Order v. Income Tax Officer

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.NARAYANAA.S.No.1410 of 1988 ORDER: 1. This Appeal is filed as against the Decree and Judgmentmade in O.S.No.163/81 on the file of learned Principal SubordinateJudge, Visakhapatnam whereby the suit filed by the Income TaxOfficer, Visakhapatnam – the appellant herein/plaintiff, was dismissed. The said suit was filed to set aside the claim order made by the TaxRecovery Officer in O.P.No.136/79-80 dated 29-4-1980. The learnedPrincipal Subordinate Judge, Visakhapatnam in the light of therespective pleadings of the parties, having settled the Issues,ultimately came to the conclusion that the order under challenge doesnot suffer from any illegality and accordingly the suit was dismisseddirecting the parties to bear their own costs. Aggrieved by the same,the present Appeal had been preferred. 2. The learned Standing Counsel representing the appellanthad taken this Court through the respective pleadings of the partiesand the evidence available on record in proper perspective. Thelearned Standing Counsel also would maintain that in the facts andcircumstances of the case, inasmuch as the 5[th] respondent was apartner representing the joint family as such, the respondents 1 to 4being the sons of the 5[th] respondent are liable under the theory ofpious obligation. The learned Standing Counsel had strongly reliedupon 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 theapplicability of the doctrine of pious obligation and also on the aspectof the illegality of the contract as such hence the findings are to be setaside and the Appeal to be allowed. 3. Per contra, the learned Counsel representing therespondents had taken this Court through the findings recorded by thelearned Principal Subordinate Judge, Visakhapatnam and would mthat 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 bedismissed. 4. Heard the Counsel on record. 5. Before taking up further discussion on the Points forconsideration which would arise in this Appeal, it may be appropriateto have a glance at the respective pleadings of the parties, theevidence available on record and the findings recorded by the trialCourt 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 5[th] defendant isthe father of defendants 1 to 4 and he is the kartha and father-managerof the joint family consisting of himself and his sons – defendants 1 to4, his wife Tippala Veerayamma and his two daughters. The 5[th]defendant had inherited from his father considerable properties,movable and immovable including Acs.12-00 of agricultural land, ahouse at Venkannapalem and considerable cash, all having fallen tohis share in the partition with his brothers. Besides the abovementioned ancestral properties, the 5[th] defendant, as kartha of theHindu joint family further made certain acquisitions, including the suitschedule properties with the aid of the joint family nucleus and fromthe income of the joint family properties and its assets. Besides thejoint family properties acquired and the ancestral properties referred to above he had no personal properties and he never possessed anymovable or immovable properties in his personal capacity. Apart fromthe above mentioned properties, the family was running arrackbusiness since 1963-64 onwards. The 5[th] defendant was also notemployed and was only managing the arrack business of the HinduUndivided Family as its kartha and had been maintaining himself andhis family from out of the income of the joint family properties which heis managing as the kartha and the father-manager of the Hindu jointfamily consisting of himself and his family. While so, in the year 1971in his capacity as a joint family manager it had entered into apartnership with 18 others known others known as M/s.VisakhaGowda Association which carried on business in Abkari contracts byinvesting in joint family funds. The firm M/s. Visakha GowdaAssociation, 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 returnwas filed on 19-12-1972 for 1972-73 disclosing an income ofRs.72,903/- which was further revised under a return dated 26-3-1975disclosing an income of Rs.73,403/-. The assessments for the saidyears could only be completed by the plaintiff on 28-2-1976 on accountof the delaying tactics adopted and on account of the failure of theproduction of the accounts and required date by the said firm in propertime for the Assessment Years 1971-72 and 1972-73. Finally the firmwas assessed to a total amount of Rs.12,61,921/- as tax and penaltiesfor the said two Assessment Years. The properties belonging to thejoint family of the 5[th] defendant and his sons, namely the plaintschedule houses along with their appurtenant sites, the otherproperties belonging to the joint family were got attached by theplaintiff for realization of the tax arrears of M/s.Visakha GowdaAssociation of which the 5[th] defendant was a partner in the capacity askartha or manager of the joint family of himself and his sons. Defendants 1 to 4 who are the undivided sons of the 5[th] defendantobjected to the attachment of the plaint schedule properties by filingO.P.No.136/79-80 on 3-3-1980 before