Income tax Officer, A-Ward V. Tippala China Appa Rao

AS/1410/1988

AI Insights

The case revolves around the dispute concerning the attachment of properties belonging to the 5th defendant's family for the recovery of tax arrears from M/s.Visakha Gowda Association, a partnership in which the 5th defendant was involved. The Income Tax Officer, Visakhapatnam, filed a suit to challenge the Tax Recovery Officer's decision, which partially excluded the family properties from attachment. The trial court found that the 5th defendant was a partner in his individual capacity, leading to the appeal by the Income Tax Officer. The High Court upheld the trial court's decision, emphasizing the lack of evidence that the partnership was a joint family business and confirming that the properties of defendants 1 to 4, being the undivided sons of the 5th defendant, were not liable for the tax dues.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 719742 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 18-06-2010
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax, Patiala Vs. Piara, J.Devaraja Rao and others Vs. Income Tax officer, Anantapur, Chamdrayya Vs. Sambayya, V.Padayachi Vs. Sivasoorinam, Amritlal Vs. Jayantilal, M.R. Radhakrishnam Vs. Union of India, Sidramappa Vs. Babajappa, P.Murugavva Vs. S.Somasundaram, Pichappa Vs. Chokalingam, Rama Krishna Transport Vs. Income Tax Commissioner, Shanmukeshwararao Vs. Venkatappaiah and sons, Benaras Bank Vs. Hari Narayan, A.Robini Vs. Akak Sethumadhavan, Kanakaratnamala Vs. Logenadha, G.Narayana Raju Vs. Chamarju, Lakshmi Ammal Vs. Meenakshi Ammal and others, Badridas Daga Vs. Commissioner of Income Tax, Commissioner of Income Tax, Gujarat Vs. S.C. Kothari, S.M.Jakati Vs. S.M.Borkar, Perumal Chetti Vs. Province of Madras, Nidavolu Achutan Vs. Ratnajee, Rao Balwant Singh Vs. Rani Kishori, Mayne's Hindu Law
• Laws Referred To: Income Tax Act 1922
• Result in Favour of: Others
• Court: HIGH COURT
• Keywords: Hindu Undivided Family; Income tax assessment; Partnership; Tax Recovery; Pious Obligation
• Section: 148; 10(1); 184(7)

Judgement Text

" THE HON'BLE SRI JUSTICE P.S.NARAYANA A.S.No.1410 of 1988 Date : 18-6-2010 Between : The Income Tax Officer, A.Ward, Visakhapatnam .. Appellant And Tippala China Appa Rao and others .. Respondents THE HON'BLE SRI JUSTICE P.S.NARAYANA A.S.No.1410 of 1988 ORDER: 1. This Appeal is filed as against the Decree and Judgment made in O.S.No.163/81 on the file of learned Principal Subordinate Judge, Visakhapatnam whereby the suit filed by the Income Tax Officer, Visakhapatnam – the appellant herein/plaintiff, was dismissed. The said suit was filed to set aside the claim order made by the Tax Recovery Officer in O.P.No.136/79-80 dated 29-4-1980. The learned Principal Subordinate Judge, Visakhapatnam in the light of the respective pleadings of the parties, having settled the Issues, ultimately came to the conclusion that the order under challenge does not suffer from any illegality and accordingly the suit was dismissed directing the parties to bear their own costs. Aggrieved by the same, the present Appeal had been preferred. 2. The learned Standing Counsel representing the appellant had taken this Court through the respective pleadings of the parties and the evidence available on record in proper perspective. The learned Standing Counsel also would maintain that in the facts and circumstances of the case, inasmuch as the 5th respondent was a partner representing the joint family as such, the respondents 1 to 4 being the sons of the 5th respondent are liable under the theory of pious obligation. The learned Standing Counsel had strongly relied upon the decisions in Commissioner of Income Tax, Patiala Vs. Piara [1] and J.Devaraja Rao and others Vs. Income Tax officer, Anantapur [2] and made elaborate submissions on the aspect of the applicability of the doctrine of pious obligation and also on the aspect of the illegality of the contract as such hence the findings are to be set aside and the Appeal to be allowed. 3. Per contra, the learned Counsel representing the respondents had taken this Court through the findings recorded by the learned Principal Subordinate Judge, Visakhapatnam and would m that in the light of the convincing findings recorded by the trial Court, this is not a fit matter to be interfered with and the Appeal to be dismissed. 4. Heard the Counsel on record. 5. Before taking up further discussion on the Points for consideration which would arise in this Appeal, it may be appropriate to have a glance at the respective pleadings of the parties, the evidence available on record and the findings recorded by the trial Court in nutshell. 6. The parties hereinafter would be referred to as ‘plaintiff’ and ‘defendants’ as shown in O.S.No.163/81 aforesaid. 7. Pleadings of the parties : Averments made in the plaint : It was pleaded that the 5th defendant is the father of defendants 1 to 4 and he is the kartha and father-manager of the joint family consisting of himself and his sons – defendants 1 to 4, his wife Tippala Veerayamma and his two daughters. The 5th defendant had inherited from his father considerable properties, movable and immovable including Acs.12-00 of agricultural land, a house at Venkannapalem and considerable cash, all having fallen to his share in the partition with his brothers. Besides the above mentioned ancestral properties, the 5th defendant, as kartha of the Hindu joint family further made certain acquisitions, including the suit schedule properties with the aid of the joint family nucleus and from the income of the joint family properties and its assets. Besides the joint family properties acquired and the ancestral properties referred to above he had no personal properties and he never possessed any movable or immovable properties in his personal capacity. Apart from the above mentioned properties, the family was running arrack business since 1963-64 onwards. The 5th defendant was also not employed and was only managing the arrack business of the Hindu Undivided Family as its kartha and had been maintaining himself and his family from out of the income of the joint family properties which he is managing as the kartha and the