Oak, C.J. - (1.) THIS is a reference under Section 66 of the Indian Income-tax Act, 1922. The assessee is a Hindu undivided family consisting of six members. Mahadeo Prasad is the karta of the family. Other members of the family are Mahadeo Prasad's major son, Bithai Das, two minor sons, Naunit Priya Das and Ashtbhuji Das, Mahadeo Prasad's wife, Smt. Kastoori Devi, and his widowed mother, Smt. Kastoori Devi. The assessment years are 1956-57, 1957-58 and 1958-59.
(2.) UP to the assessment year 1948-49, the assessee was being assessed as a Hindu undivided family. For the assessment year 1949-50 and subsequent years, the assessee claimed partition in the family. The assessee's case has all along been that there was partition in the family in the year 1948. The family carried on business. Some of the assets of the assessee were in the books of the family. Several items were outside the books. Items in the books of the assessee were divided on June 30, 1948. On July 7, 1948, a partnership firm took over the assets, which had been divided on June 30, 1948. The assets outside the books were also divided on October 30, 1948, and were invested in the partnership firm. The result is that the entire business of the family was taken over by the new firm. According to the assessee, it had no income during the three previous years corresponding to the three assessment years. The assessee's case was not accepted by the Income-tax Officer. He held that formation of the partnership firm on July 7, 1948, was a sham transaction. It was further held that the assets in question continued as assets of the joint Hindu family. Assessment for the three years was, therefore, made on that basis. This view was upheld in appeal by the Appellate Assistant Commissioner and by the Appellate Tribunal. At the instance of the assessee, the Appellate Tribunal has referred the following two questions to this court: "1. Whether the assets of the Hindu undivided family except zamindari and house properties and Government securities of the value of Rs. 18,24,000, about which there is no dispute, could be deemed to have been partitioned on June 30, 1948, and October 10, 1948. 2. If the answer to question No. 1 is in the negative, whether the income from the business set up and assets acquired in the case of individual members of the family after the above dates by utilising the family funds could be assessed in the hands of the Hindu undivided family?"
(3.) IT may be pointed out that the Tribunal accepted the position that the zamindari and house properties and Government securities of the value of Rs. 18,24,000 had been divided among the members of the family before the three relevant assessment years. That is why question No. 1 has been confined to items besides those .three items. In the, statement of the case there is a table giving details of the assets, which were divided in the year 1948. There were five items, of assets in the books, and seven items outside the books. The total value of the assets in the books came to Rs. 3,29,819. After adjusting a pertain liability amounting to Rs. 56,156, the balance was divided among the six members of the family. The share allotted to each member came to Rs. 45,610-7-0. Entries to this effect were made in the books of the family on June 30,1948.;