Malik, C.J. - (1.) THIS is a reference under Section 66 (1), Income-tax Act read with Section 25, Excess Profits Tax Act. The assessee was a joint Hindu family owning considerable property in Banaras and carrying on business under the name and style of Messrs. Sohan Pathak and Sons. The Sohan Pathak's family tree is as follows : JUDGEMENT_199_ITR19_1951Html1.htm The joint family was carrying on extensive business in Banaras brocade goods and in the year 1943-44 it had made a profit of Rs. 26,802. In 1944-45 upto 16th July 1943, it made a profit of Rs. 64,776 which was well in excess of the amount on which excess profits tax was payable, i. e., RS. 36.000. On 16th July 1943, the adult members of the family are said to have made a partial partition by dividing the Banaras brocade business, the status of the joint family remaining joint and the other property also not being divided. After this division on 16th July 1943, on 17th July 1943, they started two partnership firms under the name and style of (1) Sohan Pathak Girdhar Pathak and (2) G. M. Pathak and Co. The two firms carried on the same business as the joint family was carrying on. The partners in Sohan Pathak Girdhar Pathak were said to be- JUDGEMENT_199_ITR19_1951Html2.htm G. M. Pathak and Co., had as its partners-- JUDGEMENT_199_ITR19_1951Html3.htm It would be seen that all the four branches were equally represented in the two firms each having a share of annas 4. The reason why this partial partition was made on 16th July 1943, according to the assessee, was to safeguard the interest of the minor members, who in case of loss, would not be liable for the losses of the business, being minors; though they would be entitled to the profits thereof, while, if the joint family had continued the business, the entire joint family property would have been liable for the losses. THIS explanation was not accepted by the Excess Profits Tax Officer or by the appellate Tribunal, who held that the main purpose was to avoid payment of excess profits tax. Its would be seen from the facts stated above that in Girdhar's branch, who was dead, there were only two minors and no major member. In Ganesh's branch Gopi Nath and Radhey Mohan were the only two minors. In Mahesh Ram's branch there were no minors. In Shyam Sunder's branch all his three sons were minors, and his fourth son, Krishna Mohan was born after 16th July 1943, and his name was, therefore, not included. No explanation is given why Mahesh Barn's branch took greater responsibility for the losses, if any, than the other two branches of Ganesh and Shyam Sunder, and why Girdhar's branch was so favourably treated as not to be made liable for any losses at all, while each branch was given the same interest of annas 4 in each business.
(2.) ON the finding that the transaction had been entered into with the main purpose of avoiding payment of excess profits tax, the Excess Profits Tax Officer, under Section 10A, held the assessee liable for the profits of the business. It may be mentioned that during the period from 17th July 1943 to 8th October 1943, the rest of the assessment year, the Banaras brocade business made a profit of Rs. 25,983. The Appellate Tribunal came to the conclusion that the Excess Profits Tax Officer was right in taking action under Section 10A. On an application filed by the assessee the following questions have been referred to us for answer : " (1) Whether in view of the fact that the partial partition had been accepted by the Income-tax Officer and the business was treated as having been discontinued for the purpose of assessment under the Income-tax Act, the same business could legally be treated as having continued unbroken in respect of the same chargeable accounting period for the purpose of Section 10A, E. P. T. Act, read with Sections 4 and 5 of the same Act ? (2) Whether in the circumstances of the case, the effect of the partial partition of the Hindu undivided family on 16-3-43 and the formation of two different firms was a transaction within the meaning of Section 10A, E.P.T. Act? (3) Whether on the facts found by the Tribunal as stated in Para. 7 of the statement of case, it was justified to draw the inference that the main purpose behind the partial partition was the avoidance or reduction of liability to excess profits tax ?" We may mention here that we were put to a great deal of trouble by reason of the way the statement of case was drafted, as well as by reason of the fact that the paper book contained nothing more than the statement of case. In Para. 3 reference was made to para. 7 of the statement of case, but para. 7 of the statement of case was as follows : "The tribunal finally held that on the facts of the case, the Excess Profits Tax Officer was right in taking action under Section 10-A of the chargeable accounting period in dispute." We were told that para. 7 was a mistake for para. 4, or para. 7 of the statement of case was a mistake