Law:

Section:

Section 4 of Income-tax Act, 1961 - Hindu undivided family - Assessable as - Assessment years 1944-45 and 1947-48 - Assessee - HUF of which 'R' was karta, held shares in managing agency company in which R's brothers also held shares - Managing agency company was managing agents of Lal Mills - Pursuant to report of Investigation Commission of concealment, ITO initiated proceedings under section 34(1A) of Indian Income-tax Act, 1922, and determined assessee's total income - ITO also having found as a fact of Lal Mills having sold cloth to certain parties who were mere nominees of managing agents and families of two brother controlling managing agency company deriving extra profits by said sale, held that half of profits, as determined by him, belonged to assessee-family while other half belonged to branch of R's brother's family - Tribunal confirmed assessment - Whether in view of fact that it was HUF which had purchased shares of Lal Mills and managing agency company and 'R' was merely acting on behalf of HUF when he was managing their affairs, all earnings made by virtue of position which 'R' occupied, must be, therefore, treated as HUF's income - Held, yes - Whether, consequently, contention that there was no nexus between HUF and income earned by 'R' had to be rejected, and profits earned out of transaction of Lal Mills with certain parties were to be assessed in hands of assessee-HUF - Held, yes FACTS The assessee-HUF, consisting of 'R', his wife and his son, held certain shares in a managing agency company R's two brothers and some other relations also held shares in that company. That company was the managing agents of the company called 'Lal Mills'. The Investigation Commission reported concealment of income by the Lal Mills, its managing agent and the families controlling the managing agency Co. and determined the assessee's share for the assessment year 1944-45. The ITO completed the assessee's assessment and determined the total income. The income consisted of certain amount on account of secret transactions in cloth, lessian and yarn and from undisclosed sources. The ITO found as a fact that in the years 1943 and 1944, the Lal Mills had sold cloth to…

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