanamma and that about.ten
days thereafter Seshamma brought Rs. 12,000/- and
gave them to Nagappa and Narayanamma. He
admitted that Seshamma had no immovable property
other than a house which she had bequeathed to her
daughter under a will.
The witness did not know
-
'
-
-
3 S.C:.R. SUPREME COURT REPORTS
201
how Seshamma got the amount.
He, however,
stated somewhat inconsiS!ently under cross-examination that on the date of registration of Ext. A-230
Seshamma had asked her daughter 'Narayanamma to
bring the money.' On that day the key of the iron safe
was with Narayanamma and that Narayanamma
brought some cash which
was counted and paid
over to the vendors.
Both the Courts found that
this witness was unreliable and a bare reading of his
recorded testimony confirms that view.
Nagappa
said that Seshamma had paid the consideration
for the sale-deed, but in cross-examination he made
diverse statements which threw doubt upon the truth
of that story. He was interested in devising ways
and means for saving the properties for the benefit
of his sons. It was he who had instigated and had
prosecuted the suits.
His bare statement that the
consideration for the sale-deed was advanced by
Seshamma not supported by any documentary evidence is unreliable, especially having regard to the
statement
which
Seshamma had
made before
the Income-tax authorities. It must therefore be
held that the Courts below were right in holding that
the plaintiffs have failed to establish that the properties conveyed by the sale-deed were purchased with
the funds supplied by Seshamma. It is common
ground th'at the plaintiffs had no other source of
income.
As admitted by Nagappa and his clerk
Venkatsami,
Nagappa made large profits in his
business, and Rs. 18,481/- out of the consideration
payable under Ext. A-230 were actually paid to the
vendors by Nagappa. There were before the Court
two versions-one by the plaintiffs who alleged that
the consideration for the sale-deed was supplied by
Seshamma. That version, for reasons already stated,
cannot be accepted.
On the oth~r hand there is
the version that the funds belonged to
the joint
family of which Na6appa was the Manager and that
Nagappa paid the consideration. No documentary
evidence in support of either version is forthcoming :
lffS
K•lwtt De~ll•
v.
Union •f /Mio
Sh•h J.
1969
I[ alwa Devadsttom
v.
[./nian oj India
Shah J.
~08 SUPREME COURT REPORTS [1964] VOL.
even Nagappa's accounts have not been produced.
But if the moneys were actually paid by Nagappa
and the story about Seshamma having provided the
amount be disbelieved, it would be a legitimate
inference consistent with probability that N agappa
had for purchasing the property provided the funds
out of the joint family earnings. It appears that
Kumaji Sare Mal who are the respondents in Appeal
No. 642 of 1961 had in the suit filed by them in 1942
obtained an order for attachment before judgment
over the immovable property of the joint family in
the hands of Nagappa.
This attachment before
judgment was outstanding at the date of the saledeed Ext. Ac230.
This order for attachment before
judgment was vacated when the suit was dismissed
by the Trial Court on August 31, 1944. This
circumstance in the context of the other evidence
strongly supports the contention .of the Union that
with a view to protect the properties from his creditors Nagappa thought of purchasing the properties in
the names of his sons the plaintiffs and the considera·
tion was advanced by him.
The High Court was
therefore right in holding that the properties items
46 to 51 were of the joint family and liable to be
attached and sold in enforcement of the liability
for payment of income-tax. Civil Appeal No. 641
of 1961 must therefore fail.
.
We may now deal with the questions which
fall to be determined in Civil Appeal No. 642
of 1961-one of the questions being common in
Appeals Nos. 641 and 642 of 1961. Suit No. 7 of
1944 was filed by the firm Kumaji Sare Mal for
damages for breach of contract. That suit was
decreed by the High Court on March 5, 1947
Within nine days thereafter the deed of partitio~
came into existence. The plaintiffs contended that the
debts due by Nagappa to Kumaji Sare Mal being im.
moral or avyavharika their share in the properties was
not liable to be sold. In any event, they contended,
..
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•
3 s.c.R.
SUPRENfE COURT REPORTS
200
the shares allotted to them under the deed of partition were not liable to be attached and sold in
execution proceeding in enforcement of the decree
against their father Nagappa, and the remedy of the
· creditor even if the debts were not avyavharika was to
file a suit to enforce the pious obligation of the plainiiffs and not in execution of the decree obtained
against Nagappa alone. The creditors contended
that the deed of partition was a sham transaction and
therefore they were entitled to proceed in execution.
Alternatively, it was contended that even if the deed
of partition did not evidence a sham transaction, it
was open to them as holders of a decree obtained
before the partition to enforce the pious obligation
of the plaintiffs to discharge the debts of their father
in execution of the decree, and it was not necessary
for them to file a separate suit. On the question
as to the proper procedure for enforcement of the
liability of a Hindu son to discharge the debts of his
father which are not avyavharika, where since the
passing of the decree on the debt against the father
there has been a partition between the father and
son, there has arisen 11ifference of opinion. The
Madras High Court in Sckwebo K.S.R.M. Firm v.
Subbiak (1 ), held that the son's share in the property
cannot be proceeded against in execution, as the
division of status brought about by the partition
will stand, notwithstanding the avoidance of the
partition as a fraudulent transfer. This was reaffirmed in a Full Bench judgment of the Madras High Court
in Katragadda China Ramayya v. Okiruvella Venkanraju ('), where the Court held:-
"A son under the Hindu law is undoubtedly
liable for the pre-partition debts of the father
which are not immoral or illegal. If a decree,
however, is obtained against the father alone,
and there is a partition of the family properties, in execution of such a decree, the son's
share cannot be seized by the creditor as by
(2) A.I.R. (1954) Mad, 864,
l9fS
C•lma l>11•i•llam
v.
l!ttiGn of ltttli•
S/rah J.
JfC
Kalw; DINIW"'1n
••
U.U.• ef l•tii•
S.WJ,
2io stiPRBME COURT REPORTS [1964J vdL.
reason of the partition the disposing power of
the father possessed by him over the son's share
under the pious -Obligation of the son to discharge the father's debts can no longer be
exercised. With the partition, the power comes
to an end. The liability thereafter can be
enforced only in a suit. After partition, the
son's share can no longer be treated as property
over which the father had a disposing power
within the meaning of s. 60 Civil P.C."
On the other hand the Bombay High Court has held in
Ganpatrao Vishwanathappa v. Bhimrao Sahibrao ('},
that a decree obtained against the ·Hindu father may
after partition be executed against the son's interest
by impleading the son as a party to the executing
proceeding against the father.
There is no clear
expression of opinion by this Court on this question,
though in S.M. Jakati v. S.M. Borkar (1), this Court
has held that the liability of a Hindu son to discharge the debts of his father which are not tainted
with immorality or illegality is founded in the pious
obligation of the son which cc1ntinues to exist in the life
time and even after the death of the father and which
does not come to an end as a result of partition of
the joint family property: all that results from partition is that the right of the father to make an alienation comes to an end. In that case the property of
the family · was sold in execution of a money decree
against the father and the sons sued to set aside the
sale in so far as is affected their interest in the property and for a decree for possession of their share.
The Court held that it was not proved that the
liability which was incurred by the father was illegal .
or immoral and the sale of the joint family property
including the share of the sons for satisfying the
debts was valid notwithstanding the. severance of the
joint family status effected before the sale was held
through Court.