father-manager of the Hindu joint family consisting of himself and his family. While so, in the year 1971 in his capacity as a joint family manager it had entered into a partnership with 18 others known others known as M/s.Visakha Gowda Association which carried on business in Abkari contracts by investing in joint family funds. The firm M/s. Visakha Gowda Association, now a dissolved firm, initially filed a return on 28-8- 1971 disclosing a loss of Rs.12,185/- for the Assessment Year 1971- 72. A revised return of income was filed by the said firm on 26-11- 1971 finally disclosing an income of Rs.88,890/-. Similarly a return was filed on 19-12-1972 for 1972-73 disclosing an income of Rs.72,903/- which was further revised under a return dated 26-3-1975 disclosing an income of Rs.73,403/-. The assessments for the said years could only be completed by the plaintiff on 28-2-1976 on account of the delaying tactics adopted and on account of the failure of the production of the accounts and required date by the said firm in proper time for the Assessment Years 1971-72 and 1972-73. Finally the firm was assessed to a total amount of Rs.12,61,921/- as tax and penalties for the said two Assessment Years. The properties belonging to the joint family of the 5th defendant and his sons, namely the plaint schedule houses along with their appurtenant sites, the other properties belonging to the joint family were got attached by the plaintiff for realization of the tax arrears of M/s.Visakha Gowda Association of which the 5th defendant was a partner in the capacity as kartha or manager of the joint family of himself and his sons. Defendants 1 to 4 who are the undivided sons of the 5th defendant objected to the attachment of the plaint schedule properties by filing O.P.No.136/79-80 on 3-3-1980 before the Tax Recovery Officer by setting up the right order their mother and their two sisters to the plaint schedule houses on the ground that they were set apart for the security of their mother and for marriage purposes of their sisters. They further contended that the arrack business of M/s.Visakha Gowda Association had nothing to do with the joint family and that is purely individual business of their father, the 5th defendant and that only 1/5th undivided share of the 5th defendant in the joint family properties alone is liable to attachment in any event. The Tax Recovery Officer, while correctly rejecting the contention of the defendants that the house properties were set apart for the security of their mother and sisters as untenable had erroneously allowed the claim of the defendants 1 to 4 to the extent of their 4/5th share on the ground that the 5th defendant had entered into the arrack business as a partner of M/s.Visakha Gowda Association in his individual capacity and that the joint family has got no connection whatsoever in the said business and raised the attachment of the suit schedule properties to the extent of 4/5th undivided share of the defendants 1 to 4; that the arrack business run by the 5th defendant was the joint family business of the defendants and the investment for the said business had flown from the Hindu Undivided Family funds and as such the finding of the Tax Recovery Officer that the 5th defendant had joined into partnership in his individual capacity and not in the representative capacity as kartha of the joint family is not correct and is contrary to the established facts and the various admissions made by the defendants 1 to 4 to the effect that the Hindu Undivided Family funds were invested by the 5th defendant for the said business. The 5th defendant representing the joint family as its kartha, entered into a partnership business by investing the Hindu Undivided Family funds and carried the business on behalf of the family and as such the entire family properties are liable to be proceeded against including the share of the defendants 1 to 4. In any event, the 5th defendant being the father-manager, the debts contracted by him and his liabilities to the plaintiff towards tax dues are to be discharged by the defendants 1 to 4 under Law and the said liability is not an outcome of an illegal or immoral debt or transaction. In that view of the pious obligation theory recognized under the Hindu Law also the share of defendants 1 to 4 in the joint family property is liable to be proceeded against for the recovery of the monies recoverable from the father-manager-5th defendant and as such the orders of the Tax Recovery Officer passed in O.P.No.136/79- 80 dated 29-4-1980 are not proper and valid and are liable to be set aside and hence the suit. Averments made in the written statement filed by the defendants 1 to 4 : It was pleaded that the 1st defendant is already carrying on his separate business and the other defendants are still in college and schools. Whatever investment was made by their father in the arrack business was his share in the family income and therefore the investment in arrack business is his exclusive investment and it cannot be said that the arrack business is the joint family business of the defendants. While carrying on the said business, the 5th defendant never purported to do so as manager of the joint family and merely because these defendants and the 5th defendant lived together and the household expenses were being met by the 5th defendant, it does not mean that the arrack business is the joint family business. The 5th defendant never entered in his capacity as joint family manager into a partnership with M/s. Visakha Gowda Association. The joint family funds were not invested in the said partnership business to which the 5th defendant was one of the partners. It is only in his capacity as individual that the 5th defendant contributed his separate share from the family income and it was not the joint family funds that were invested. The 5th defendant was partnership in his individual capacity in the said M/s.Visakha Gowda Association. Neither in the partnership deed nor in any document relating to the firm of M/s.Visakha Gowda Association the 5th defendant ever signed or purported to have signed as joint family manager to the best of the information of the defendants. The Tax Recovery Officer had rightly