RASTOGI, J. - (1.) THIS is a reference under S. 256(1) of the IT Act, 1961 ('the Act'). and at the instance of the assessee the following question of law has been referred by the Tribunal, Delhi Bench D, for the opinion of this Court: "Whether, on the facts and in the circumstances of the case, the Tribunals was right in law in holding that the share income of Sidharatha Prasad and Rahul Prasad, the minor sons of the assessee, from the firm M/s Arvind Cold Storage had been rightly included under S. 64(ii) of the IT Act, 1961 as the income of the assessee."
(2.) THE material facts are these: The assessment year involved is 1972-73, the corresponding accounting period ended 31st March, 1972. The assessee, Sahu Govind Prasad, is an individual. He is a partner of a firm Arvind Cold Storage by name as karta of his HUF. His two minor sons, Sidhartha Prasad and Rahul Prasad, were admitted to the benefits of partnership in this firm. The ITO treated the share of the profit of these minor sons of the firm as income of the assessee and included the same in his total income. Aggrieved, the assessee filed an appeal before the AAC, which failed and then took up the matter in further appeal before the Tribunal, For the asst. yrs. 1967-68 to 1969-70 in the case of the assessee and his brother Madho Prasad, both of whom were partners of this firm representing their respective HUF, and minor sons of both of whom were admitted to the benefits of partnership in this firm, this Court had, agreeing with the Revenue authorities and the Tribunal, taken the view that the share of each of the minors in the profits of the firm was liable to be included in the income of their respective fathers in their individual status under S. 64(1)(ii) of the Act. The decision is reported in Madho Prasad vs. CIT 1976 CTR (All) 334 : (1978) 112 ITR 492 (All). Following that the decision the Tribunal agreed with the Revenue authorities and dismissed the appeal. As stated earlier, at the instance of the assessee the question mentioned above had now been referred to this Court. It was submitted before us on behalf of the assessee by Sri Bharatuji Agrawal that the decision in Madho Prasad's case (supra) requires reconsideration for two reasons.: Firstly, the decision of the Supreme Court in CIT vs. Sodra Devi (1957) 32 ITR 615 (SC) which lays down that the income of a minor child cannot be included in the total income of his mother under S. 16(3)(a)(ii) of the 1922 Act, was not taken notice of and secondly, that the Explanation to sub-s. (1) of S. 64 was also not brought to the notice of their Lordships in that case. The learned standing counsel, on the other hand, urged before us that this Court has already taken a view on this controversy in Madho Prasad's case (supra) and if the assessee was aggrieved against that decision, he could have taken the matter in appeal to the Supreme Court. According to the learned counsel there is no proper reason for reconsideration of that decision and further the decision in Sodra Devis' case (supra) is not applicable because it was rendered under a different Act and also on a different set of facts.
(3.) AFTER a careful consideration of the respective submissions, we find that the decision in Madho Prasad's case (supra) requires reconsideration. We Shall first refer to the relevant provisions of the Act. Sec. 4 of the Act enacts charge of income tax. The scheme of the charging provision of this Act is the same as that of the corresponding provisions of the 1922 Act. Sec. 2(7) contains the definition of the assessee. According to this definition, assessee means 'a person by whom any tax or any other sum of money is payable under this Act' and includes every person in respect of whom any proceedings is taken for the assessment: (a) of his income, (b) of his loss, or (c) of the amount of refund due to him. In other words, this definition covers two categories: firstly, person by whom any tax, penalty or interest is payable under this Act has been actually taken against them or not (sic); and secondly person against whom any of the proceedings specified under this clause had been taken, whether they are or are not liable to any tax, penalty or interest.;