R.N. Misra, J. -
(1.) BY order dated November 19, 1973, this court on applications made under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as " the Act '), directed the Appellate Tribunal to state a case and refer the following questions for opinion of the court:
"(1) On the facts and in the circumstances of the case, is Sardar Santokh Singh entitled to claim the status of Hindu undivided family for purposes of assessment ?
(2) In the facts and circumstances of the case, is the claim laid under Section 171(1) of the Act tenable in law ?
(3) Whether, in the facts and circumstances of the case, the claim of registration made to the Income-tax Officer was valid in law and the registration is admissible ? "
(2.) FOR the assessment years 1962-63, 1963-64, 1964-65, 1965-66, 1966-67 and 1967-68, the Income-tax Officer treated the status of Sardar Santokh Singh as individual while he claimed his status to be the karta of a Hindu undivided family. The assessee battered the position in appeals before the Appellate Assistant Commissioner and the Appellate Tribunal. When his claim was rejected, he required the Tribunal to state a case raising the first question indicated above to be referred to this court. When the Tribunal rejected the application, this court was moved in S.J.Cs. Nos. 225 to 230 of 1972 in respect of the aforesaid six years.
In the assessment year 1965-66, the assessee asked for recording a partial partition under Section 171 of the Act. The Income-tax Officer refused the prayer by order dated March 28, 1970, by holding that the assessee being an individual in status, the claim for partition was untenable. The question was battered in appeal before the Appellate Assistant Commissioner as also the Appellate Tribunal and when relief was not granted and the request to refer the case was rejected by the Tribunal, S. J. C. No. 223 of 1972 was filed in this court.
In the assessment years 1965-66 and 1966-67, the registration of a firm by name " Autoways (India) " was claimed by Sardar Santokh Singh and members of his family who claimed to have constituted the firm, but the application under Section 185 of the Act was rejected in both these years. The appeals did not bring any result and when the Tribunal refused to state a case to this court, S. J. Cs. Nos. 222 of 1972 and 224 of 1972 had been filed.
All these reference applications are thus connected. In fact at the stage of preliminary hearing they were dealt with together and the Tribunal has also drawn up a single statement to cover all these cases. Accordingly, we proceed to dispose of all these reference applications by a common order.
Sardar Santokh Singh was a member of a major Hindu undivided family and his father, late Kartar Singh, was its karta. Kartar Singh was an ex-military officer and was living at Patiala where he was assessed to income-tax. For the assessment years 1957-58 to 1960-61, the Income-tax Officer at Cuttack assessed Sardar Santokh Singh to income-tax treating his status to be Hindu undivided family. Sardar Santokh Singh claimed partial partition of the major Hindu undivided family with effect from April 1, 1959. In respect of assessment year 1961-62, he claimed his status to be that of Hindu undivided family (minor) consisting of himself, his wife and four minor sons and was assessed in such status. Subsequently, on receipt of information from the Income-tax Officer, Patiala, the Income-tax Officer of Cuttack reopened the assessments for the years 1957-58 to 1960-61, and came to treat the status of Sardar Santokh Singh as individual.
In respect of the assessment years 1962-63 to 1967-68, Sardar Santokh Singh claimed his status to be Hindu undivided family (minor), but the Income-tax Officer on the basis of the past records relating to assessment years 1957-58 to 1960-61, changed it to that of individual. On the finding that the assessee's status was that of an individual, the claim laid for recording of a partial partition was rejected and the request to register the firm got up after the alleged partition was also thrown out.
Before the revenue, the assessee had two alternative claims, namely, the major Hindu undivided family of which his late father was the karta disrupted with effect from April 1, 1959, and joint family assets came into his hands which were invested in business. Necessarily, the properties which came to Sardar Santokh Singh from the major Hindu undivided family were joint family properties in his hands. Alternatively, assessee's stand was that the separate properties of Sardar Santokh Singh had been put into the common stock and he and his sons formed a smaller Hindu undivided family. Accordingly, the status of the assessee in respect of the assessment years 1962-63 to 1967-68 should have been that of Hindu undivided family and the claim for partial partition should have been accepted as also the claim for registration of the firm should not have been rejected.