the Tax Recovery Officer bysetting up the right order their mother and their two sisters to the plaintschedule houses on the ground that they were set apart for the securityof their mother and for marriage purposes of their sisters. They furthercontended that the arrack business of M/s.Visakha Gowda Associationhad nothing to do with the joint family and that is purely individualbusiness of their father, the 5[th] defendant and that only 1/5[th] undividedshare of the 5[th] defendant in the joint family properties alone is liableto attachment in any event. The Tax Recovery Officer, while correctlyrejecting the contention of the defendants that the house propertieswere set apart for the security of their mother and sisters as untenablehad erroneously allowed the claim of the defendants 1 to 4 to theextent of their 4/5[th] share on the ground that the 5[th] defendant hadentered into the arrack business as a partner of M/s.Visakha GowdaAssociation in his individual capacity and that the joint family has gotno connection whatsoever in the said business and raised theattachment of the suit schedule properties to the extent of 4/5[th]undivided share of the defendants 1 to 4; that the arrack business runby the 5[th] defendant was the joint family business of the defendantsand the investment for the said business had flown from the HinduUndivided Family funds and as such the finding of the Tax RecoveryOfficer that the 5[th] defendant had joined into partnership in hisindividual capacity and not in the representative capacity as kartha ofthe joint family is not correct and is contrary to the established factsand the various admissions made by the defendants 1 to 4 to the effectthat the Hindu Undivided Family funds were invested by the 5[th]defendant for the said business. The 5[th] defendant representing thejoint family as its kartha, entered into a partnership business byinvesting the Hindu Undivided Family funds and carried the business on behalf of the family and as such the entire family properties areliable to be proceeded against including the share of the defendants 1to 4. In any event, the 5[th] defendant being the father-manager, thedebts contracted by him and his liabilities to the plaintiff towards taxdues are to be discharged by the defendants 1 to 4 under Law and thesaid liability is not an outcome of an illegal or immoral debt ortransaction. In that view of the pious obligation theory recognizedunder the Hindu Law also the share of defendants 1 to 4 in the jointfamily property is liable to be proceeded against for the recovery of themonies recoverable from the father-manager-5[th] defendant and assuch 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 setaside and hence the suit. Averments made in the written statement filed by the defendants 1 to 4: It was pleaded that the 1[st] defendant is already carrying on hisseparate business and the other defendants are still in college andschools. Whatever investment was made by their father in the arrackbusiness was his share in the family income and therefore theinvestment in arrack business is his exclusive investment and it cannotbe said that the arrack business is the joint family business of thedefendants. While carrying on the said business, the 5[th] defendantnever purported to do so as manager of the joint family and merelybecause these defendants and the 5[th] defendant lived together andthe household expenses were being met by the 5[th] defendant, it doesnot mean that the arrack business is the joint family business. The 5[th]defendant never entered in his capacity as joint family manager into apartnership with M/s. Visakha Gowda Association. The joint familyfunds were not invested in the said partnership business to which the5[th] defendant was one of the partners. It is only in his capacity asindividual that the 5[th] defendant contributed his separate share fromthe family income and it was not the joint family funds that were invested. The 5[th] defendant was partnership in his individual capacityin the said M/s.Visakha Gowda Association. Neither in the partnershipdeed nor in any document relating to the firm of M/s.Visakha GowdaAssociation the 5[th] defendant ever signed or purported to have signedas joint family manager to the best of the information of thedefendants. The Tax Recovery Officer had rightly excluded the 4/5[th]share of the defendants 1 to 4 by holding that the same is not liable forattachment and sale holding that the arrack business carried on inpartnership was the individual business of the 5[th] defendant and thatas a partnership of the said firm he was not acting on behalf of the jointfamily. Items 4 and 5 being ancestral properties these defendantshave 4/5[th] interest in the same. So far as the sites owned on whichbuildings 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-1is concerned, one half of the building site belongs to their mother andthe other half belongs to the joint family and there is no question of anydebt here and there and there is no obligation on these defendants tomeet the tax liability of their father more so when his 1/5[th] share is theproperty available for being