1988 (9) TMI 33 - HC - Income Tax

Summary

Issues:
1. Whether the Tribunal was justified in holding that the liability determined under section 132(5) of the Income-tax Act, 1961, was not an actual tax liability?
2. Whether the Tribunal was right in holding that there was no partition of the joint family?

Analysis:
The case involved a reference under section 256(1) of the Income-tax Act, 1961, where the Income-tax Appellate Tribunal referred questions of law to the High Court for its opinion. The primary issue was whether the Tribunal's decisions regarding tax liability determination and the existence of a partition in the joint family were correct. The assessee claimed a total partition in the family, which was disputed by the tax authorities. The Income-tax Officer, the Appellate Assistant Commissioner, and the Tribunal all rejected the claim of partition. The Tribunal specifically highlighted that no physical division of assets had taken place, and the deed of family settlement presented by the assessee was not registered, affecting the validity of the claim. The High Court considered the facts and circumstances of the case to determine the correctness of the Tribunal's decisions.

Regarding the first question, the High Court affirmed that the liability determined under section 132(5) of the Act was not the actual tax liability, a fact that was not disputed by the assessee. Consequently, the Tribunal was deemed justified in its decision on this matter. Moving on to the second question about the partition of the joint family, the assessee's claim was based on a deed of family settlement. However, the Tribunal found that no physical division of assets occurred, and the deed lacked registration, rendering it ineffective in conveying valid title to the allottees. The High Court concurred with the Tribunal's findings that, based on the facts and circumstances, there was no partition of the joint family. Therefore, the High Court answered both questions in the affirmative, ruling against the assessee. The parties were directed to bear their own costs in the reference.