Srinivasan, J.
1. In these writ petitions, the validity of section 20A of the Wealth-tax Act, 1957, is challenged. The prayer in these writ petitions is for a declaration that the provisions of the said section are unconstitutional in so far as the petitioners are concerned.
2. Section 20A of the Wealth-tax Act provides that if a partial partition takes place after December 31, 1978, among the members of a Hindu undivided family, which was assessed till then as undivided, such family shall continue to be liable to be assessed under the Act as if no such partial partition had taken place. It is not necessary to go into the other provisions of that section for the purpose of this case. The Explanation to that section reads that for the purposes of the section, partial partition shall have the meaning assigned to it in clause (b) of the Explanation to section 171 of the Income-tax Act.
3. Sub-section (9) of section 171 of the Income-tax Act contains a similar provision for the purpose of the Income-tax Act. Under that sub-section also, if a partial partition takes place after December 31, 1978, among the members of a Hindu undivided family, which was assessed till then as undivided, such family would continue to be liable to be assessed under the Act as if no such partial partition had taken place. Partial partition has been defined in that section, as a partition, which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both.
4. The validity of section 171(9) of the Income-tax Act came up for consideration before a Division Bench of this court in M. V. Valliappan v. ITO : [1988]170ITR238(Mad) . The Bench held that the section cannot be upheld on the ground that it is a measure to counteract the tendency to tax avoidance and, consequently, inasmuch as the income which does not belong to the Hindu undivided family but in fact and in law belongs to a member of the Hindu undivided family, on a partial partition is brought to tax in the hands of the Hindu undivided family, the provision in the section necessarily suffers from legislative incompetence. The section is also held to be void on the ground of violation of article 14 of the Constitution of India, inasmuch as it is vitiated by discrimination and arbitrariness. The Bench said that the section entrenches upon the charging provision in section 4 of the Income-tax Act and purports to bring to charge the income, which does not belong to the Hindu undivided family to be assessed in the hands of the family and, thus, the provision enlarges the scope of sections 4 and 5 of the said Act and is, therefore, invalid. It also said that the section has the effect of fastening a penal liability on the Hindu undivided family when in fact in the case of a partial partition, the liability for concealment of income is that of the member of the Hindu undivided family who earned the income in his own right and not of the Hindu undivided family and the provision of law, which has the effect of fastening such a penal liability in respect of something over which the Hindu undivided family has no control, cannot but be construed as arbitrary. Ultimately, the Bench has said that the effect of the section is that it virtually negatives the right of partition under the personal law only in certain cases of partition after December 31, 1978, and there is no valid basis or justification for treating Hindu undivided families separately in a hostile manner with reference to the date December 31, 1978, the choice of the date being clearly arbitrary.
