D.K. Kapur J.
1. The following question has been referred to us under s. 25(1) of the Expenditure-tax Act, 1957, relating to the assessment year 1964-65 and 1965-6 :
'Whether, on the facts and in circumstances of the case, the Tribunal was justified in upholding the action u/s. 16 of the Expenditure tax Act, 1957, as valid in law on the ground that there was failure on the part of the assessed to disclose fully and truly all material facts necessary for its assessment for each of the assessment years 1964-65 and 1965-66 ?'
2. The statement of case reveals that the assessed is an HUF. The assessment for the year 1964-65 was originally completed on February 18, 1965, determining the taxable expenditure to be Rs. 60,731. For the assessment year 1965-66, the original assessment was completed in September 15, 1965, determining the taxable expenditure to be Rs. 53,873. A notice under s. 16 of the Act was issued to the assessed on the ground that there was a failure on the part of the assessed to include certain expenditure incurred out of the assets of the assessed-family which were held in the names of the members of the family. Addition in the year 1964-65 was Rs. 19,266 on account of expenditure incurred by L. Bansi Dhar and Rs. 8,134 incurred by Mrs, Urmila Bansi Dhar. For the year 1965-66, the addition made was Rs. 10,690, Rs. 6,606 and Rs. 253 on account of expenditure incurred out of the assets in the names of L. Bansi Dhar, Mrs. Urmila Bansi Dhar and Master Tilak Kumar, respectively.
3. On appeal, the AAC came to the conclusion that the assets out of which the expenditure had been incurred did not belong to the HUF in the case of all the addition except Rs. 253 incurred by Master Tilak Kumar in the year 1965-66. An objection taken by the assessed regarding the legality of the reassessment proceedings was rejected. Both the parties appealed to the Tribunal for both the years. As regarded the question of legality, the Tribunal came to the conclusion that it was not correct to say that all the information had been filed because a good deal of information came to the knowledge of the Expenditure-tax Officer at a later stage. The substance of the judgment was that the Expenditure-tax Officer as also the ITO were dealing with the case of the assessed-family as well as the individual assessment of L. Bansi Dhar and the information regarding the escarpment came to light when the individual assessment was made.
4. On the merits, the Tribunal held that the inclusion of Rs. 253 as expenditure out of the assets held in the name of Master Tilak Kumar could not be included in the assessment of the family as the income out of which the expenditure was incurred was derived from shares exclusively owned by Master Tilak Kumar. Regarding the remaining items. The Tribunal restored the appeal to the AAC for a fresh consideration of the matter.
5. Before us it has been urged by learned counsel for the petitioner that the matter is virtually concluded by the judgment in L. Bansi Dhar & Sons v. CIT : [1980]123ITR58(Delhi) , in which a Bench of this court has considered the income-tax reference arising out of the income-tax assessment of the assessed-family. We have carefully examined the circumstances of the case, and find that the contention of the learned counsel is sound.
6. The facts and circumstances of the present case are explained in the order of the AAC dated May 3, 1969. It appears from the order that the expenditure as originally shown was increased because certain moneys received on account of an air accident insurance policy which had become payable on the death of Shri Murli Dhar, father of L. Bansi Dhar, in 1949, was treated by the department as being HUF money. It was the case of L. Bansi Dhar that the money received from the insurance company was individually received by the legal representatives and hence the amount was not to the treated as an HUF asset. The department, on the other hand, claimed that it was money received by the HUF and, hence the expenditure was also treated from to said assets as being the expenditure of the assessed-family.
7. The ITO in the assessment proceedings had treated the amount as being an amount received by the HUF and the resultant income from the investment made in M/s. B.R.C.R. Private Ltd., was also treated as income of the HUF. Consequently, the expenditure incurred from that income was treated in reassessment proceedings as being part of the expenditure incurred by the assessed-family. The AAC had on the merits held that this was not an assets of the HUF and, thereforee, the expenditure was also not of the HUF.
8. The Tribunal, however, reached the opposite conclusion. It is obvious that the result of the income-tax proceedings had a direct bearing on the question of expenditure. If the income is of the HUF, then the expenditure out of that income is also of the HUF. If the income is individual income, then the expenditure is also individual expenditure.
9. In deciding the reference, this court held, in L. Bansi Dhar & Sons v. CIT : [1980]123ITR58(Delhi) , that the amount of Rs. 2,49,874 received from the insurance company, M/s. London and Lancashire Insurance Company Ltd., by L. Bansi Dhar was his individual property and consequently the income from the investment of the said amount was also of the same character and was not the property of the HUF. It would follow that the expenditure incurred out of the said income by L. Bansi Dhar would also not be assessable as expenditure incurred by the assessed-family. Similarly, it was held by the Bench that shares acquired in the name of Master Tilak Kumar in M/s. B.R.C.R. Private Ltd., and share acquired in the name of Mrs. Urmila Bansi Dhar in the same company would not be included in the income of the assessed-HUF. It was held that the shares had been purchased by both Master Tilak Kumar and Mrs. Urmila Bansi Dhar in their individual names and were their own property. The income could thus not be included in the income of the HUF.
10. It would, accordingly, follow that the expenditure out to this amount could also not be included in the account of the assessed-family.
11. The question referred to us relates to the legality of the action taken under s. 16 of the Expenditure-tax Act, 1957. The answer to the question depends 'on the facts and circumstances of the case'. If the expenditure was incurred from out of income which was part of the income of the HUF, then the order of the Tribunal would be correct, but if the source of the income was the individual assets of the members of the family, then the Tribunal action would be not justified. As in the income-tax reference it has been held by the court that the income was of the individual members of the family and not the family itself, it must follow that the expenditure from that income was also of the individuals and not of the assessed-family, and hence, the Tribunal's action would not be justified in these altered circumstances. Hence, the question referred to us has to be answered in the negative. As out decision is based on the decision in the other cases, we have the parties to bear their own costs.