SUDHIR AGARWAL, J. - (1.) IN IT Ref. Nos. 23 of 1982 and 47 of 1987, the following two questions of law have been referred to be answered by this Court : "1. Whether on the facts and in the circumstances of the case the Tribunal was correct in law in holding that the business income pertaining to the sales and manufacture of rice and other grains etc. was assessable in the hands of the bigger HUF and not in the hands of the smaller HUF ? 2. Whether on the facts and in the circumstances of the case, Tribunal was correct in law in holding that the business of sale and manufacture of rice and other grains, etc. was carried on by the bigger HUF only as a result of family arrangement and that the Department was not justified in interfering with the same
(2.) IN IT Ref. No. 106 of 1986 though two questions have been referred, the first question is similar to question No. 1 as stated above, the question No. 2 is also based on the aforesaid references but has been coined as under : "2. Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the business of sale and manufacture of rice and other grains, etc. was carried on by the bigger HUF only as a result of family arrangement and that the Department was not justified in interfering with the same specially when the reference applications under s. 256(1) are pending before the Hon'ble High Court for the asst. yrs. 1974 -75 and 1975 -76 on similar issue
(3.) THE facts of the case, as admitted between the parties, are that earlier Sri Chamba Mal, his son, Sri Harjeet Singh, two wives of Sri Harjeet Singh and children of Sri Harjeet Singh constituted HUF. The family was carrying on business in between late Sri Chamba Mal and his son, Sri Harjeet Singh. This partition was accepted by the Income -tax Officer by Sri Harjeet Singh in the status of HUF. For the years 1966 -67 to 1968 -69, the assessments were made in the status of HUF and the assessee was assessed both in respect of income -tax from business and the property income. The assessment for the year 1969 -70 was also made in the status of HUF. The assessee claimed that there was another and his two wives, Smt. Suraj Kumar and Smt. Dharmendra Kaur and three minor sons, Harmendra Singh, Ravindra Singh and Pratap Singh. The CIT(A) held that the correct status of the assessee was that of HUF. Thereafter, for 1971 - 72 and 1972 -73, the business income of assessee was taxed in the status of smaller HUF. In the asst. yr. 1973 -74, the assessee filed return showing income from house property and business income in the status of bigger HUF and contended that as per the family arrangement, the business was carried on by all the members jointly with the help of the assets which belong to the family which were never the subject -matter of partial partition. He also claimed that business was carried on in the status of bigger HUF. This was not accepted by ITO and his view was confirmed by the Asstt. CIT in appeal. However, the Tribunal took a different view and reversed the orders of ITO and CIT(A) directing that the income should be taken as that of bigger HUF and not of smaller HUF. The learned counsel appearing for the Revenue contended that business of smaller HUF cannot be treated to be that of bigger HUF only on the basis of family arrangement and the Tribunal erred in law in directing that the business income of the assessee was to be treated to be that of bigger HUF.;