proceeded against. No liabilitywhatsoever attaches to these defendants and the theory of piousobligation never be invoked in a case of this nature. The orderspassed by the Tax Recovery Officer in O.P.No.136/79-80 does not callfor any interference and hence the suit may be dismissed. Averments made in the written statement filed by the 5thdefendant:The 5[th] defendant denied the material allegations in the plaint and hadtaken a similar stand as that of defendants 1 to 4 in their writtenstatement. Further it was pleaded that besides being an illiterateperson he used to contribute his signature whenever and whoeverasked him to sign. He never joined as a partner in the arrack businessof M/s.Visakha Gowda Association in the capacity as a joint familymanager 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 fundsin the said business and only his share of income was invested in thesaid firm and therefore the order passed by the Tax Recovery Officer inO.P.No.136/79-80 does not call for any interference and hence the suitmay be dismissed with costs. 8. Issues settled by the trial Court : (a)Whether the 5[th] defendant was a partner of the arrack businessin his individual capacity and not as a kartha of the joint familyconsisting of himself and his sons ?in his individual capacity and not as a kartha of the joint familyconsisting of himself and his sons ? in his individual capacity. He had never invested the joint family fundsin the said business and only his share of income was invested in thesaid firm and therefore the order passed by the Tax Recovery Officer inO.P.No.136/79-80 does not call for any interference and hence the suitmay be dismissed with costs. 8. Issues settled by the trial Court : (a)Whether the 5[th] defendant was a partner of the arrack businessin his individual capacity and not as a kartha of the joint familyconsisting of himself and his sons ?in his individual capacity and not as a kartha of the joint familyconsisting of himself and his sons ? (b)Whether the share of the defendants 1 to 4 in the joint familyproperties are not liable to be proceeded against by the plaintiff?properties are not liable to be proceeded against by the plaintiff? (c)Whether the 4/5[th] share of the defendants 1 to 4 is not liable forattachment for recovery of tax arrears of the partnership firm ?attachment for recovery of tax arrears of the partnership firm ? (d)Whether the orders of the Tax Recovery Officer are proper andvalid and are not liable to be set aside ?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 (5[th] 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.Visakhapatnam. Ex.A.2 dt.20-11-1976 – Photostat copy of application of 5[th]defendant to Income Tax Officer, C.Ward, Visakhapatnam.defendant to Income Tax Officer, C.Ward, Visakhapatnam. Ex.A.3 dt.12-8-1976 – Photostat copy of Return of Incomesubmitted by 5[th] defendant for Assessment Year 1963-64submitted by 5[th] defendant for Assessment Year 1963-64 Ex.A.4 dt.12-3-1976 – Photostat copy of Return of Incomesubmitted by 5[th] defendant for Assessment Year 1971-72submitted by 5[th] defendant for Assessment Year 1971-72 Ex.A.5 dt.12-3-1976 – Photostat copy of Return of Incomesubmitted b 5[th] defendant for Assessment Year 1972-73submitted b 5[th] defendant for Assessment Year 1972-73 Ex.A.6 dt.30-3-1977 – Photostat copy of Assessment order ofIncome Tax Officer, C.Ward, Visakhapatnam.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 148of Income Tax Officer, D.Ward, Visakhapatnam to the 5[th]defendant for Assessment Year 1971-72of Income Tax Officer, D.Ward, Visakhapatnam to the 5[th]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 5[th]defendant for the Assessment Year 1971-72defendant 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 TaxOfficer, A.Ward, Visakhapatnam to the 5[th] defendantOfficer, A.Ward, Visakhapatnam to the 5[th] defendant Ex.A.16 dt.28-2-1985 – Photostat copy of order of AssistantCommissioner of Income Tax, VisakhapatnamCommissioner of Income Tax, Visakhapatnam Ex.A.17 dt.26-12-1970 – Photostat copy of partnership deedbetween P.Raghavarao and 18 othersbetween P.Raghavarao and 18 others Ex.A.18 dt.23-3-1971 – Photostat copy of application for registration ofM/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 registrationof Income Tax Act 1961 for continuation of registration Ex.A.20 dt.28-7-1971 – Photostat copy of return of income ofM/s.Sree Visakha Gowda Association for Assessment Year1971-72M/s.Sree Visakha Gowda Association for Assessment Year1971-72 Ex.A.16 dt.28-2-1985 – Photostat copy of order of AssistantCommissioner of Income Tax, VisakhapatnamCommissioner of Income Tax, Visakhapatnam Ex.A.17 dt.26-12-1970 – Photostat copy of partnership deedbetween P.Raghavarao and 18 othersbetween P.Raghavarao and 18 others Ex.A.18 dt.23-3-1971 – Photostat copy of application for registration ofM/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 registrationof Income Tax Act 1961 for continuation of registration Ex.A.20 dt.28-7-1971 – Photostat copy of return of income ofM/s.Sree Visakha Gowda Association for Assessment Year1971-72M/s.Sree Visakha Gowda Association for Assessment