5. In W. P. No. 1701 of 1983, the petitioner was being assessed to Income-tax and Wealth-tax in the status of a Hindu undivided family. The assessment under the Income-tax Act was originally made on the petitioner in the status of an individual, as admitted by the petitioner himself in the returns of income, and later, on realising the mistake, a petition dated January 1, 1978, in Form No. 6A under section 143(2)(a) of the Income-tax Act, was filed before the respondent with a request to correct his status as a Hindu undivided family for the assessment year 1978-79. On being satisfied about the correctness of the statement so made, the respondent, by order dated December 28, 1978, accepted the status as a Hindu undivided family. During the course of assessment proceedings for the assessment year 1979-80, the petitioner claimed that a partial partition had taken place in the family on January 29, 1979, among the petitioner, his wife and his son, as evidenced by the deed dated February 16, 1979, with reference to certain movable properties and the liabilities as on January 29, 1979, and that the partial partition was evidenced by book entries. The claim of the petitioner was accepted by the respondent by order dated November 20, 1979, under section 171 of the Income-tax Act. For the assessment years 1980-81 and 1981-82, original assessments were completed on October 25, 1980, and November 19, 1981, respectively, accepting the returned income of the family as mentioned above. However, on March 27, 1982, the respondent initiated proceedings under section 147(b) of the Income-tax Act by issuing notices under section 148 of the Income-tax Act for the two assessment years proposing to reassess the income of the partially partitioned properties and called upon the petitioner to file returns within 30 days of the receipt of the notice. The petitioner, however, along with a covering letter dated April 21, 1982, filed returns repeating the figures furnished in the original assessments and stated that the partial partition effected in the family had already been accepted in the original assessments for the said years. The respondent, however, by order dated October 23, 1982, for the assessment years 1980-81 and 1981-82, stated that since section 171(9) of the Income-tax Act was newly introduced in the statute book derecognising the partial partitions effected after December 31, 1978, being held applicable from the assessment years 1980-81 onwards and, revised the assessments under section 147(b) of the Income-tax Act by derecognising the partial partition originally accepted by him. For the assessment years 1980-81 and 1981-82, the original assessments under the Wealth-tax Act were completed on October 25, 1980, and December 31, 1981, respectively, accepting the returned net wealth. Later, notices under section 14(2) of the Wealth-tax Act were issued by the respondent on the ground that the partial partition effected after December 31, 1978, had been derecognised under section 20A of the Wealth-tax Act and that, therefore, the total wealth of the family has to be taken as if no partition had taken place. The petitioner filed the same returns, as originally filed, for the said two assessment years. The respondent, however, determined the net wealth including the whole wealth of the family that were held prior to the partition by order dated October 23, 1982, under section 16(1) read with section 17 of the Wealth-tax Act. Aggrieved thereby, the petitioner has preferred the above writ petition challenging the validity of section 20A of the Wealth-tax Act and for consequential orders.
6. In W. P. No. 6049 of 1983, the petitioner, a member of the Hindu undivided family, was an assessee under the Wealth-tax Act. The family held a deposit of Rs. 66,026 with M/s. V. V. Vennia Perumal and Sons, Virudhunagar. The above deposit was subjected to a partition on March 31, 1979, with each of the male members taking a one-third share. Necessary entries in the books of account were made reflecting the above position and the petitioner, in the return for the year 1979-80, offered his share of the partitioned amount alone for assessment and filed a petition under section 20 of the Act for recognition of the partial partition, evidenced by the deed and entries made in the books of account. The respondent, however, rejected the claim of partial partition by stating that in view of the amendment introduced by way of section 20A of the Wealth-tax Act, the partial partition claimed under the Act will not be accepted. Accordingly, the entire deposit of Rs. 66,026 was included in the assessment of the Hindu undivided family by an order of assessment dated March 29, 1983. Aggrieved thereby, the petitioner has preferred this writ petition for declaring the section as unconstitutional and invalid.
7. We have already found that section 20A of the Wealth-tax Act is identical in terms with section 171(9) of the Income-tax Act. We agree with the reasoning of the Division Bench in the case in M. V. Valliappan v. ITO : [1988]170ITR238(Mad) We prefer to follow the said judgment and we apply the same reasoning in this case and hold that section 20A of the Wealth-tax Act is unconstitutional and invalid. Hence we allow these two writ petitions and direct the respondents to take appropriate proceedings recognising the partial partition effected by the members of the Hindu undivided families in these two cases. The writ petitions are accordingly allowed. The parties will, however, bear their respective costs.
8. Counsel for the respondents orally prays for the grant of leave to appeal to the Supreme Court. He brings to our notice that the Supreme Court has granted leave to appeal against the judgment of the Division Bench in Valliappan's case : [1988]170ITR238(Mad) by order dated April 25, 1988, and has also granted stay of operation of the judgment of this court, vide [1988] 171 ITR 52. In our opinion, the question raised in these two cases is fit to be decided by the Supreme Court and we accordingly issue the certificate under article 133(1) of the Constitution of India.