excluded the 4/5th share of the defendants 1 to 4 by holding that the same is not liable for attachment and sale holding that the arrack business carried on in partnership was the individual business of the 5th defendant and that as a partnership of the said firm he was not acting on behalf of the joint family. Items 4 and 5 being ancestral properties these defendants have 4/5th interest in the same. So far as the sites owned on which buildings covered by Items 2 and 3 are constructed are concerned, they belong to the mother of the defendants 1 to 4. In so far as Item-1 is concerned, one half of the building site belongs to their mother and the other half belongs to the joint family and there is no question of any debt here and there and there is no obligation on these defendants to meet the tax liability of their father more so when his 1/5th share is the property available for being proceeded against. No liability whatsoever attaches to these defendants and the theory of pious obligation never be invoked in a case of this nature. The orders passed by the Tax Recovery Officer in O.P.No.136/79-80 does not call for any interference and hence the suit may be dismissed. Averments made in the written statement filed by the 5th defendant: The 5th defendant denied the material allegations in the plaint and had taken a similar stand as that of defendants 1 to 4 in their written statement. Further it was pleaded that besides being an illiterate person he used to contribute his signature whenever and whoever asked him to sign. He never joined as a partner in the arrack business of M/s.Visakha Gowda Association in the capacity as a joint family manager and kartha and that he had joined as a partner in the said firm in his individual capacity. He had never invested the joint family funds in the said business and only his share of income was invested in the said firm and therefore the order passed by the Tax Recovery Officer in O.P.No.136/79-80 does not call for any interference and hence the suit may be dismissed with costs. 8. Issues settled by the trial Court : (a) Whether the 5th defendant was a partner of the arrack business in his individual capacity and not as a kartha of the joint family consisting of himself and his sons ? (b) Whether the share of the defendants 1 to 4 in the joint family properties are not liable to be proceeded against by the plaintiff ? (c) Whether the 4/5th share of the defendants 1 to 4 is not liable for attachment for recovery of tax arrears of the partnership firm ? (d) Whether the orders of the Tax Recovery Officer are proper and valid and are not liable to be set aside ? (e) To what relief ? 9. Evidence available on record : Witnesses examined for plaintiff : PW-1 – Ch.Gopalakrishna Murthy, Income-tax Officer Witnesses examined for defendants : DW-1 – T.Appa Rao (5th defendant) DW-2 – G.Appannareddy DW-3 – G.Satyarao DW-4 – K.Appa Rao DW-5 – P.Bhoolokareddy Documents marked for plaintiff : Ex.A.1 dt.29-4-1980 – Copy of order of Tax Recovery Officer, Visakhapatnam. Ex.A.2 dt.20-11-1976 – Photostat copy of application of 5th defendant to Income Tax Officer, C.Ward, Visakhapatnam. Ex.A.3 dt.12-8-1976 – Photostat copy of Return of Income submitted by 5th defendant for Assessment Year 1963-64 Ex.A.4 dt.12-3-1976 – Photostat copy of Return of Income submitted by 5th defendant for Assessment Year 1971-72 Ex.A.5 dt.12-3-1976 – Photostat copy of Return of Income submitted b 5th defendant for Assessment Year 1972-73 Ex.A.6 dt.30-3-1977 – Photostat copy of Assessment order of Income Tax Officer, C.Ward, Visakhapatnam. Ex.A.7 dt.19-12-1977 - -do- for 1977-78 Ex.A.8 dt.27-7-1979 - -do- for 1978-79 Ex.A.9 dt.20-2-1980 – Photostat copy of notice under Section 148 of Income Tax Officer, D.Ward, Visakhapatnam to the 5th defendant for Assessment Year 1971-72 Ex.A.10 dt.20-2-1980 – Photostat copy of notice under Section 148 of Income Tax Officer, D.Ward, Visakhapatnam to the 5th defendant for the Assessment Year 1971-72 Ex.A.11 dt.20-2-1980 - -do- Ex.A.12 dt.20-2-1980 - -do- for 1972-73 Ex.A.13 dt.20-2-1980 - -do- for 1972-73 Ex.A.14 dt.20-2-1980 - -do- for 1972-73 Ex.A.15 dt.10-6-1981 – Photostat copy of letter of Income Tax Officer, A.Ward, Visakhapatnam to the 5th defendant Ex.A.16 dt.28-2-1985 – Photostat copy of order of Assistant Commissioner of Income Tax, Visakhapatnam Ex.A.17 dt.26-12-1970 – Photostat copy of partnership deed between P.Raghavarao and 18 others Ex.A.18 dt.23-3-1971 – Photostat copy of application for registration of M/s. Visakhapatnam Gowda Association Ex.A.19 dt.30-11-1972 - -do- for declaration under Section 184(7) of Income Tax Act 1961 for continuation of registration Ex.A.20 dt.28-7-1971 – Photostat copy of return of income of M/s.Sree Visakha Gowda Association for Assessment Year 1971-72 Ex.A.21 dt.26-3-1972 - -do- of revised return for 1971-72 Ex.A.22 dt.28-2-1976 – Copy of assessment order for Assessment Year 1971-72 Ex.A.23 dt.19-3-1972 – Photostat copy of returns of income for 1972-73 Ex.A.24 dt.26-3-1972 - -do- of revised return for 1972-73 Ex.A.25 dt.28-2-1976 - -do- for assessment order for 1972-73 Ex.A.26 dt.25-2-1980 – Photostat copy of objection petition of defendants 1 to 4 to Tax Recovery Officer, Visakhapatnam Ex.A.27 dt.12-8-1976 – Photostat copy of Income Tax returns submitted by 5th defendant for 1964-65 Ex.A.28 dt.12-8-1976 – Photostat copy of Income Tax return submitted by 5th defendant for 1965-66 Ex.A.29 dt.12-8-1976 – Photostat copy of Income Tax returns submitted by 5th defendant for 1966-67 Ex.A.30/12-3-1976 – Photostat copy of Income Tax returns submitted by 5th defendant for 1967-68 Ex.A.31/30-3-1977 – Photostat copy of Assessment order of Income Tax Officer, C.Ward, Vizag or Assessment Year 1969-70 Documents marked for defendants: Ex.B.1 dt.21-2-1986 – Copy of order of Assessment Commissioner of Income Tax, Visakhapatnam for 1972-73 Ex.B.2 dt.31-3-1984 – Photostat copy of Assessment order for Assessment Year 1971-72 Ex.B.3 dt.31-3-1984 – Photostat copy of Assessment order for Assessment Year 1972-73 of Income Tax Officer, A.Ward, Visakhapatnam Ex.B.4 dt.19-2-1980 - -do- of Registration Extract of sale deed for Rs.400/- executed by G.Venkayyamma in favour of 1st defendant