Year1971-72 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 AssessmentYear 1971-72Year 1971-72 Ex.A.23 dt.19-3-1972 – Photostat copy of returns of income for1972-731972-73 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 ofdefendants 1 to 4 to Tax Recovery Officer, Visakhapatnamdefendants 1 to 4 to Tax Recovery Officer, Visakhapatnam Ex.A.27 dt.12-8-1976 – Photostat copy of Income Tax returnssubmitted by 5[th] defendant for 1964-65submitted by 5[th] defendant for 1964-65 Ex.A.28 dt.12-8-1976 – Photostat copy of Income Tax returnsubmitted by 5[th] defendant for 1965-66submitted by 5[th] defendant for 1965-66 Ex.A.29 dt.12-8-1976 – Photostat copy of Income Tax returnssubmitted by 5[th] defendant for 1966-67submitted by 5[th] defendant for 1966-67 Ex.A.30/12-3-1976 – Photostat copy of Income Tax returnssubmitted by 5[th] defendant for 1967-68submitted by 5[th] defendant for 1967-68 Ex.A.31/30-3-1977 – Photostat copy of Assessment order ofIncome Tax Officer, C.Ward, Vizag or Assessment Year 1969-70Income 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 Commissionerof Income Tax, Visakhapatnam for 1972-73of Income Tax, Visakhapatnam for 1972-73 Ex.B.2 dt.31-3-1984 – Photostat copy of Assessment order forAssessment Year 1971-72Assessment Year 1971-72 Ex.B.3 dt.31-3-1984 – Photostat copy of Assessment order forAssessment Year 1972-73 of Income Tax Officer, A.Ward,VisakhapatnamAssessment Year 1972-73 of Income Tax Officer, A.Ward,Visakhapatnam Ex.B.4 dt.19-2-1980 - -do- of Registration Extract of sale deed forRs.400/- executed by G.Venkayyamma in favour of 1[st]defendantRs.400/- executed by G.Venkayyamma in favour of 1[st]defendant Ex.B.5 dt.29-1-1964 - -do- for Rs.1500/- executed by MohammedSaheb in favour of 1[st] defendantSaheb in favour of 1[st] defendant Ex.B.6 dt.24-6-1964 - -do- for Rs.1000/- executed by G.Nagireddiin favour of 1[st] defendantin favour of 1[st] defendant Ex.B.7 dt.28-2-1976 – Photostat copy of Assessment order for1971-721971-72 10. Findings recorded by the trial court in nutshell : The learned Principal Subordinate Judge after referring toseveral decisions ultimately came to the conclusion that in the factsand circumstances of the case the 5[th] defendant was a partner ofM/s.Visakha Gowda Association in his individual capacity investinghis monies and not on behalf of the Hindu Undivided Family though heis a joint family manager and as such only his 1/5[th] share in the jointfamily property alone is liable to be proceeded against for realization ofthe tax. Further it was held that the 4/5[th] share of the undivided sons ofthe 5[th] defendant i.e., defendants 1 to 4, who are is not liable forauction for recovery of the income tax arrears and ultimately came tothe conclusion that the order under challenge does not suffer from anyillegality 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 : 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 PrincipalSubordinate Judge, Visakhapatnam dismissing the suit are tobe confirmed or to be disturbed or set-aside in the facts andcircumstances of the case ?Subordinate Judge, Visakhapatnam dismissing the suit are tobe confirmed or to be disturbed or set-aside in the facts andcircumstances of the case ? (b)If so to what relief the parties would be entitled to ? 12. Point No.1:The 5[th] defendant is the father of the defendants 1 to 4 and the 5[th] defendant joined as partner in M/s.Visakha GowdaAssociation. It is the case of the plaintiff that the 5[th] defendant joinedthe said Association as one of the partners of M/s.Visakha GowdaAssociation representing the Hindu Undivided Family, in short referredto as “HUF" but however specific stand taken by the defendants is thatthe 5[th] defendant joined as a partner in the said Association in hisindividual capacity and not representing the joint family. The learnedJudge after appreciating the evidence available on record referred tothe 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]], RamaKrishna Transport Vs. Income Tax Commissioner[[10]],Shanmukeshwararao Vs. Venkatappaiah and sons[[11]], BenarasBank 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 andothers[[16]]. The learned Judge appreciated in elaboration the oral evidence ofPW-1 and also the oral evidence of DW-1, DW-2, DW-3, DW-4 andDW-5 as well and also recorded further findings in relation todocumentary evidence as well – Exs.A-1 to A-31 and Exs.B-1 to B-8as well and ultimately came to the conclusion that the order underchallenge does not suffer from any illegality whatsoever andaccordingly dismissed the suit. 13. The 5[th] defendant was a partner in M/s.Visakha GowdaAssociation and his sons i.e., defendants 1 to 4 had chosen to contestthe suit with all seriousness. The learned Judge on appreciation of theevidence of PW-1, DW-1, DW-2, DW-3, DW-4 and DW-5 and alsoExs.A-1 to A-31 and Exs.B-1 to B-8, recorded findings in detail andultimately came to the conclusion that the order under challenge doesnot suffer from any illegality and ultimately dismissed the suit. 14. In the decision referred (2) supraat paras 6, 8, 9 and 17, theFull Bench of this Court observed : “Colebrooke’s translation was also