Dwivedi, J. - (1.) THE Income-tax Appellate Tribunal has referred for the court's opinion this question : ' " Whether on the facts and in the circumstances of the case, the Tribunal was right in cancelling the order of assessment ? "
(2.) LET us give the pertinent facts now. Shri B. P. Tandon, the assessee, filed returns for the assessment years 1958-59 and 1959-60. The returns were filed in the status of individual disclosing his income from all sources. Subsequently, he filed two separate returns. In one return he showed income in the status of an individual. In the other return he showed income as the karta of a Hindu undivided family. In the first return his remuneration for services rendered to Lala Manmohan Das Trust was shown as his personal income ; in the other return income of the Hindu undivided family of which he was the karta was shown. The Income-tax Officer did not pass any order on the return filed by him in the status of a Hindu undivided family. But, he held that the entire income was assessable in his hands in the status of an individual. He filed two appeals before the Appellate Assistant Commissioner. They were dismissed. On a further appeal, the Tribunal held that the income other than the dividends from the shares held by him as a beneficiary and his remuneration for services rendered to Lala Manmohan Das Trust belonged to the Hindu undivided family of which he was the karta and did not belong to him in the status of an individual. After the order of the Tribunal, the Income-tax Officer passed an order on the return submitted by Shri B. P. Tandon in the status of a Hindu undivided family of which he was the karta. The Income-tax Officer was of the view that the said return was pending. Against that order Shri B.P. Tandon filed an appeal before the Appellate Assistant Commissioner. The appeal was dismissed. An appeal was taken to the Tribunal. Following the decision of this court in Raghunath Prasad Tandon v. Commissioner of Income-tax, the Tribunal held that although the return filed by Shri B. P. Tandon in the status of a Hindu undivided family was not " disposed of factually ", it was " virtually disposed of ". On that view the Tribunal further held that the return was not pending and the Income-tax Officer could not make Any assessment on the basis of it. On the application of the Commissioner of Income-tax, the Tribunal referred the question that we have set forth earlier. In the course of hearing the assessee made an application for admitting two documents. They are assessment orders made by the Income-tax Officer for the assessment years 1958-59 and 1959-60. As they are relevant for deciding the question in issue, we have admitted them by a separate order dated April 28, 1972. We will refer to those documents later.
(3.) AT the outset the reference was listed before a Division Bench. It seems that the Division Bench felt some doubt about the correctness of the decision in Raghunath Prasad Tandon v. Commissioner of Income-tax, [1964] 51 I.T.R. 763, 772 (All.); so it has referred the reference to a larger Bench. In Raghunath Prasad Tandon, Shri Justice Desai said : " In the instant case the Income-tax Officer had virtually rejected the return of the assessee and it was not pending when he issued the notices under Section 34(1). So long as a return is pending before the Income-tax Officer he may not say that any income mentioned in it has escaped assessment, but virtual rejection of a return may amount to escape of the income mentioned in it from assessment. The return of the assessee cannot be said to have been pending merely because the Income-tax Officer did not pass a specific order rejecting it. When he assessed all the incomes mentioned in it as the income of the Hindu undivided family and did not assess the assessee at all on it, it meant that he had rejected the return and not kept it pending." The Chief Justice applied the rule of implication to the case before him. On the facts of that case he was of the view that the return should be deemed to have been impliedly disposed of.;