| SooperKanoon Citation | sooperkanoon.com/64785 |
| Court | Income Tax Appellate Tribunal ITAT Nagpur |
| Decided On | Oct-25-1991 |
| Judge | T Bukte, H Srivastava |
| Reported in | (1992)40ITD136(Nag.) |
| Appellant | Shriram Sitaram Dahiwalkar |
| Respondent | Wealth-tax Officer |
2. In ground No. 1 of the COs., the assessee has challenged the jurisdiction for making assessments by the Wealth-tax Officer and contended that the Hindu undivided family of the assessee was not in existence. Therefore, the assessments made in the status of HUF are bad in law. According to the assessee, the HUF did not subsist as a suit for partition was instituted by one of the family members.
3. In ground No. 4 of the COs., the valuation of plots is disputed and in ground No. 5 thereof it is pleaded to apply the provisions of Section 7(4) of the Wealth-tax Act, 1957, to value the residential house.
4. At the outset we are satisfied to direct the WTO to value the residential house by applying the provisions of Section 7(4) of the W.T. Act. However, if the Dy. CWT(A)'s orders are set aside for not following the mandatory provisions of issuing a notice to the Departmental Valuation Officer and hearing him before passing the order in accordance with the provisions of Section 23(3A)(a) of the W.T. Act, 1957, which is a mandatory provision.
5. Now what has remained to consider is the validity of the assessment made by the Assessing Officer and its sustainability. Before discussing the facts and legal provisions, it would be proper to mention here that WTA No. 133/Nag./90 for the assessment year 1975-76 is filed against the levy of penalty for late filing of the return of wealth under Section 18(1)(a) of the W.T. Act, 1957, and in this appeal also the validity of the assessment made by the WTO in the status of HUF of the assessee is challenged. Therefore, the decision of this appeal depends on the decision of the cross objections.
6. WTA No. 134/Nag./90 is filed for levying the penalty under Section 18(1)(c) of the W.T. Act, 1957, for concealment of wealth. However, in this the validity of the assessment is not challenged but it is pleaded that the initiation of penalty proceedings are bad in law. If the Dy.
CWT(A)'s orders are set aside for passing a fresh order, then the Dy.
CWT(A) would be directed to reconsider this penalty appeal also.
7. Regarding the validity of the assessment, and its sustainability Shri L.S. Dewani the learned counsel for the assessee has argued at length. One Sitaram Mahadeo Dahiwalkar was a Karta of the HUF and he died on 30-9-1965. His widow died on 6-4-1975. The late Sitaram Mahadeo Dahiwalkar and his wife left behind them 4 sons and 6 daughters as their heirs and legal representatives. One of the daughters Smt.
Mandabai wife of Manoharrao Ansurkar gave a notice of her intention claiming the partition of her share from the HUF property of late Sitaram Mahadeo Dahiwalkar. She also filed a civil suit for partition on 17-11-1976 and got an injunction restraining the respondents therein from disposing of the property in any manner whatsoever without a due process of law by order dated 3-1-1979.
8. Shri Dewani's contention is that giving a notice by one of the members of the family and filing a suit for partition amounts to disruption of the status of HUF as well as the properties held by the HUF. Therefore, the WTO would not have made assessments in the status of HUF and after disruption of the status of the HUF and its properties and, therefore, such assessments are not sustainable in law.
9. The Supreme Court has held in the case of WO v. Smt. N.K. Sarada Thampatty [1991] 187 ITR 6% that the ITO was justified in holding that the HUF had not disrupted and that the income derived from the properties for the purposes of assessment continued to be impressed with the character of income of the HUF. According to Shri Dewani this judgment is in respect of the Income-tax Act pertaining to the partial partition, under Section 171 of the Income-tax Act and, therefore, the judgment of the Supreme Court given on the Income-tax Act is not applicable to the assessments made under the Wealth-tax Act. According to Shri Dewani the disruption of the HUF and its properties would not have taken place in the case of Smt. N.K. Sarada Thampatty (supra) under the Income-tax Act but that does not mean that disruption of the status of the HUF and its properties has not taken place under the Wealth-tax Act because there is no such provision in the Wealth-tax Act.
10. We are unable to agree with the proposition and interpretation of the Supreme Court judgment as made by Shri Dewani in the case of Smt.
N.K. Sarada Thampatty (supra) because the meaning of the disruption of the HUF and its properties does not change under the Wealth-tax Act nor any other meaning can be attributed to such disruption of the status of HUF. Under the facts and circumstances when the Supreme Court has held that there was no disruption of HUF under Section 171 of the Income-tax Act and the character of the income of the HUF continued for the purpose of assessment, that does not mean any other meaning can be attributed under the Wealth-tax Act. If the disruption had not taken place under the Income-tax Act then it cannot be said that dismption of the status of the HUF has taken place under the Wealth-tax Act in view of the said judgment.
11. It would not be out of context to mention here the provisions of Sections 19 and 20 of the Wealth-tax Act, 1957, particularly Section 20(2) of the Wealth-tax Act, 1957, which reads as follows :-- 20(2). Where the (Assessing Officer) is not so satisfied, he may, by order, declare that such family shall be deemed for the purposes of this Act to continue to be a Hindu undivided family liable to be assessed as such.
Making the assessments in the status of HUF by WTO gives an implied meaning that he acted under the provisions of Section 20(2) of the Wealth-tax Act, 1957. That means he was not satisfied that there was a disruption of HUF for the purposes of Wealth-tax Act and the HUF continued to be liable to be assessed as such. These two sections throw considerable light on the power of the WTO for making assessments in the status of HUF even without considering the corresponding provisions in the Income-tax Act.