accepted by theSupreme 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 todischarge their father’s debts not tainted with immorality orillegality. In Perumal Chetti Vs. Province of Madras, AIR 1952Madras 382 Chief Justice Rajamannar delivering the judgmentof the Division Bench observed : “We have our doubts if that term had a precise and 14. In the decision referred (2) supraat paras 6, 8, 9 and 17, theFull Bench of this Court observed : “Colebrooke’s translation was also accepted by theSupreme 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 todischarge their father’s debts not tainted with immorality orillegality. In Perumal Chetti Vs. Province of Madras, AIR 1952Madras 382 Chief Justice Rajamannar delivering the judgmentof 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 exampleit is an expression as elastic and indefinite as theexpression “reasonable restrictions” in Article 19 of ourConstitution. Colebrooke translated the expression“avyavaharika” as “repugnant to good morals”. Therehave been other translations, like ‘improper’ and ‘notlawful’, usual or customary’. “Vyavahara” is a wordwhich has more than one meaning. But we agree withMr.Venkata Subramania Aiyar that the word hasreference to the ideal of good conduct according to thenotions prevailing at the material time. But we areunable to hold that any debt which the father ought not tohave strictly contracted is necessarily a debt which is‘avyavaharika’. There should be an element of moralturpitude involved in the debt. It is only then that it couldbe called ‘avyavaharika’. Whatever may be the difference in the translations of thisexpression, it is now clear that the expression ‘avyavaharika’has been understood as repugnant to good morals or taintedwith immorality or illegality or involving some morel turpitude. Even if a wider meaning such as ‘improper’ is given there canbe no doubt that the liability in the present case, namely, theliability of the father to pay arrears of income-tax which hadaccrued in respect of the business which he was carrying oncannot be said to be ‘avyavaharika’. In our opinion it isimpossible to argue that the liability to pay taxes legally due tothe Government is an ‘avyavaharika’ debt within the meaningof the texts as interpreted by the judicial decisions, some ofwhich have been referred to above. It is stated that theassessment was made on an estimated income but even sothe tax so levied would still be tax legitimately due at it hasbeen held that even an estimate cannot be arbitrary and mustrest on some rational basis. There would be some scope forargument if a penalty or fine had been levied due to thenegligence or laches of the assessee or due to his non-compliance with any provision of law. As that is not the casehere we express no opinion on that matter. We may also statethat Mr.Rama Rao also did not seriously contend before usthat the said liability would be in the nature of an‘avyavaharika’ debt not binding upon the son. His mainargument however, was that the exemption from liability of the son under the doctrine of pious obligation is not only in respectof an ‘avyavaharika’ debt, but in respect of the various classesof debts, mentioned I the several texts referred to earlier. Hesubmitted that one class of debts which is specificallymentioned in the text of Usanas and the other texts is ‘sulka’. According to the dictionary meaning as well as the meaninggiven by the various recognized translators of the texts fromtime to time, the expression ‘sulka’ would also include a tax. As the smritis expressly state that the son is not liable to paythe ‘sulka’ which remained unpaid by the father it is arguedthat the son is not liable for the arrears of income-tax payableby the father in this case. It is very difficult at this distance oftime to find out what the ‘smriti’ text writers meant by theexpression ‘sulka’. The dictionary meaning as given in Apte’sDictionary is ‘toll, tax, customs duty particularly levied atferries, passes, roads. The other meanings of ‘sulka’ given are‘gain, profit, money advanced to ratify a bargain, purchaseprice of a girl; money given to the parents of a bride; a nuptialpresent; marriage settlement or dowry presents given by thebridegroom to his bride’. In the various translations,sometimes, the expression ‘toll’ is used, sometimes ‘tax’,sometimes ‘duty’. In arriving at the meaning of the expressionused in the texts it is important to bear in mind the context inwhich these passages occurred. As observed already thesetexts refer to the exceptions to the general rule that a son isliable to pay the debts of his father. As pointed by the PrivyCouncil in 70 Ind.App.171 = (AIR 1943 P.C. 142) most of thedebts mentioned in the texts as debts which he need not pay,are of objectionable character, even if some type of taxes orduties were exempt from the doctrine of pious obligation forcertain reasons which appealed to the ancient Smriti textwriters; it is for the court to decide in the context of the presentsociety whether any particular tax liability is of such a natureas could be treated as one tainted with illegality or immoralityor opposed to right conduct as to