Mr.Pasayat, for the assessee, concedes before us that there is no material for a finding that the assets invested in business the income whereof has been assessed during the material years belonged to the larger Hindu undivided family with Kartar Singh as karta and on partition of the said family the said assets came to the hands of Sardar Santokh Singh and his sons. In view of this concession, one of the alternative stands of the assessee must no more be examined.
The other contention is on the basis that the assets had been found to have belonged to Sardar Santokh Singh. He was entitled to put his separate property into common stock of which he and his sons as coparceners could be joint owners. Therefore, his claim for being assessed in the status of Hindu undivided family should not have been rejected.
Learned standing counsel contended that on the concession that the major Hindu undivided family had not partitioned, Sardar Santokh Singh who was a member of the major Hindu undivided family could not in law claim of being a member of another Hindu undivided family. According to learned standing counsel within the fold of a major Hindu undivided family there cannot exist a smaller Hindu undivided family. This contention of learned standing counsel is wholly contrary to law. It is unnecessary to refer to a catena of binding authorities as it would be sufficient if a small passage from a decision of the Supreme Court in the case of Bhagwan Dayal v. Reoti Devi, AIR 1962 SC 287 is quoted. In paragraph 47 of the judgment, it has been said:
"In Mayne's Hindu Law, 11th edition, the legal position has been neatly stated thus at page 347: 'So long as a family remains an undivided family, two or more members of it, whether they be members of different branches or of one and the same branch of the family, can have no legal existence as a separate independent unit; but all the members of a branch, or of a sub-branch, can form a distinct and separate corporate unit within the larger corporate family and hold property as such. Such property will be joint family property of the members of the branch inter se, but will be separate property of that branch in relation to the larger family.
The principle of joint tenancy is unknown to Hindu law except in the case of the joint property of an undivided Hindu family governed by the Mitakshara law.'
The legal position may be stated thus: Corparcenery is a creature of Hindu law and cannot be created by agreement of parties except in the case of reunion. It is a corporate body or a family unit. The law also recognizes a branch of the family as a subordinate corporate body. The said family unit, whether the larger one or the subordinate one, can acquire, hold and dispose of family property subject to the limitations laid down by law. Ordinarily, the manager, or by consent, express or implied of the members of the family, any other member or members, can carry on business or acquire property, subject to the limitations laid down by the said law, for or on behalf of the family. Such business or property would be the business or property of the family. The identity of the members of the family is not completely lost in the family. One or more members of that family can start a business or acquire property without the aid of the joint family property, but such business or acquisition would be his or their acquisition. The business so started or property so acquired can be thrown into the common stock or blended with the. joint family property in which case the said property becomes the estate of the joint family. But the or they need not do so, in which case the said property would be his or their self-acquisition, and succession to such property would be governed not by the law of joint family but only by the law of inheritance. In such a case, if a property was jointly acquired by them, it would not be governed by the law of joint family; for Hindu law does not recognise some of the members of a joint family belonging to different branches, or even to a single branch, as a corporate unit."
The revenue has accepted the position that the assets introduced into the business earnings whereof are assessed as income in the relevant years belonged to Sardar Santokh Singh as his separate property. In Hindu law the position is settled beyond doubt that property which is sell-acquired or separate of a particular member can be voluntarily thrown into the common stock with the intention of abandoning all separate claims upon it. Once a clear intention to waive separate rights is established the property becomes impressed with the character of joint asset. The act by which the coparcener throws his separate property into a common stock is an unilateral act and a matter of individual volition. As soon as he declares his intention to treat his self-acquired property as that of the joint family, the property assumes the character of joint family property (see paragraph 227 of Mulla's Hindu Law).