for para. 7 of the order of the Appellate Tribunal. But neither in para 7 of the order of the Appellate Tribunal nor in para 4 of the statement of case are the findings of the Appellate Tribunal summurised on which we are expected to give our answer. This unsatisfactory way of stating a case has always been a source of great inconvenience and we have more than once pointed out that it is not for this Court either to record findings of fact or to collect the findings from the various documents on the Income tax file. The facts found by the Tribunal should be clearly set out in the statement of case so that we may have only to answer the question, whether on those facts the conclusion was or was not possible. Now that the Tribunal has stopped including other papers such as the assessment order, the appellate Orders including the order of the Appellate Tribunal, we have no material from which we can collect the facts even if we wanted to do so. In this case, counsel for the Department provided us with typed copies, but even they were not of much assistance. We looked into the appellate order care-fully and it is only by implication that the Appellate Tribunal can be said to have accepted the findings of the Excess Profits Tax Officer. After having, in para. 3, quoted the grounds on which the Excess Profits Tax Officer had overruled the contention of the assessee and hiving mentioned in para. 6 that counsel for the Department had urged that the onus had been fully discharged and that he had referred to the grounds on which the Excess Profits Tax Officer had invoked the provisions of Section 10-A, the members of the Tribunal in para. 9 say : "On the facts of the cage we hold, therefore, that the Excess Profits Tax Officer was right in taking action under Section 10-A." From that we can only assume that they accepted the grounds which they had set out in para. 3 as the grounds on which the Excess Profits Tax Officer had acted. They do not say so at any place. The portions of their appellate order where they seem to have given any finding, of their own, on questions of fact are to be found partly in para. 7 and partly in para. 8. In paras 7 and 8 they found the following facts : (1) On 16th July 1943, the assets of brocade business were equally divided among four groups of members forming the family. (2) On the next day these four groups formed two partnership concerns for carrying on the same brocade business. (3) This business was to be carried on by capital received from the family. (4) The four branches had equal shares in the profits. (5) If the main purpose of the partial partition of the business was to safeguard the interests of the minors, the family should have divided the shares in earlier chargeable ac-counting periods when a slum had set in and the profits had gone down and not in the chargeable accounting periods when the profits had gone up considerably. The grounds on which the Excess Profits Tax Officer had acted are set oat in para. 4 of the statement of case. Even if we discard the grounds on which the Excess Profits Tax Officer had come to the conclusion that the main purpose was to avoid payment of excess profit tax, it cannot be said that on the facts found by the Appellate Tribunal it was not justified in drawing the inference that the main purpose behind the partial partition was the avoidance or reduction of liability to excess profits tax. This is our reply to question 8.
(3.) AS regards question 1 we have already held in Misc. case no. 12 of 1946, Ganga Sahai Umrao Singh v. Commr. Excess Profits Tax, U.P.C.P. and Berar, decided on 25th April 1950, (A. I. R. (37) 1950 ALL. 595), that the Excess Profits Tax Officer is not bound by the findings arrived at by the Income-tax Officer. The Income-tax Officer had accepted the plea of partial partition by his order dated 24th July 1946, and the claim for relief under Section 25 (3), Income-tax Act on the ground of creation of distinct and separate partnerships on 17th July 1943, for purposes of assessment of Income-tax for the year 1944-45. The two partnerships had been registered by the Income-tax Officer and it was argued on that basis that the Excess Profits Tax Officer having accepted the partial partition and having accepted that the joint family had discontinued business for purposes of assessment under the Income-tax Act, the same business could not legally be treated as having been continued during the same period for purposes of payment of excess profits tax. Per the reasons given by us in our decision quoted above our answer to the question is that the Excess Profits Tax Officer was not bound by the decision of the Income tax Officer and if under Section 10-A, Excess Profits Tax Act he came to the conclusion that the main purpose behind the transaction was avoidance o payment of excess profits tax, he could proceed in accordance with the provisions of that section and make the necessary adjustment.;