bring it within the exceptionsto the general rule that the son is liable to pay the father’sdebt. We have no hesitation in holding that the liability to payarrears of income-tax cannot be regarded as one such. On theother hand it appears to us that it is obligatory on the son thathe should pay taxes which are legitimately due to the State byhis father. Even from ancient times till the present day theliability to pay taxes which are legitimately due to the State isregarded as one of the foremost duties of the citizens. We cannot believe that the ancient law givers which laid so muchstress upon the duty of the son the his father’s debt would haveexempted him from payment of the taxes legally due by thefather to the State. It has been repeatedly held that the son isliable to pay the debts of the father incurred during the courseof trade which he had lawfully carried on. It does not stand toreason that while the son is liable to pay the debts of the fatherso incurred, he is not liable to pay the tax due in respect of theprofits of that trade, or debts incurred by the father for thepurpose order the payment of those taxes. In interpreting these‘Smritis’ which were rendered thousands of years ago it is notsafe to merely to take the dictionary meaning and apply it tothe texts. In this connection it has to be remembered that these‘Smritis’ also deal with religious and moral law. According toHindu conception ‘Dharma’ is of widest significance andincludes religious, moral, social and legal duties and can onlybe defined by its contents. The Hindu ‘Dharma sastra’therefore deals with religious and moral law as well as civiland criminal law. It is true that the Smriti writers knew thedistinction between ‘vyavahara’ or the like, the breach of whichresults in judicial proceedings, and the law in the widestsense. But having regard to the fact that all the old texts andcommentaries are appellant to mingle religious and moral lawas well as civil and criminal law. It is true that the Smriti writersknew the distinction between ‘vyavahara’ or the like the breachof which results in judicial proceeding, and the law in thewidest sense. But having regard to the fact that all the old textsand commentaries are appellant to mingle religious and moralconsiderations, not being positive laws, with the rules intendedto be positive laws their Lordships of the Privy Council haverepeatedly emphasized the necessity for caution in theinterpretation of ‘Smritis’, vide Rao Balwant Singh Vs. RaniKishori (1898) 25 Ind.App.54 (P.C.). In Nidavolu Achutan Vs.Ratnajee, AIR 1926 Madras 323, Courts-Trotter, C.J. observedthat the governing provision in the texts is that which excludesfrom the rule debts that are not ‘vyavaharika’ and particularinstances given in the Smritis must be treated as a mereexpression of opinion on the part of the authors as to whatclass 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 tollor a tax. Another meaning of the word ‘sulka’ is a nuptial present, given as the price of a bride. Reference is made toHaradatta’s translation where he assigns the meaning of brideprice to ‘sulka’ and to the fact that this translation is supportedby Sarvajna Narayana in his gloss on the text in Manu. Mayneis the opinion that this stands to reason as a promise of brideprice is not enforceable even according to the moderndecisions and being unapproved marriage neither the liabilityto pay the bride price nor a debt incurred for the purpose ofpaying it can be lawful or proper (vyavaharika). Even if themeaning is not restricted to the last mentioned one, namely,the bride price, we are of the opinion that having regard to thecontext n which it occurs, ‘sulka’ must be confined only to suchliability, though in the nature of tax or a duty, which wouldinvolve some moral turpitude on the part of the father or theincurring of which would be tainted with illegality or immorality. The Bench of the Madras High Court in AIR 1955 Mad.382had to consider whether court-fee payable by the father in alitigation which he carried on comes within the expression‘Danda’ used in the text which as has been noticed is also oneof the specifically enumerated class of debts mentioned in thetext. It was observed that the conception of the court-fee at thepresent day is radically different from ‘Danda’ which wasimposed on the parties to a litigation in the days of ‘Smritis’,and that whatever the theory underlying the court-fee may be, itis clearly not in the nature of punishment. They observed thatthe conception of ‘Dharma’ and Nyaya changes and theliability even under the ‘Smritis’ would have to be judged bythe present day notions and if judged by those notions, it couldnot be said that the liability to pay court-fee was in anywayinconsistent with right conduct. We are of the view that thesame approach should be made in interpreting the expression‘sulka’ in the same texts. …….. .……. For all the reasons above stated we are of the opinion thatGopalakrishnan Nair, J., was right in holding that the arrears ofincome-tax due by the petitioner’s father in respect of separatebusiness prior to partition between him and his son can berecovered from the son after the partition under the doctrine ofpious obligation”. 