Ex.B.5 dt.29-1-1964 - -do- for Rs.1500/- executed by Mohammed Saheb in favour of 1st defendant Ex.B.6 dt.24-6-1964 - -do- for Rs.1000/- executed by G.Nagireddi in favour of 1st defendant Ex.B.7 dt.28-2-1976 – Photostat copy of Assessment order for 1971-72 Ex.B.8 dt.28-2-1976 - -do- for 1972-73 10. Findings recorded by the trial court in nutshell : The learned Principal Subordinate Judge after referring to several decisions ultimately came to the conclusion that in the facts and circumstances of the case the 5th defendant was a partner of M/s.Visakha Gowda Association in his individual capacity investing his monies and not on behalf of the Hindu Undivided Family though he is a joint family manager and as such only his 1/5th share in the joint family property alone is liable to be proceeded against for realization of the tax. Further it was held that the 4/5th share of the undivided sons of the 5th defendant i.e., defendants 1 to 4, who are is not liable for auction for recovery of the income tax arrears and ultimately came to the conclusion that the order under challenge does not suffer from any illegality and dismissed the suit. 11. In the light of submissions made by the Counsel on record, the following Points arise for consideration in this Appeal : (a) Whether the findings recorded by the learned Principal Subordinate Judge, Visakhapatnam dismissing the suit are to be confirmed or to be disturbed or set-aside in the facts and circumstances of the case ? (b) If so to what relief the parties would be entitled to ? 12. Point No.1: The 5th defendant is the father of the defendants 1 to 4 and the 5th defendant joined as partner in M/s.Visakha Gowda Association. It is the case of the plaintiff that the 5th defendant joined the said Association as one of the partners of M/s.Visakha Gowda Association representing the Hindu Undivided Family, in short referred to as “HUF\" but however specific stand taken by the defendants is that the 5th defendant joined as a partner in the said Association in his individual capacity and not representing the joint family. The learned Judge after appreciating the evidence available on record referred to the undernoted decisions : Chamdrayya Vs. Sambayya [3], V.Padayachi Vs. Sivasoorinam [4], Amritlal Vs. Jayantilal [5], M.R. Radhakrishnam Vs. Union of India [6], Sidramappa Vs. Babajappa [7], P.Murugavva Vs. S.Somasundaram [8], Pichappa Vs. Chokalingam [9], Rama Krishna Transport Vs. Income Tax Commissioner [10], Shanmukeshwararao Vs. Venkatappaiah and sons [11], Benaras Bank Vs. Hari Narayan [12], A.Robini Vs. Akak Sethumadhavan [13], Kanakaratnamala Vs. Logenadha [14], G.Narayana Raju Vs. Chamarju [15], Lakshmi Ammal Vs. Meenakshi Ammal and others[16]. The learned Judge appreciated in elaboration the oral evidence of PW-1 and also the oral evidence of DW-1, DW-2, DW-3, DW-4 and DW-5 as well and also recorded further findings in relation to documentary evidence as well – Exs.A-1 to A-31 and Exs.B-1 to B-8 as well and ultimately came to the conclusion that the order under challenge does not suffer from any illegality whatsoever and accordingly dismissed the suit. 13. The 5th defendant was a partner in M/s.Visakha Gowda Association and his sons i.e., defendants 1 to 4 had chosen to contest the suit with all seriousness. The learned Judge on appreciation of the evidence of PW-1, DW-1, DW-2, DW-3, DW-4 and DW-5 and also Exs.A-1 to A-31 and Exs.B-1 to B-8, recorded findings in detail and ultimately came to the conclusion that the order under challenge does not suffer from any illegality and ultimately dismissed the suit. 14. In the decision referred (2) supra at paras 6, 8, 9 and 17, the Full Bench of this Court observed : “Colebrooke’s translation was also accepted by the Supreme Court in S.M.Jakati Vs. S.M.Borkar, AIR 1959 S.C. 282. They observed that it is the pious duty of the sons to discharge their father’s debts not tainted with immorality or illegality. In Perumal Chetti Vs. Province of Madras, AIR 1952 Madras 382 Chief Justice Rajamannar delivering the judgment of the Division Bench observed : “We have our doubts if that term had a precise and definite meaning even in the days of the Smritis. It is like “just and convenient”, reasonable and prudent, “justice, equity and good conscience”. To give the latest example it is an expression as elastic and indefinite as the expression “reasonable restrictions” in Article 19 of our Constitution. Colebrooke translated the expression “avyavaharika” as “repugnant to good morals”. There have been other translations, like ‘improper’ and ‘not lawful’, usual or customary’. “Vyavahara” is a word which has more than one meaning. But we agree with Mr.Venkata Subramania Aiyar that the word has reference to the ideal of good conduct according to the notions prevailing at the material time. But we are unable to hold that any debt which the father ought not to have strictly contracted is necessarily a debt which is ‘avyavaharika’. There should be an element of moral turpitude involved in the debt. It is only then that it could be called ‘avyavaharika’. Whatever may be the difference in the translations of this expression, it is now clear that the expression ‘avyavaharika’ has been understood as repugnant to good morals or tainted with immorality or illegality or involving some morel turpitude. Even if a wider meaning such as ‘improper’ is given there can be no doubt that the liability in the present case, namely, the liability of the father to pay arrears of income-tax which had accrued in respect of the business which he was carrying on cannot be said to be ‘avyavaharika’. In our opinion it is impossible to argue that the liability to pay taxes legally due to the Government is an ‘avyavaharika’ debt within the meaning of the texts as interpreted by the judicial decisions, some of which have been referred to above. It is stated that the assessment was made on an estimated income but even so the tax so levied would still be tax legitimately due at it has been held that even an estimate cannot be arbitrary and must rest on some rational basis. There would be some scope for argument if a penalty or fine had been levied due to the negligence or laches of the assessee or due to his