1987 (11) TMI 69 - HC - Income Tax

Summary

Issues:
1. Competency of the Income-tax Officer to allocate and determine tax liability in the hands of members of a Hindu undivided family.
2. Validity of gift deeds made by the karta of the Hindu undivided family and their impact on the partition of family properties.

Analysis:

Issue 1:
The case involved a dispute regarding the competence of the Income-tax Officer to allocate and determine tax liability in the hands of members of a Hindu undivided family. The Appellate Assistant Commissioner had directed a fresh assessment due to a partition in the family, which was not correctly accounted for in the initial assessment. The Income-tax Officer's subsequent order of assessment apportioned the tax liability among the members based on the assets received by each member during the partition. The Appellate Assistant Commissioner initially reversed this apportionment, but the Tribunal later restored it. The court found that the apportionment was based on a recognized partition, and no legal question arose from the Tribunal's order regarding tax liability allocation.

Issue 2:
The second issue revolved around the validity of gift deeds executed by the karta of the family, which were deemed invalid by the Bombay Tribunal in a previous order. The Income-tax Officer, in the assessment order, relied on a subsequent partition that recognized the assets based on the invalid gift deeds. The Tribunal noted that the family itself considered the gift deeds invalid and included them in the partition for distribution. As the tax liability apportionment was based on the partition and not the gift deeds, the court concluded that the question of the gift deeds' validity was of academic interest only. Therefore, the court dismissed the application, finding no merit in challenging the tax liability apportionment based on the recognized partition.

In conclusion, the court upheld the Income-tax Officer's apportionment of tax liability among the members of the Hindu undivided family based on the recognized partition, and deemed the question of the gift deeds' validity to be of no legal consequence in the context of the tax assessment.