15.In the decision referred (1) supra, the assessee wascarrying 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 whenthe assessee stated that he was taking the currency notes to Pakistanto enable him to purchase gold in that country with a view to smugglingit into India, the currency notes were confiscated and the Income Taxofficer initiated proceedings under the Income Tax Act 1922 forassessing the assessee’s income and determining the tax liability andfound that out of Rs.65,000/- an amount of Rs.60,500/- constituted theincome of the assessee from undisclosed sources. In the said factsand circumstances on the question whether the loss of Rs.65,000/-arising from confiscation of currency notes was an allowable deductionunder Section 10(1) of the Income Tax Act 1922, the Apex Court heldthat the deduction must be allowed inasmuch as the confiscation of thecurrency notes was a loss occasioned in pursuing the business and itwas a loss in much the same way as if the currency notes had beenstolen or dropped on the way while carrying on the business and itwas further held that it was a loss which arose directly from thecarrying on of the business and is incidental to it. The Apex Courtapplied the view expressed in Badridas Daga Vs. Commissioner ofIncome Tax[[17]]following the decision in Commissioner of Income Tax, Gujarat Vs. S.C. Kothari[[18]]. 16. In the decisionreferred (7) supra where the father carriedon family kulachar of dyeing without any aid of ancestral nucleus andthough the son assisted him in the business, it was held that the saiddyeing business cannot be called family trade and subsequent startingof clothes business is not an extension of the trade. 17. In the decision referred (8) supra it was held that there is nopresumption that a business carried on by a member of a joint family isthe joint family business or is there is any presumption that a businesscarried on by such a member in partnership with a stranger is a jointfamily business and there is no presumption that a business started byeven 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 willbe regarded as part of the old business. 18. In the decision referred (9) supra it was held that where themanger of a Hindu joint family entered into partnership with a stranger,the other members do not ipso facto become partners. 17. In the decision referred (8) supra it was held that there is nopresumption that a business carried on by a member of a joint family isthe joint family business or is there is any presumption that a businesscarried on by such a member in partnership with a stranger is a jointfamily business and there is no presumption that a business started byeven 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 willbe regarded as part of the old business. 18. In the decision referred (9) supra it was held that where themanger 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 wherethe managing member of a joint Hindu family enters into partnershipwith a stranger in relation to a business whose capacity in whole or inpart is derived from the property or funds of the joint family, the familyas a unit or the entire body of the family members do not ipso factobecome partners in that partnership business and partnership will beconfined to the strangers and such of the members of the family whoactually entered into partnership with them and the members of thefamily in their personal or individual capacity can quoad their separateproperty enter into partnership with the kartha of the joint family whorepresents the joint family. 20. In the decision referred (11) supra it was held : “The principles that emerge from a review of the abovedecisions are that the joint family as such cannot become apartner in the partnership firm and the karta or co-parcenerscan become partners of the firm representing the joint family.The partners alone have to be looked into for the purpose ofthe partnership firm or for the transactions with the public. In asituation where a karta or a co-parcener is a partner in thepartnership firm the profits in such a firm belong to the jointfamily and in the event of the assessment under the Income-tax act they are liable to be assessed in the status of the jointfamily. Apart from the other circumstances to get at the factwhere the karta or the co-parcener is a partner representingthe family the crucial consideration is whether the joint familyfunds have been utilised for the purpose of becoming a partnereither by way of capital in the partnership firm or otherwise.” 21. In the decision referred (12) supra it was held that thebusiness started by father as manager of the family cannot be said tobe ancestral so as to render the minors interest in the joint familyproperty liable for the debt incurred for the business. 22. In the decision referred (13) supra it was held that wherethere is no proof that the business was the family business and not anew or independent business of the kartha, the loan taken for suchbusiness could not be said to be for the binding necessities or for thebenefit of the family. 