Commissioner of Income-tax Vs. Ashok Kumar. - Court Judgment

Excerpt:

.....finding that assessments framed on an individual could not be treated as assessments framed on joint family was a finding of fact. held: the assessments were framed on the assessed for the assessment years 1980-81 and 1981-82 in the hands of joint family on 7-10-1983 and 27-2-1983 respectively. earlier, the assessments were made in the case of individual. the tribunal had held that the assessments made on the individual could not be treated as assessments made on joint family. as the facts found by the tribunal were correct, no question did arise out of the order of the tribunal as a question of law. application: also to current assessment years. income tax act 1961 s.256(2) reference--question of fact--tribunal's finding that assessed not a joint family. ratio: tribunal's finding that assessed not a joint family hitherto assessed to tax was a finding of fact, thereforee, no reference was called for. held: the assessed was never assessed to tax as joint family and the recording by the tribunal of that fact is a pure finding of fact. this finding of fact did not, thereforee, give rise to any question of law and no interpretation of section 171(9) was..........families which have not been assessed as such till the date of the partial partition. the assessed did accept that an assessment had been in fact, made by the wto, jaipur, for the assessment year 1978-79, but the assessment was under the wealth-tax act. according to the assessed, for the purpose of sec. 171(9) assessment should have been made on the assessed as a huf prior to the date of partial partition (20-10-1979) under the income-tax act, 1961. this not having been done the assessed pleaded that the restriction in 171(9) would not apply to it. 5. the ito did not accept the above position. he rejected the assessed claim. the assessed filed an appeal to the aac. it supported its appeal by pointing out that a similar issue had cropped up and been decided by the tribunal in ita no. 3091/82 dated 18-11-82 and in ita nos. 716 to 727/79 dated 27-3-81. but the aac confirmed the order of the ito. he noted that year after year, assessments had been made in respect of the properties held by the assessed family in the name of the individual. this was a mistake. the status ought to have been huf. in the assessment so made year after year. hence, the assessed could not claim that.....

Judgment:

ORDER

Per Dr. S. Narayanan, Vice President (WZ) - The CIT, Agra requires the Tribunal to draw up a Statement of the Case and refer certain questions of law said to arise out of the consolidated order of the Tribunal in ITA Nos 1322, 1591 and 1757/85 dated 31-12-86. In our view, no question of law arises in the matter. We decline to state the case. We record our reasons thereforee below in this consolidated order.

R. A. No 583/87, A. Y. 1981-82

2. The assessed is a HUF. It made a claim for partial partition supported by a Memorandum of Partial Partition, executed on 21-10-1979. The assessed-HUF consisted of the following members :

(1) Smt. Shanti Devi W/o Late Manik Chand (2) Shri Ashok Kumar S/o Late Manik Chand (3) Master Arun} (4) Master Sanjeev Kumar} Minors (5) Master Dinesh Kumar} (6) Master Bharat Bhushan}

3. The assessed family was a partner in the firm of M/s Ladu Mal Kewal Chand, Shamli, Disstt. Muzfarnagar. It effected a partial partition of its capital in the said firm and its right to share in the profits of the firm w.e.f. 20-10-1979. It made a claim before the ITO for recognition of this partial partition under sec. 171.

4. The ITO refused to record a finding of partial partition. According to him, no partial partition could be recognized after 18-6-80 in view of the amendment introduced by way of sec. 171(9) by the Finance Bill 1980. (The Bill was introduced on 18-6-80). The assessed case before the ITO was that sec. 171(9) applied only to such case of joint families which had been assessed as Hindu Undivided Family 'hitherto' but that the provisions did not apply to case of Hindu Undivided Families which have not been assessed as such till the date of the partial partition. The assessed did accept that an assessment had been in fact, made by the WTO, Jaipur, for the assessment year 1978-79, but the assessment was under the Wealth-tax Act. According to the assessed, for the purpose of sec. 171(9) assessment should have been made on the assessed as a HUF prior to the date of partial partition (20-10-1979) under the Income-tax Act, 1961. This not having been done the assessed pleaded that the restriction in 171(9) would not apply to it. 5. The ITO did not accept the above position. He rejected the assessed claim. The assessed filed an appeal to the AAC. it supported its appeal by pointing out that a similar issue had cropped up and been decided by the Tribunal in ITA No. 3091/82 dated 18-11-82 and in ITA Nos. 716 to 727/79 dated 27-3-81. But the AAC confirmed the order of the ITO. He noted that year after year, assessments had been made in respect of the properties held by the assessed family in the name of the individual. This was a mistake. The status ought to have been HUF. In the assessment so made year after year. hence, the assessed could not claim that sec. 171 did not apply to it. The assessed filed and appeal to the Tribunal.

6. The Tribunal accepted the assessed claim and held that the assessed claim for having its partial partition recognized user sec. 171 was genuine and should be allowed. it recorded the following in this regard :

(i) It is fact, which was not in dispute, that until the assessment years 1980-81 and 1981-82, the property and the assets held by M/s Manik Chand & Sons (the assessed - HUF) were being assessed in the hands of Shri Manik Chand, individual. hence all the income which was being earned from the assets of the assessed-HUF were being assessed in the hands of Manik Chand, individual. There was no whisper of these being assessed in the hands of the assessed family.

(ii) The AAC was, thereforee not correct in holding that the assessments of the assessed family had been made year after year [even prior to 18-6-80] in the hands of Manik Chand, individual. He failed to see that the assessments were made in the case of Manik Chand, the individual, and not in Manik Chand & Sons, HUF. The two are different entities. One cannot be mistaken for the other. The assessments made in the case of Manik Chand, the individual, could not be treated or considered as the assessments made on the assessed family M/s Manik Chand & Sons. This was so, notwithstanding the fact that the subject matter of assessment in the case of Manik Chand, individual, rightly pretended to Manik Chand & Sons, HUF. Merely from this circumstance, the revenue cannot claim that the assessed HUF had been assessed.

(iii) In fact, the assessed family had explained why the assessments were made in the above manner in the affidavit of Ashok Kumar dated 20-10-1979 forming part of the record. According to this affidavit, the mistake are so in the following manner :

'That my father, Shri Manik Chand was being assessed to in one tax at Jaipur, on whose sudden death the entire responsibility devolved on me. I met Shri C. P. Chhabra, Advocate of Muzaffarnagar in August 1979 for seeking his guidance and assistance in Income-tax and Wealth-tax matters. After studying the relevant papers, Shri C. P. Chhabra, Advocate, told me that my father had been showing in his individual status the income from the firm, M/s Ladu