2012 (12) TMI 165 - HC - Income Tax

Block Assessment - Protective assessment - Assessee being an individual filed return in capacity as Kartha of HUF - AO referred to the order of the assessment relating to 1982-83, rejected the claim that he was owning an extent of 20.88 acres of agricultural lands in the status of HUF AO held that the property were held jointly and not as HUF property holding it as ancestral property - the property was Joint family property, the entire income from the lorries and the lands were assessed at the hands of the assessee in the status as individual. Assessee produce additional evidence in the form of Encumbrance certificate, that possession as belonging to HUF and partition deed dated 24.2.1981 which showed the family partition between the assessee and his brother and also providing maintenance for his father. Held that - The nature of encumbrance therein and cannot spell on the holding of the property and right from 1952, 1980 to 1984 to 2000, the property had not been subjected to any encumbrance. The partition deed allotted an extent of 4.63 acres alone, there are no material to show that the balance extent of 16.25 acres, were, infact, joint family property and not an individual property. In respect of division of family property and not of joint property. It may be noted that the statement that the expression that parties henceforth would have only blood relationship and nothing beyond are found normally only in partition of HUF joint family and not in respect of division of property held jointly. Except to the extent of 4.63 acres of land found as HUF property, the assessment as regards other extent of 16.25 acres in the individual hands is confirmed. In favour of assessee

Summary

Issues:
1. Whether the Tribunal erred in not dismissing the appeal by the Department in limine due to the Revenue not filing an appeal to the Tribunal from the HUF assessment rendered substantive by the first appellate authority?
2. Determination of the nature of property ownership - HUF or individual - for assessment purposes.
3. Validity of the Commissioner of Income Tax (Appeals) treating protective assessment as substantive assessment.
4. Consideration of additional evidence in the form of an encumbrance certificate and a partition deed.

Issue 1:
The case involved an appeal by the assessee against the Income Tax Appellate Tribunal's order for block assessment period 1984-85 and 1985-86. The main question was whether the Tribunal erred in not dismissing the Department's appeal due to the Revenue not filing an appeal against the HUF assessment rendered substantive by the first appellate authority. The Tribunal found that the Revenue's appeal was related to the individual capacity of the assessee and not the HUF, thus holding that the protective assessment treated as substantive assessment was beyond its jurisdiction.

Issue 2:
The assessment related to the individual assessee claiming ownership of agricultural lands at Alamarathupatti Village, Kolathur, as HUF property. The Assessing Officer rejected the claim due to lack of evidence supporting HUF ownership, leading to the assessment of income from lorries and lands at the individual's hands. The Commissioner of Income Tax (Appeals) partially allowed the appeal, concluding that the property was HUF-owned based on available documentation, contradicting the Tribunal's view that the property was individual and not HUF-owned.

Issue 3:
The Commissioner of Income Tax (Appeals) treated the protective assessment as substantive, which was challenged by the Revenue before the Tribunal. The Tribunal held that the Commissioner's decision exceeded jurisdiction as the appeals were focused on individual assessment, not HUF, leading to the reversal of the Commissioner's order.

Issue 4:
During the appeal, the assessee presented additional evidence, including an encumbrance certificate and a partition deed dated 24.2.1981, indicating HUF ownership of the property. The Tribunal considered these documents but rejected the claim, leading to the appeal before the High Court. The High Court analyzed the partition deed and encumbrance certificate, concluding that the property in question was originally joint family property, supporting HUF ownership to the extent of 4.63 acres. However, the remaining 16.25 acres lacked evidence of joint family ownership, leading to confirmation of assessment at the individual's hands.

In conclusion, the High Court rejected the assessee's appeal, confirming the assessment of the property in question as individual-owned, except for the 4.63 acres recognized as HUF property. The Court upheld the Tribunal's decision, emphasizing the importance of evidence in determining property ownership for tax assessment purposes.