non- compliance with any provision of law. As that is not the case here we express no opinion on that matter. We may also state that Mr.Rama Rao also did not seriously contend before us that the said liability would be in the nature of an ‘avyavaharika’ debt not binding upon the son. His main argument however, was that the exemption from liability of the son under the doctrine of pious obligation is not only in respect of an ‘avyavaharika’ debt, but in respect of the various classes of debts, mentioned I the several texts referred to earlier. He submitted that one class of debts which is specifically mentioned in the text of Usanas and the other texts is ‘sulka’. According to the dictionary meaning as well as the meaning given by the various recognized translators of the texts from time to time, the expression ‘sulka’ would also include a tax. As the smritis expressly state that the son is not liable to pay the ‘sulka’ which remained unpaid by the father it is argued that the son is not liable for the arrears of income-tax payable by the father in this case. It is very difficult at this distance of time to find out what the ‘smriti’ text writers meant by the expression ‘sulka’. The dictionary meaning as given in Apte’s Dictionary is ‘toll, tax, customs duty particularly levied at ferries, passes, roads. The other meanings of ‘sulka’ given are ‘gain, profit, money advanced to ratify a bargain, purchase price of a girl; money given to the parents of a bride; a nuptial present; marriage settlement or dowry presents given by the bridegroom to his bride’. In the various translations, sometimes, the expression ‘toll’ is used, sometimes ‘tax’, sometimes ‘duty’. In arriving at the meaning of the expression used in the texts it is important to bear in mind the context in which these passages occurred. As observed already these texts refer to the exceptions to the general rule that a son is liable to pay the debts of his father. As pointed by the Privy Council in 70 Ind.App.171 = (AIR 1943 P.C. 142) most of the debts mentioned in the texts as debts which he need not pay, are of objectionable character, even if some type of taxes or duties were exempt from the doctrine of pious obligation for certain reasons which appealed to the ancient Smriti text writers; it is for the court to decide in the context of the present society whether any particular tax liability is of such a nature as could be treated as one tainted with illegality or immorality or opposed to right conduct as to bring it within the exceptions to the general rule that the son is liable to pay the father’s debt. We have no hesitation in holding that the liability to pay arrears of income-tax cannot be regarded as one such. On the other hand it appears to us that it is obligatory on the son that he should pay taxes which are legitimately due to the State by his father. Even from ancient times till the present day the liability to pay taxes which are legitimately due to the State is regarded as one of the foremost duties of the citizens. We cannot believe that the ancient law givers which laid so much stress upon the duty of the son the his father’s debt would have exempted him from payment of the taxes legally due by the father to the State. It has been repeatedly held that the son is liable to pay the debts of the father incurred during the course of trade which he had lawfully carried on. It does not stand to reason that while the son is liable to pay the debts of the father so incurred, he is not liable to pay the tax due in respect of the profits of that trade, or debts incurred by the father for the purpose order the payment of those taxes. In interpreting these ‘Smritis’ which were rendered thousands of years ago it is not safe to merely to take the dictionary meaning and apply it to the texts. In this connection it has to be remembered that these ‘Smritis’ also deal with religious and moral law. According to Hindu conception ‘Dharma’ is of widest significance and includes religious, moral, social and legal duties and can only be defined by its contents. The Hindu ‘Dharma sastra’ therefore deals with religious and moral law as well as civil and criminal law. It is true that the Smriti writers knew the distinction between ‘vyavahara’ or the like, the breach of which results in judicial proceedings, and the law in the widest sense. But having regard to the fact that all the old texts and commentaries are appellant to mingle religious and moral law as well as civil and criminal law. It is true that the Smriti writers knew the distinction between ‘vyavahara’ or the like the breach of which results in judicial proceeding, and the law in the widest sense. But having regard to the fact that all the old texts and commentaries are appellant to mingle religious and moral considerations, not being positive laws, with the rules intended to be positive laws their Lordships of the Privy Council have repeatedly emphasized the necessity for caution in the interpretation of ‘Smritis’, vide Rao Balwant Singh Vs. Rani Kishori (1898) 25 Ind.App.54 (P.C.). In Nidavolu Achutan Vs. Ratnajee, AIR 1926 Madras 323, Courts-Trotter, C.J. observed that the governing provision in the texts is that which excludes from the rule debts that are not ‘vyavaharika’ and particular instances given in the Smritis must be treated as a mere expression of opinion on the part of the authors as to what class of debts would fall under general words. …….. In Mayne’s Hindu Law it is stated that the expression ‘sulka’ in the Smritis is ambiguous. It is sometimes translated as a toll or a tax. Another meaning of the word ‘sulka’ is a nuptial present, given as the price of a bride. Reference is made to Haradatta’s translation where he assigns the meaning of bride price to ‘sulka’ and to the fact that this translation is supported by Sarvajna Narayana in his gloss on the text in Manu. Mayne is the opinion that this stands to reason as a promise of bride price is not enforceable even according to the modern decisions and being unapproved marriage neither the liability to pay the bride price nor a debt incurred for the purpose of paying it can be lawful or proper (vyavaharika). Even if the meaning is not restricted to the last