JUDGMENT
1. The Income-tax Appellate Tribunal, New Delhi, has referred the following questions of law under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for the opinion of this Court:
1. Whether in the circumstances of the case, the Income-tax Appellate Tribunal was legally correct to hold that if the order of the civil judge clearly spelled out that assessee had only l/5th share in the property then the assessee's share was including it for the purpose of taxation to the extent of 1/5th only ?
2. Whether the Income-tax Appellate Tribunal was legally correct to hold that when co-owners had not challenged the order of the Magistrate, it was not open to the Revenue to question the same while it is a cardinal principle of law that decisions of the civil courts were not binding on the Revenue who was not a party before the civil court ?
2. The present reference relates to the assessment years 1984-85 to 1987-88.
3. Briefly stated the facts giving rise to the present reference are as follows:
The respondent-assessee owns certain land at village Makkarabpur Palhera, Tehsil Sardhana, Meerut, measuring 13 bighas, 5 biswas and 7 biswansi. The said land was agricultural land and was acquired by the Meerut Development Authority, wrongly mentioned as Moradabad Development Authority in the statement of case. Possession was taken on July 9, 1982, and the compensation was paid in the year 1988. The respondent was also awarded interest under Section 34 of the Land Acquisition Act. The assessing authority taxed the interest so received in the assessment years 1983-84 to 1988-89. The respondent had claimed that he had only a 1/5th right in the said agricultural land and in support of his claim he has placed reliance on the order of the 8th Civil Judge, Meerut, dated February 9, 1989. According to the respondent, he had acquired bhoomidari right in the said land after the U.P. Zamindari and Land Reforms Act was made applicable to the concerned area. He had become joint owner of the bhoomidari right as one single unit as a son Shri J.K. Chauhan was born in September, 1947, which was prior to July 1, 1952, the date on which the U.P. Zamindari and Land Reforms Act was made applicable and another son was born on July 1, 1952. A family settlement took place in the year 1978, in which each of the sons of the respondent was given a l/5th share. A declaratory suit was also filed by Sri J. K. Chauhan, which was decreed on February 9, 1989, in which it was held that each one had l/5th share. The Assessing Officer was of the view that the order of the Civil Judge was made in a declaratory suit filed by the son of the respondent, namely, Sri J.K. Chauhan, which did not justify the respondent's interest and of his sons. He was of the view that the land revenue record showed the assessee-respondent as the owner and, therefore, the interest was, accordingly, assessable in the hands of the assessee individual which order has been upheld by the Deputy Commissioner (Appeals). However, in further appeal the Tribunal has upheld the claim of the assessee in the following words:
The rival submissions have been considered. The assessee owned certain agricultural lands situated at village Mukkarabpur Palhera, Tehsil Sardhana, Meerut, measuring 13 bighas, 5 biswas and 7 biswansi. The assessee had acquired bhumidhar rights in the said land after the U.P. Zamindari and Land Reforms Act which made the Act applicable to the area in which the land of the assessee was situated. The eldest son Shri Janmejai Kumar Chauhan was born on September 14, 1947 prior to July 1, 1952, on which date the U.P. Zamindari and Land Reforms Act became as statute. By that process the assessee became entitled to l/5th share and the other sons also acquired l/5th share on the basis of family settlement. The additional compensation including interest for the assessment years 1983-84 to 1988-89 was received on March 25, 1988 vide order dated January 9, 1988 of the Land Acquisition Officer, Meerut. It was on these facts that the Additional Civil Judge, Meerut, vide his order dated February 9, 1989, had decided that the assessee had only 1/5th share. The above said facts are available from the statement of facts as submitted by the assessee. In the absence of the order of the Civil Judge, I have no other alternative but to remand the issue back to the file of the Assessing Officer to consider the same. In case the order clearly spells out that the assessee had only l/5th share in the property then the income from the said property that would be included in the hands of the assessee is also only to the extent of 1/5th. Further, where the co-owners had not challenged the order of the Magistrate, it is not open to the Revenue to question the same. The matter is, accordingly, remitted back for verification and readjudication.
4. We have heard Sri Shambhu Chopra, learned standing counsel for the Revenue. Nobody has appeared for the respondents.
5. Learned standing counsel submitted that the jurisdiction of the civil court is barred under Section 293 of the Income-tax Act, 1961 and, therefore, the decree passed by the civil court was not binding upon the Revenue. He further submitted that as the decree was passed ex parte and without any contest, it has no binding effect. The submission is misconceived. Section 293 of the Act applies in a case where some action or order of the income-tax authority constituted under the Act is being sought to be challenged before the civil court. In the present case, no such action or order of the Income-tax Officer or any of the authority has been challenged in the civil court. Further the dispute of partition inter parties vis-a-vis shares and eligibility/entitlement can more appropriately be adjudicated upon by the civil court and not by the income-tax authorities and, therefore, the decree and the order passed by the civil court is binding between the parries and consequential effect is to be given by the income-tax authority while passing the assessment order. As under the decree of the civil court, each of the parties has been given l/5th share and it is a declaratory suit, the assessee has rightly been held to be taxable in respect of 1/5th share of the interest income. Moreover, it is not correct to say that the decree and order in an uncontested suit is not binding upon the parties. It is well-settled that a decree or order passed in a suit in which the parties do not contest or is passed ex parte is binding upon the parties in the same manner as a decree or order passed after contest unless it is set aside or modified in appeal or revision by a competent court of law.
6. In view of the above discussions, we answer both the questions referred to us in the affirmative, i.e., in favour of the assessee and against the Revenue. However, there shall be no order as to costs.