Wealth-tax Officer Vs. Lakhaji Kunverji (Huf) - Court Judgment

Excerpt:
1. the grounds in these appeals are common arising out of the same facts and therefore, they are disposed of by this common order. the department is aggrieved because the aac had directed the wealth-tax officer not to assess the value of certain properties in the hands of the asses see. the assessee at first included that property in its returns but later on revised it filing a nil return. the wealth-tax officer had not considered the revised returns but the aac directed him to do so and reframe the assessments after examining the assessee's claim of partition. the wto did so but rejected the assessee's claim for partition and included the value of that property in the assessee's wealth.2. the property in question is fully rented out chawls. it was owned by the huf of one kunverji sawaji, the father of the karta of the present huf lakhaji sawaji and his brother dhanaji kunwarji. the claim to the partition was that there was a verbal agreement for that partition in 1968 and it was put into writing by declaration dated 4-4-1969. the partition could not be effected by metes and bounds because of the nature of the property. before the wto the assessee filed affidavits of all the coparceners of the huf of the son of the karta of the huf of lakhaji, the assessee before us to the effect that the property has been partitioned. there was an oral agreement to resolve the family disputes and divide the property in five equal shares consisting of the sons of the karta of the present huf and the son of his brother and two widows. the wealth-tax officer had asked for the following details:-- (c) rent receipts and names, and addresses of the persons who collected the rent, and (d) copies/extracts regarding the property as appearing in the municipal records.3. the aac has also noted that before him the valuation of the valuer was filed wherein the five owners have been mentioned. the aac, however, allowed the assessee's claim to partition. the family tree is as follows:---------------------------------------------------------------------------------- lakhaji kunwarji (died 1961) dhanji kunwarji (died 1947) ------------------------------ --------------------------- | ---------------------- ----------- mangiben (died 1977) roshanben | | 4. it is seen that the appellant has supported the fact of the partition of the immovable property by affidavit signed by all the living coparceners. it is also seen that this property had remained undivided from the days of shri kunverji savaji who died many years ago and whose two sons, viz., lakhaji kunverji and dhanji kunverji died in 1971 and 1947 respectively. according to the provisions of hindu succession act, this property could only be treated as belonging to the respective hufs of shri mohanbhai, son of lakhaji kunverji, revchandbhai son of lakhaji kunverji and jawarbhai, son of dhanaji kunwarji. the affidavit is only confirming the legal position regarding the ownership and the survivorship in respect of this property. it is immaterial whether this partition was actually done or not because in absence of such a partition also, this property cannot be said to be owned by anybody else except the huf status of the abovenamed three hufs. the wto is, therefore, directed not to assess the aggregate value of this property in the hands of the huf of shri lakhaji kunverji because his huf so far as this property is concerned automatically ceased to be liable to be assessed after the death of lakhabhai as according to the provisions of the hindu succession act, 1956, the share of branch of lakhaji would go to shri mohanbhai and revchandbhai and the share of the branch of dhanji would go to jawarbhai. the addition made by the wto in respect of the value of this property is deleted in toto.4. before us, the learned departmental representative relied on the supreme court decision in the case of kalloomal tapeswari prasad (huf) v. cyt[1982] 133 itr 690 where it had been held that formal order under section 171(l)of the i.t. act was necessary for giving effect to the partition. he submitted that in this case no order under the wealth-tax ,act had been passed recognising the partition although that partition was claimed to have taken place sometime in 1968. he also submitted, relying on the same case, that even though the property may not admit of physical division such division as was possible was necessary. he also submitted that the property was shown as jointly owned as per the valuer's report dated 24-3-1982 and in the municipal records and so the aac's finding that they belonged to the respective huf of the coparceners was unjustified. the learned d.r. also submitted that the first return showed that there was no partition and the affidavits were merely self-serving statements. according to him, it was for the assessee to prove that partition had in fact taken place for which there was hardly any evidence available. on the other hand, so far as the factual aspect was concerned, the assessee's advocate relied on the aforesaid affidavit and submitted that the affidavit showed that partition had already taken place among the coparceners of the huf before us. he then made certain legal submissions. he submitted