mentioned one, namely, the bride price, we are of the opinion that having regard to the context n which it occurs, ‘sulka’ must be confined only to such liability, though in the nature of tax or a duty, which would involve some moral turpitude on the part of the father or the incurring of which would be tainted with illegality or immorality. The Bench of the Madras High Court in AIR 1955 Mad.382 had to consider whether court-fee payable by the father in a litigation which he carried on comes within the expression ‘Danda’ used in the text which as has been noticed is also one of the specifically enumerated class of debts mentioned in the text. It was observed that the conception of the court-fee at the present day is radically different from ‘Danda’ which was imposed on the parties to a litigation in the days of ‘Smritis’, and that whatever the theory underlying the court-fee may be, it is clearly not in the nature of punishment. They observed that the conception of ‘Dharma’ and Nyaya changes and the liability even under the ‘Smritis’ would have to be judged by the present day notions and if judged by those notions, it could not be said that the liability to pay court-fee was in anyway inconsistent with right conduct. We are of the view that the same approach should be made in interpreting the expression ‘sulka’ in the same texts. …….. .……. For all the reasons above stated we are of the opinion that Gopalakrishnan Nair, J., was right in holding that the arrears of income-tax due by the petitioner’s father in respect of separate business prior to partition between him and his son can be recovered from the son after the partition under the doctrine of pious obligation”. 15. In the decision referred (1) supra, the assessee was carrying on regular smuggling activity and while crossing Indo-Pak border into Pakistan he was apprehended and a sum of Rs.65,000/- recovered in currency notes was transferred from his person and when the assessee stated that he was taking the currency notes to Pakistan to enable him to purchase gold in that country with a view to smuggling it into India, the currency notes were confiscated and the Income Tax officer initiated proceedings under the Income Tax Act 1922 for assessing the assessee’s income and determining the tax liability and found that out of Rs.65,000/- an amount of Rs.60,500/- constituted the income of the assessee from undisclosed sources. In the said facts and circumstances on the question whether the loss of Rs.65,000/- arising from confiscation of currency notes was an allowable deduction under Section 10(1) of the Income Tax Act 1922, the Apex Court held that the deduction must be allowed inasmuch as the confiscation of the currency notes was a loss occasioned in pursuing the business and it was a loss in much the same way as if the currency notes had been stolen or dropped on the way while carrying on the business and it was further held that it was a loss which arose directly from the carrying on of the business and is incidental to it. The Apex Court applied the view expressed in Badridas Daga Vs. Commissioner of Income Tax [17] following the decision in Commissioner of Income Tax, Gujarat Vs. S.C. Kothari [18]. 16. In the decision referred (7) supra where the father carried on family kulachar of dyeing without any aid of ancestral nucleus and though the son assisted him in the business, it was held that the said dyeing business cannot be called family trade and subsequent starting of clothes business is not an extension of the trade. 17. In the decision referred (8) supra it was held that there is no presumption that a business carried on by a member of a joint family is the joint family business or is there is any presumption that a business carried on by such a member in partnership with a stranger is a joint family business and there is no presumption that a business started by even the manager is a joint family business but if the joint family funds had been utilized in opening a new branch, then the new branch will be regarded as part of the old business. 18. In the decision referred (9) supra it was held that where the manger of a Hindu joint family entered into partnership with a stranger, the other members do not ipso facto become partners. 19. In the decision referred (10) supra it was held that where the managing member of a joint Hindu family enters into partnership with a stranger in relation to a business whose capacity in whole or in part is derived from the property or funds of the joint family, the family as a unit or the entire body of the family members do not ipso facto become partners in that partnership business and partnership will be confined to the strangers and such of the members of the family who actually entered into partnership with them and the members of the family in their personal or individual capacity can quoad their separate property enter into partnership with the kartha of the joint family who represents the joint family. 20. In the decision referred (11) supra it was held : “The principles that emerge from a review of the above decisions are that the joint family as such cannot become a partner in the partnership firm and the karta or co-parceners can become partners of the firm representing the joint family. The partners alone have to be looked into for the purpose of the partnership firm or for the transactions with the public. In a situation where a karta or a co-parcener is a partner in the partnership firm the profits in such a firm belong to the joint family and in the event of the assessment under the Income- tax act they are liable to be assessed in the status of the joint family. Apart from the other circumstances to get at the fact where the karta or the co-parcener is a partner representing the family the crucial consideration is whether the joint family funds have been utilised for the purpose of becoming a partner either by way of capital in the partnership firm or otherwise.” 21. In the decision referred (12) supra it was held that the business started by father as manager of the family cannot be said to be ancestral so as to render the minors interest in the joint family property liable for the debt incurred for the business. 