In the case of Mallesappa Bandeppa Desai v. Desai Mallappa, AIR 1961 SC 1268, 1271 the legal position has been stated thus :
" If it appears that property which is separately acquired has been deliberately and voluntarily thrown by the owner into the joint stock with the clear intention of abandoning his claim on the said property and with the object of assimilating it to the joint family property, then the said property becomes a part of the joint family estate ; in other words, the separate property of a coparcener loses its separate character by reason of the owner's conduct and gets thrown into the common stock of which it becomes a part. This doctrine, therefore, inevitably postulates that the owner of the separate property is a coparcener who has an interest in the coparcenary property and desires to blend his separate property with the coparcenary property. There can be no doubt that the conduct on which a plea of blending is based must clearly and unequivocally show the intention of the owner of the separate property to convert his property into an item of joint family property. A mere intention to benefit the members of the family by allowing them the use of the income coming from the said property may not necessarily be enough to justify an inference of blending; but the basis of the doctrine is the existence of coparcenary and coparcenary property as well as the existence of the separate property of a coparcener."
(3.) IN the case of Goli Eswariah v. Commissioner of Gift-tax,  76 ITR 675, 678 (SC) the legal position was reiterated thus :
" The separate property of a Hindu ceases to be separate property and acquires the characteristics of a joint family or ancestral property not by any physical mixing with his joint family or his ancestral property but by his own volition and intention by his waiving and surrendering his separate rights in it as separate property. The act by which the coparcener throws his separate property in the common stock is a unilateral act. There is no question of either the family rejecting or accepting it. By his individual volition he renounces his individual right in that property and treats it as a property of the family. No longer (perhaps sooner) he declares his intention to treat his self-acquired property as that of the joint family property, the property assumes the character of joint family property. The doctrine of throwing into the common stock is a doctrine peculiar to the Mitakshara school of Hindu law."
No dispute has been raised before us that the assessee would be governed by the Mitakshara school of Hindu law. In Mulla's Hindu Law, at page 45, 14th edition, it has been stated that Hindus living in Punjab are governed by the said school except to the extent customs exclude application of the Mitakshara law. On the admitted position that the assets belonged to Sardar Santokh Singh, he was entitled to put the same into the common stock and for doing so, no other process than expression of a clear and unequivocal intention was sufficient. Mr. Pasayat for the assessee has argued relying upon two decisions that the declaration furnished in the return for these six years constituted unequivocal expression of intention and that would be sufficient to establish blending. In the case of Thakur Hari Singh v. Commissioner of Income-tax, 1967 65 ITR 267 a Bench of the Rajasthan High Court has taken that view. Similarly, in the case of G. Mohan Rao v. G. Salyanavayana,  84 ITR 685 (AP) a Bench of the Andhra Pradesh High Court has accepted the same position in law. By unilateral declaration Sardar Santokh Singh was thus capable of putting his own separate property into a common stock.
In paragraph 5 of the order calling for a statement, this court categorically found:
" .....The alternative advanced by the assessee was not independently examined notwithstanding the fact that in law such an alternative claim could be independently worked out."
On analysing the decisions of the forums below, we would accept the contention of counsel for both parties that this aspect has not been properly examined by the Appellate Tribunal though the question was directly mooted.
Instead of answering the question referred to us, namely, whether on the facts and in the circumstances of the case, Sardar Santokh Singh is entitled to claim the status of Hindu undivided family for the purpose of assessment in these six years, we think it appropriate that the Tribunal should examine the matter as a question of fact on the basis of the legal position indicated by us and come to its own conclusion. . We are aware of our limitations in the advisory jurisdiction, but we come to that conclusion in view of the request made by counsel for the assessee as also for the revenue.
The claim laid under Section 171(1) of the Act has been rejected in view of the finding that the status of Sardar Santokh Singh was that of an. individual. In view of what has been stated above, the only way in which S.J.C. No. 223 of 1972 can be disposed of is by requiring the matter, to be reconsidered by the Appellate Tribunal after the first aspect is finally determined. As the facts and circumstances of the case are not yet known and no finding of fact is reached, whether the claim under Section 171(1) of the Act would be tenable must be left to be determined. Here again counsel for both sides made the same prayer.