that on the death of lakhaji kunverji the 1/2 share of lakhaji kunverji in the huf of kunverji sawaji went out. but we are here dealing with the huf of lakhaji kunverji. therefore, that is not relevant. according to him, in the present case, partition had taken place in the huf of lakhaji kunverji the assessee before us because lakhaji kunverji the karta had died in 1961 which was after the coming into force of the hindu succession act, 1958. as a result of section 6 of the hindu succession act as interpreted by the supreme court in the case of gurupad khandappa magdum v. hirabai khandappa magdum [1981] 129 itr 440 a disruption had taken place in the huf of lakhaji kunverji, the assessee. on the death of the karta lakhaji kunverji, partition took place in the family by reason of the statute and the property belonged to the respective hufs of mohanbhai and devchandbhai, the sons of lakhaji kunverji. he submitted that no order under the wealth-tax act was necessary because the partition was caused by the statute relying upon the case of sreepadam v. cwt [1985] 155 itr 318 (ker.). he relied upon the gujarat high court decision in the case of cwt v. kantilal manilal [1973] 90 itr 289 and submitted that on the death of lakhaji kunverji his interest in the family went out and was divided among his heirs. he also submitted that no income-tax returns have been filed by the huf but the department had not issued any notice under section 148.5. the learned d.r. in rejoinder relied upon the kerala high court decision in the case of cait v. chullikkan parmeswara bhatt [1980] 125 itr 28 to submit that section 6 of the hindu succession act does not operate to bring about an automatic disruption of a huf on the death of any of its members.6. so far as the factual aspect is concerned, we are of the view that the assessee has not been able to support his case for partition. the details asked for by the wealth-tax officer are extremely relevant but the assessee has failed to produce them. all that the assessee has got are affidavits of the coparceners which as called by the d.r. are merely self-serving documents. there is no objective data to prove the partition as per agreement as claimed by the assessee.7. we are therefore, now left with the question of partition effected by reason of section 6 of the hindu succession act. the relevant observations in the supreme court judgment in gurupad's case have been duly explained by the supreme court in the case of state of maharashtra v. narayan rao sham rao deshmukh we have carefully considered the above decision and we feel that this case has to be treated as an authority for the position that when a female member who inherits an interest in the joint family property under section 6 of the act files a suit for partition expressing her willingness to go out of the family, she would be entitled to get both the interest she has inherited and the share which would have been notionally allotted to her as stated in explanation 1 to section 6 of the act. but it cannot be an authority for the proposition that she ceases to be a member of the family on the death of a male member of the family whose interest in the family property devolves on her without her volition to separate herself from the family. a legal fiction should no doubt ordinarily be carried to its logical end to carry out the purposes for which it is enacted but it cannot be carried beyond that. it is no doubt true that the right of a female heir to the interest inherited by her in the family property gets fixed on the death of a male member under section 6 of the act but she cannot be treated as having ceased to be a member of the family without her volition as otherwise it will lead to strange results which could not have been in the contemplation of parliament when it enacted that provision and which might also not be in the interest of such female heirs.the above quotation shows that the court has placed emphasis on the rights of the female heir. at the same time it has emphasised that the female heirs do not cease to be members of the family without their volition. the tenor of this decision therefore is that there is no disruption of the family as such. the kerala high court decision in chullikkan parmeswara's case (supra) on which the learned d.r. has relied also states that the said section 6 does not operate to bring about an automatic disruption of the huf on the death of its member.therefore, the trend of the judicial decisions is in favour of the view that automatic disruption of the assessee-huf did not take place on the death of lakhaji kunverji. regarding the gujarat high court decision in the case of kantilal manila] (supra) it can, at best, be said that the share of lakhaji kunverji in the family property went out on his death and was divided among his heirs. however, that case does not decide that the family was disrupted as a result of the death of one of the heirs. regarding the counsel's submission that notice under section 148 of the i.t. act had not been given although returns had not been filed, in our view, that does not take away the burden on the assessee to prove that partition has taken place as claimed. we, therefore, hold that there is no basis for the assessee's claim to partition.