22. In the decision referred (13) supra it was held that where there is no proof that the business was the family business and not a new or independent business of the kartha, the loan taken for such business could not be said to be for the binding necessities or for the benefit of the family. 23. In the decision referred (14) supra it was held that where consideration for sale transaction proceeded for husband and his subsequent conduct showing his admission that title to the property vested in wife, the purchase by wife cannot be held to be benami for husband but she is herself the owner of the property and the fact that the husband was in possession and management of the property or that he was receiving the rents does not affect the position inasmuch as in ordinary Hindu families property belonging exclusively to a female member would also be normally managed by the manager of the family. 24. In the decision referred (15) supra it was held that it is well established that there is no presumption under Hindu law that a business standing in the name of any member of the joint family is a joint family business and unless it could be shown that the business in the hands of the coparcener grew up with the assistance of the joint family property or with joint family funds or with the earnings of the business were blended with joint family estate, the business remains free and separate. 25. In the decision referred (16) supra it was held that there is no presumption of doing joint family business merely because the business is in the name of a member of a joint family. 26. There cannot be any quarrel relating to the propositions of Law which had been laid down in the decisions referred to supra. This Court had carefully gone through the evidence available on record and also the findings recorded by the trial Court in elaboration as well. PW-1, the Inspector of Income Tax, deposed that the 5th defendant was a partner in Visakha Gowda Association and that the said Association had fallen in arrears of income tax to a tune of Rs.13 lakhs. He further deposed that the 5th defendant is the father of the defendants 1 to 4 and all of them constituted Hindu joint family and the 5th defendant is the joint family manager. It was further deposed that the 5th defendant is a partner of the said Visakha Gowda Association in the capacity of kartha of their Hindu joint family consisting of himself and defendants 1 to 4 and when the properties were attached belonging to their joint family the defendants 1 to 4 filed objection petitions stating that the properties no doubt were joint family properties but their shares were not liable for attachment on the ground that the 5th defendant joined in the said Association in his individual capacity and not as kartha of the joint family. The Tax Recovery Officer allowed their objection and raised attachment with reference to the 4/5th covering shares of defendants 1 to 4 under the original of Ex.A-1 orders dated 29-4-1980 in O.P.No.136/79-80. He further deposed that Ex.A-2 is the Photostat copy of the written statement dated 20-11-1976 filed by the 5th defendant before the Income Tax Officer, C.Ward showing the various properties inherited by him to his share in partition between himself and his brothers and that he has no self acquisitions. Ex.A-3 is the certified copy of the Income Tax return of receipts and payments filed by 5th defendant for the Assessment Year 1963-64 in the status of Hindu Undivided Family. Exs.A-4 and A- 5 are certified copies of income tax returns relating to the Assessment Year 1971-72 and 1972-73 filed by the 5th defendant in the status of Hindu Undivided Family which discloses that the family was having business income. Exs.A-6 to A-8 are similar returns filed by the 5th defendant for the Assessment Year 1973-74, 1977-78 and 1978-79 along with receipts and payments statements. Exs.A-9 to A-11 are the certified copies of the notices issued to the 5th defendant calling upon him to submit income tax returns for the Assessment Year 1971-72 and Exs.A-12 to A-14 are the certified copies of such notices issued under Section 148 for the Assessment Year 1972-73. The original of Ex.A- 15 was issued to the 5th defendant on 10-6-1981 calling upon him to give explanation for investment of Rs.88,800/- in M/s.Visakha Gowda Association but he did not furnish any such necessary explanation. Ex.A-16 is the certified copy of the orders in CIT Appeals dated 28-2- 1985 for the Assessment Year 1971-72 dismissing the assesses appeal against the orders of the Income Tax Officer. Ex.A-17 is the certified copy of the partnership deed dated 26-12-1970 of M/s.Visakha Gowda Association showing the 5th defendant as third partner. Ex.A- 18 is a copy of Form No.11 for the Assessment Year 1971-72 seeking for registration of the firm for the Assessment Year 1972-73. Exs.A-20 and A-21 are the copies of returns of the firm for the Assessment Years 1971-72 and Ex.A-22 is the Assessment order for the said year. Exs.A-23 and A-24 are the returns for the Assessment Years 1972-73 of the said M/s.Visakha Gowda Association. Ex.A-25 is the order of the relevant dated. Ex.A-26 is a copy of the objection petition filed by the defendants 1 to 4 before the Tax Recovery Officer and Exs.A-27 to 31 are the copies of income tax returns of the 5th defendant submitted by him in the status of Hindu Undivided Family for the Assessment Years 1964-65 to 1969-70. PW-2 further deposed that he had been working in Visakhapatnam for the year 1982 where as said M/s.Visakha Gowda Association did their business from October 1970 to 30-9-1971 and thereafter they had not done any business. PW-1 deposed that he does not have any report in his record to show that the 5th defendant had got such and such properties. There were ten partners in Gowda Association and the arrack contract was on the basis of Government auction. PW-1 further deposed that P.Raghavarao bid the arrack auction and therefore all those 19 persons constituted themselves as a firm. They had not seized any accounts of the firm. PW-1 further deposed that either in the preamble or in the description of parties or in the body of the partnership deed it was not mentioned that the 5th defendant was there