1980 (1) TMI 42 - HC - Income Tax

Summary

Issues:
1. Determination of the status of the assessee as Hindu undivided family for assessment years 1962-63 to 1966-67.
2. Whether the property in question, consisting of houses and shops in Jaipur, can be considered part of an impartible estate.

Detailed Analysis:
The High Court of Rajasthan delivered a judgment on Income-tax Reference No. 20/71 and Wealth-tax Reference No. 18/71, consolidated by the Income-tax Appellate Tribunal for assessment years 1962-63 to 1966-67. The central issue revolved around determining the status of the assessee as a Hindu undivided family (HUF). The assessee, a former jagirdar, filed returns as an individual until 1957-58 but claimed HUF status for subsequent years. The Income Tax Officer (ITO) rejected the HUF claim, leading to appeals and ultimately reaching the High Court.

The Commissioner argued that under the Income Tax Act, the holder of an impartible estate is assessed as an individual owner of all properties. The Commissioner contended that the assessee failed to provide evidence of the property's transition to HUF status. Conversely, the assessee's counsel argued that the property should be considered HUF based on continuous HUF returns and the nature of the property in question.

The court examined whether the property, including houses and shops in Jaipur, could be classified as part of an impartible estate. The rules governing State grants indicated that the impartibility pertained to the grant of an interest in land by the ruler, not properties outside the grant. The Tribunal found that the properties were not resumed under land reforms and were ancestral, supporting the conclusion that the property was not impartible.

The assessee's counsel relied on precedents to argue that the continuous filing of HUF returns indicated an intention to treat the property as HUF. The court cited cases where similar conduct was deemed indicative of the property's HUF status. Despite the assessee filing individual returns until 1957-58, the principle of res judicata did not apply in this context.

Ultimately, the court upheld the Tribunal's decision, affirming the assessee's status as an HUF based on the conduct, filing history, and nature of the property. The judgment answered the central question in the affirmative, concluding that the Tribunal was correct in determining the assessee's status as an HUF for the relevant assessment years.