Judgment:
1. The grounds in these appeals are common arising out of the same facts and therefore, they are disposed of by this common order. The Department is aggrieved because the AAC had directed the Wealth-tax Officer not to assess the value of certain properties in the hands of the asses see. The assessee at first included that property in its returns but later on revised it filing a nil return. The Wealth-tax Officer had not considered the revised returns but the AAC directed him to do so and reframe the assessments after examining the assessee's claim of partition. The WTO did so but rejected the assessee's claim for partition and included the value of that property in the assessee's wealth.

2. The property in question is fully rented out chawls. It was owned by the HUF of one Kunverji Sawaji, the father of the karta of the present HUF Lakhaji Sawaji and his brother Dhanaji Kunwarji. The claim to the partition was that there was a verbal agreement for that partition in 1968 and it was put into writing by declaration dated 4-4-1969. The partition could not be effected by metes and bounds because of the nature of the property. Before the WTO the assessee filed affidavits of all the coparceners of the HUF of the son of the karta of the HUF of Lakhaji, the assessee before us to the effect that the property has been partitioned. There was an oral agreement to resolve the family disputes and divide the property in five equal shares consisting of the sons of the karta of the present HUF and the son of his brother and two widows. The Wealth-tax Officer had asked for the following details:-- (c) Rent receipts and names, and addresses of the persons who collected the rent, and (d) Copies/extracts regarding the property as appearing in the municipal records.

3. The AAC has also noted that before him the valuation of the valuer was filed wherein the five owners have been mentioned. The AAC, however, allowed the assessee's claim to partition. The family tree is as follows:---------------------------------------------------------------------------------- Lakhaji Kunwarji (died 1961) Dhanji Kunwarji (died 1947) ------------------------------ --------------------------- | ---------------------- ----------- Mangiben (died 1977) Roshanben | | 4. It is seen that the appellant has supported the fact of the partition of the immovable property by affidavit signed by all the living coparceners. It is also seen that this property had remained undivided from the days of Shri Kunverji Savaji who died many years ago and whose two sons, viz., Lakhaji Kunverji and Dhanji Kunverji died in 1971 and 1947 respectively. According to the provisions of Hindu Succession Act, this property could only be treated as belonging to the respective HUFs of Shri Mohanbhai, son of Lakhaji Kunverji, Revchandbhai son of Lakhaji Kunverji and Jawarbhai, son of Dhanaji Kunwarji. The affidavit is only confirming the legal position regarding the ownership and the survivorship in respect of this property. It is immaterial whether this partition was actually done or not because in absence of such a partition also, this property cannot be said to be owned by anybody else except the HUF status of the abovenamed three HUFs. The WTO is, therefore, directed not to assess the aggregate value of this property in the hands of the HUF of Shri Lakhaji Kunverji because his HUF so far as this property is concerned automatically ceased to be liable to be assessed after the death of Lakhabhai as according to the provisions of the Hindu Succession Act, 1956, the share of branch of Lakhaji would go to Shri Mohanbhai and Revchandbhai and the share of the branch of Dhanji would go to Jawarbhai. The addition made by the WTO in respect of the value of this property is deleted in toto.

4. Before us, the learned Departmental Representative relied on the Supreme Court decision in the case of Kalloomal Tapeswari Prasad (HUF) v. CYT[1982] 133 ITR 690 where it had been held that formal order Under Section 171(l)of the I.T. Act was necessary for giving effect to the partition. He submitted that in this case no order under the Wealth-tax ,Act had been passed recognising the partition although that partition was claimed to have taken place sometime in 1968. He also submitted, relying on the same case, that even though the property may not admit of physical division such division as was possible was necessary. He also submitted that the property was shown as jointly owned as per the valuer's report dated 24-3-1982 and in the municipal records and so the AAC's finding that they belonged to the respective HUF of the coparceners was unjustified. The learned D.R. also submitted that the first return showed that there was no partition and the affidavits were merely self-serving statements. According to him, it was for the assessee to prove that partition had in fact taken place for which there was hardly any evidence available. On the other hand, so far as the factual aspect was concerned, the assessee's advocate relied on the aforesaid affidavit and submitted that the affidavit showed that partition had already taken place among the coparceners of the HUF before us. He then made certain legal submissions. He submitted that on the death of Lakhaji Kunverji the 1/2 share of Lakhaji Kunverji in the HUF of Kunverji Sawaji went out. But we are here dealing with the HUF of Lakhaji Kunverji. Therefore, that is not relevant. According to him, in the present case, partition had taken place in the HUF of Lakhaji Kunverji the assessee before us because Lakhaji Kunverji the karta had died in 1961 which was after the coming into force of the Hindu Succession Act, 1958. As a result of Section 6 of the Hindu Succession Act as interpreted by the Supreme Court in the case of Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum [1981] 129 ITR 440 a disruption had taken place in the HUF of Lakhaji Kunverji, the assessee. On the death of the karta Lakhaji Kunverji, partition took place in the family by reason of the statute and the property belonged to the respective HUFs of Mohanbhai and Devchandbhai, the sons of Lakhaji Kunverji. He submitted that no order under the Wealth-tax Act was necessary because the partition was caused by the statute relying upon the case of Sreepadam v. CWT [1985] 155 ITR 318 (Ker.). He relied upon the Gujarat High Court decision in the case of CWT v. Kantilal Manilal [1973] 90 ITR 289 and submitted that on the death of Lakhaji Kunverji his interest in the family went out and was divided among his heirs. He also submitted that no income-tax returns have been filed by the HUF but the Department had not issued any notice Under Section 148.