as kartha of the joint family. There are unsigned statements to show that the partners had collected monies from others to make up the share capital as Rs.88,800/-. Further PW-1 deposed that the signature of the 5th defendant appearing against S.No.3 in Ex.A-18 does not show that he was signing as kartha of their joint family and E.A-19 shows that the 5th defendant had only affixed his thumb mark against S.No.19 and Exs.A-3 to A-5 and Exs.A-27 to A-30 are the photo copies of the Income Tax returns submitted by the 5th defendant which were filed on 17-8-1976. This witness also deposed that Exs.A-3, A-4, A-5, A-6, A- 27, A-28, A-29, A-30 and A-31 were filed on 12-8-1976. He further deposed that except the signature of the assessee, the entire form is in English and he cannot say whether the signature of T.Appa Rao (5th defendant) appears to be only that of a person not educated but only learnt to sign. He further deposed that Exs.A-6 and A-31 also contain assessment orders and all the assessment orders were originally typed as individual and struck of and the word Hindu Undivided Family was written and they were not attested by anybody and in the statement of case that was typed as individual. Further PW-1 deposed that the original of Ex.B-1 was signed by the Assistant Appellate Commissioner and in the said order the Appellate Commissioner found that there is no material to show that the 5th defendant joined as a partner in his capacity as kartha of the joint family. He further deposed that the return filed by the 5th defendant does not disclose that the 5th defendant joined in M/s.Visakha Gowda Association as kartha of the joint family. In Ex.A-2 statement the 5th defendant did not state that he joined in the said Association as kartha of the Hindu joint family and that he does not know personally whether the 5th defendant joined in the Association in his individual capacity or as kartha of the joint family. Ex.A-17 does not disclose the status in which the 5th defendant had joined in the partnership and at the time of assessment no enquiries were made about the status of any of the partners about their capacity either in their individual capacity or kartha of the joint family. 27. The 5th defendant examined himself as DW-1 who had deposed that he is illiterate and he can sign only and further deposed that he joined as a partner in M/s.Visakha Gowda Association in his individual capacity and not on behalf of their joint family and that his family members expressed their reluctance for his joining as partner of the said Association. DW-1 further deposed that as a few friends advised him he joined as a partner by investing a sum of Rs.5000/- by borrowing from one G.Atcharao a sum of Rs.3000/- and from G.Appanna Reddi in a sum of Rs.2000/- and that for his share in the partnership a sum of Rs.88,500/- was earmarked towards his contribution. Another 17 individuals joined to pool up the remaining amount of Rs.83,000/- and odd who gave the said amount towards their investments. Before the Income Tax authorities, they had filed papers showing their investments also and Ex.B-2 is the Photostat copy for the Income Tax assessment for the year 1972-73. While he was partner of the said Association in which the original of Ex.B-2 order was passed it was noted that along with him 17 others also contributed the amounts. Ex.B-3 is the Photostat copy of the Income Tax assessment order for the year 1972-73. One Narasimhamurthy was looking after the income tax affairs on his behalf who was not having experience. DW-1 being illiterate, he was signing wherever he was asked to sign. Ex.A-15 filed in O.S.No.161/81 is the list showing the 17 partners who contributed the amounts towards the share required to be contributed in his name. The originals Exs.B-4 to B-6 are the original sale deeds under which his wife purchased the sites covered by Items 1 to 3 of the A-Schedule. The claim petitions filed by his wife and his children 1 to 4 were allowed by the Tax Recovery Officer which orders are valid. Exs.B-5 and B-8 are the Photostat copies of the orders relating to the firm M/s.Visakha Gowda Association apportioning income among the partner. DW-1 also further deposed that the Income Tax Department is proceeding against him only and not against the other partners. His sons have nothing to do with the business carried on by him as a partner in the said Association. His sons are contending the suit and the attachment effected over the shares of his sons is not valid and the Tax Recovery Officer upheld their contentions. 28. The evidence of DW-2 is that he lent the 5th defendant (DW-1) Rs.2000/- in the month of September 1970 when he requested him to lend him Rs.5000/- in connection with arrack auctions. DW-3 also deposed on similar lines. The evidence of DW-4 and DW-5 also is available on record and their evidence goes to show that these witnesses had contributed amounts to DW-1 towards his share of investment as a partner in the Association aforesaid. 29. It is not as though the father-5th defendant is dead. He is alive and was examined as DW-1. Though there is no quarrel to the propositions which had laid down in the decisions referred to supra, on facts, this Court is thoroughly satisfied that since the learned Judge recorded appropriate findings on appreciation of oral and documentary evidence available on record ie., the evidence of PW-1, DW-1 to DW-5 and Exs.A-1 to A-31 and Exs.B-1 to B-8, this Court is not inclined to disturb the well considered findings and accordingly the said findings are hereby confirmed. 30. Accordingly, the Appeal shall stand dismissed. But however, in the peculiar facts and circumstances, let the parties bear their own costs. _____________________ Justice P.S.Narayana Date : -6-2010 L.R. copy to be marked : YES / NO AM [1] AIR 1980 S.C. 1271 [2] AIR 1970 A.P. 426 [3] 1966 (2) An.W.R. 393 [4] AIR 1950 Madras 444 [5] AIR 1960 S.C. 964 [6] AIR 1959 Madras 71 [7] AIR 1962 Mysore 38 [8] AIR 1957 Madras 100 [9] AIR 1934 P.C. 192 [10] AIR 1968 A.P. 34 [11] 1986(2) APLJ 35 [12] AIR 1932 P.C. 182 [13] AIR 1978 Kerala 119 [14] AIR 1965 S.C. 271 [15] AIR 1968 S.C. 1276 [16] 1975 MLJ 199 [17] AIR 1958 S.C. 783 [18] 1972 Tax L.R. 168 (S.C.) "