23. In the decision referred (14) supra it was held that whereconsideration for sale transaction proceeded for husband and hissubsequent conduct showing his admission that title to the propertyvested in wife, the purchase by wife cannot be held to be benami forhusband but she is herself the owner of the property and the fact thatthe husband was in possession and management of the property orthat he was receiving the rents does not affect the position inasmuchas in ordinary Hindu families property belonging exclusively to afemale member would also be normally managed by the manager ofthe family. 23. In the decision referred (14) supra it was held that whereconsideration for sale transaction proceeded for husband and hissubsequent conduct showing his admission that title to the propertyvested in wife, the purchase by wife cannot be held to be benami forhusband but she is herself the owner of the property and the fact thatthe husband was in possession and management of the property orthat he was receiving the rents does not affect the position inasmuchas in ordinary Hindu families property belonging exclusively to afemale member would also be normally managed by the manager ofthe family. 24. In the decision referred (15) supra it was held that it is wellestablished that there is no presumption under Hindu law that abusiness standing in the name of any member of the joint family is ajoint family business and unless it could be shown that the business inthe hands of the coparcener grew up with the assistance of the jointfamily property or with joint family funds or with the earnings of thebusiness were blended with joint family estate, the business remainsfree and separate. 25. In the decision referred (16) supra it was held that there isno presumption of doing joint family business merely because thebusiness is in the name of a member of a joint family. 26. There cannot be any quarrel relating to the propositions ofLaw which had been laid down in the decisions referred to supra. ThisCourt had carefully gone through the evidence available on record andalso the findings recorded by the trial Court in elaboration as well. PW-1, the Inspector of Income Tax, deposed that the 5[th] defendantwas a partner in Visakha Gowda Association and that the said Association had fallen in arrears of income tax to a tune of Rs.13lakhs. He further deposed that the 5[th] defendant is the father of thedefendants 1 to 4 and all of them constituted Hindu joint family and the5[th] defendant is the joint family manager. It was further deposed thatthe 5[th] defendant is a partner of the said Visakha Gowda Associationin the capacity of kartha of their Hindu joint family consisting of himselfand defendants 1 to 4 and when the properties were attachedbelonging to their joint family the defendants 1 to 4 filed objectionpetitions stating that the properties no doubt were joint familyproperties but their shares were not liable for attachment on the groundthat the 5[th] defendant joined in the said Association in his individualcapacity and not as kartha of the joint family. The Tax RecoveryOfficer allowed their objection and raised attachment with reference tothe 4/5[th] covering shares of defendants 1 to 4 under the original ofEx.A-1 orders dated 29-4-1980 in O.P.No.136/79-80. He furtherdeposed that Ex.A-2 is the Photostat copy of the written statementdated 20-11-1976 filed by the 5[th] defendant before the Income TaxOfficer, C.Ward showing the various properties inherited by him to hisshare in partition between himself and his brothers and that he has noself acquisitions. Ex.A-3 is the certified copy of the Income Tax returnof receipts and payments filed by 5[th] defendant for the AssessmentYear 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 AssessmentYear 1971-72 and 1972-73 filed by the 5[th] defendant in the status ofHindu Undivided Family which discloses that the family was havingbusiness income. Exs.A-6 to A-8 are similar returns filed by the 5[th]defendant for the Assessment Year 1973-74, 1977-78 and 1978-79along with receipts and payments statements. Exs.A-9 to A-11 are thecertified copies of the notices issued to the 5[th] defendant calling uponhim to submit income tax returns for the Assessment Year 1971-72 andExs.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 5[th] defendant on 10-6-1981 calling upon him togive explanation for investment of Rs.88,800/- in M/s.Visakha GowdaAssociation 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 assessesappeal against the orders of the Income Tax Officer. Ex.A-17 is thecertified copy of the partnership deed dated 26-12-1970 of M/s.VisakhaGowda Association showing the 5[th] defendant as third partner. Ex.A-18 is a copy of Form No.11 for the Assessment Year 1971-72 seekingfor registration of the firm for the Assessment Year 1972-73. Exs.A-20and A-21 are the copies of returns of the firm for the Assessment Years1971-72 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 1972-73of the said M/s.Visakha Gowda Association. Ex.A-25 is the order ofthe relevant dated. Ex.A-26 is a copy of the objection petition filed bythe defendants 1 to 4 before the Tax Recovery Officer and E