5. The learned D.R. in rejoinder relied upon the Kerala High Court decision in the case of CAIT v. Chullikkan Parmeswara Bhatt [1980] 125 ITR 28 to submit that Section 6 of the Hindu Succession Act does not operate to bring about an automatic disruption of a HUF on the death of any of its members.

6. So far as the factual aspect is concerned, we are of the view that the assessee has not been able to support his case for partition. The details asked for by the Wealth-tax Officer are extremely relevant but the assessee has failed to produce them. All that the assessee has got are affidavits of the coparceners which as called by the D.R. are merely self-serving documents. There is no objective data to prove the partition as per agreement as claimed by the assessee.

7. We are therefore, now left with the question of partition effected by reason of Section 6 of the Hindu Succession Act. The relevant observations in the Supreme Court judgment in Gurupad's case have been duly explained by the Supreme Court in the case of State of Maharashtra v. Narayan Rao Sham Rao Deshmukh We have carefully considered the above decision and we feel that this case has to be treated as an authority for the position that when a female member who inherits an interest in the joint family property under Section 6 of the Act files a suit for partition expressing her willingness to go out of the family, she would be entitled to get both the interest she has inherited and the share which would have been notionally allotted to her as stated in Explanation 1 to Section 6 of the Act. But it cannot be an authority for the proposition that she ceases to be a member of the family on the death of a male member of the family whose interest in the family property devolves on her without her volition to separate herself from the family. A legal fiction should no doubt ordinarily be carried to its logical end to carry out the purposes for which it is enacted but it cannot be carried beyond that. It is no doubt true that the right of a female heir to the interest inherited by her in the family property gets fixed on the death of a male member under Section 6 of the Act but she cannot be treated as having ceased to be a member of the family without her volition as otherwise it will lead to strange results which could not have been in the contemplation of Parliament when it enacted that provision and which might also not be in the interest of such female heirs.

The above quotation shows that the Court has placed emphasis on the rights of the female heir. At the same time it has emphasised that the female heirs do not cease to be members of the family without their volition. The tenor of this decision therefore is that there is no disruption of the family as such. The Kerala High Court decision in Chullikkan Parmeswara's case (supra) on which the learned D.R. has relied also states that the said Section 6 does not operate to bring about an automatic disruption of the HUF on the death of its member.

Therefore, the trend of the judicial decisions is in favour of the view that automatic disruption of the assessee-HUF did not take place on the death of Lakhaji Kunverji. Regarding the Gujarat High Court decision in the case of Kantilal Manila] (supra) it can, at best, be said that the share of Lakhaji Kunverji in the family property went out on his death and was divided among his heirs. However, that case does not decide that the family was disrupted as a result of the death of one of the heirs. Regarding the counsel's submission that notice Under Section 148 of the I.T. Act had not been given although returns had not been filed, in our view, that does not take away the burden on the assessee to prove that partition has taken place as claimed. We, therefore, hold that there is no basis for the assessee's claim to partition.