12. As a legal point is involved and, therefore, Shri Dewani continued to cite few more judgments in support of his contention. There cannot be any difference of opinion nor two opinions that a female member of a joint family is also entitled to claim the partition of her share from the joint family properties. There cannot be dispute that she is also entitled for filing a suit for partition. The question is whether by giving a notice and filing a suit the HUF ceases to be HUF for the purposes of making assessment under the Wealth-tax Act as contended by Shri Dewani. We have to see the case law in this respect. Mr. Dewani has cited the judgment of the Calcutta High Court in the case of Bijoy Kumar Burman v. ITO [1972] 84 ITR 71. The Calcutta High Court has held in that case that the disruption of a HUF takes place on the institution of a suit for partition and the joint status comes to an end, and the joint status cannot continue until the actual division or partition is made by metes and bounds. This decision of the Calcutta High Court was also under the Income-tax Act by issuing a notice under Section 148 of the Income-tax Act, 1961. He has filed another decision of the Calcutta High Court in support of the same contention in the case of Kaniram Hazarimal v. CWT [1974] 96 ITR 661 and pointed out relevant observations from page 666. However, the decision of the Supreme Court in the case of Smt. K.N. Sarada Thampatty (supra) has to prevail over the Calcutta High Court decisions.
13. Mr. Dewani also relied on the judgment of the Supreme Court in the case of Mudigowda Gowdappa Sankh v. Ramchandra Revgowda Sankh AIR 1969 SC 1076. That decision was neither under the Income-tax Act nor the Wealth-tax Act.
It is now well established that an agreement between all the coparceners is not essential to the disruption of the joint family status, but a definite and unambiguous indication of intention by one member to separate himself from the family and to enjoy his share in severalty will amount in law to a division of status. It is immaterial in such a case whether the other members assent or not.
Once the decision is unequivocally expressed, and clearly intimated to his co-sharers, the right of the coparcener to obtain and possess the share to which he admittedly is entitled, is unimpeachable.
This case was under the Hindu law. However, the provisions of Income-tax Act were not involved therein to consider the disruption for the purpose of assessment. He has also relied upon another decision of the Madras High Court in the case of Chellammal v. Valliammal AIR 1978 Mad. 21. That case also was for partition under the Hindu law. The Madras High Court has held that a woman would be entitled to enforce a final and absolute partition even though the co-widows or any other sharer may not consent for such a partition. No question of assessing income for the purpose of income-tax was involved in that case. He has also relied on another decision of the Supreme Court in the case of State of Maharashtra v. Narayan Rao Sham Rao Deshmukh AIR 1985 SC 716.
That case was under the Land Ceilings Act. The Supreme Court held that all members together were entitled to one ceiling unit only. Sections 3,4 and 6 of the Hindu Succession Act were also considered with reference to the Maharashtra Agricultural Lands (Ceiling on Holdings) Act. The question of assessment of income was not involved either for the purpose of income-tax or wealth-tax.
14. Shri Dewani has further relied upon the judgment of the Allahabad High Court in the case of Bhagwat Prasad v. CIT [1983] 139 ITR 961. In that case the question involved was after remand whether the assessment was made as a regular under Section 143(3) or an exparte assessment under Section 144 of the Income-tax Act. the question of disrupting a family was not involved in that case. Similarly a judgment of the Supreme Court in the case of Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum [1981] 129 ITR 440 was cited. It is a well known judgment wherein it was held that the widow's share in coparcenary property must be ascertained by adding the share to which she would be entitled at a notional partition immediately before her husband's death and the share which she would get in her husband's interest upon his death. The short point involved was what would be her share before the death of her husband and after the death of her husband, was a question. This does not help this case.
15. We have examined the facts and considered the legal aspect of the matter. We are unable to accept that the judgment of the Supreme Court in the case of Smt. N.K. Sarada Thampatty (supra) being a judgment under the Income-tax Act is not applicable to the assessment made under the Wealth-tax Act. As we have already stated that the disruption of a HUF is a disruption under the Income-tax Act as well as the Wealth-tax Act. If it is not a disruption under the Income-tax Act then it cannot be a disruption under the Wealth-tax Act. Therefore, in our opinion, the assessments made by the WTO and confirmed by the Dy. CWT(A) cannot be said to be invalid, unlawful and non-sustainable. We are satisfied to come to the conclusion that the assessments made are valid, lawful and sustainable.
16. In the result, the assessee fails on the cross objections along with the two appeals, and the orders of the Dy. CWT(A) are set aside and the same are remitted back to him to consider under Section 18(1)(a) and 18(1)(c) of the Wealth-tax Act, 1957, after passing fresh order by giving an opportunity of being heard to the Departmental Valuation Officer in the department's appeals.
17. WTA Nos. 122INag.l90 to 129/Nag./90 : These appeals are filed by the revenue against the common order of the Dy. CWT(A), Akola Range, Akola, dated Nil. However, the point involved therein was the valuation of the properties owned and possessed by the assessee. The Departmental Valuation Officer was asked to make the valuation of the said property and he has furnished his report. It is a mandatory provision under the Wealth-tax Act before passing an order, the Departmental Valuation Officer should be issued a notice and heard regarding the preparation of report of valuation of the properties by him. The Dy. CWT(A) neither issued a notice to the Departmental Valuation Officer nor heard him.
Therefore, it has become necessary to set aside the orders of the Dy.
CWT(A) and to remand the matters to her with a direction to pass fresh orders according to law and on merits after giving an opportunity of being heard to the assessee and by issuing a notice and hearing the Departmental Valuation Officer regarding the valuation of properties made by him, which is a mandatory provision.