1975 (9) TMI 51 - HC - Income Tax

Summary

Issues Involved:

1. Entitlement to claim the status of Hindu undivided family (HUF) for assessment purposes.
2. Tenability of the claim under section 171(1) of the Income-tax Act, 1961.
3. Validity and admissibility of the registration of a firm under section 185 of the Act.

Issue-wise Detailed Analysis:

1. Entitlement to Claim the Status of Hindu Undivided Family (HUF) for Assessment Purposes:

The primary issue was whether Sardar Santokh Singh could claim the status of HUF for the assessment years 1962-63 to 1967-68. Initially, the Income-tax Officer treated his status as an individual, despite his claim of being the karta of an HUF. The assessee argued that the properties he held were joint family properties, either inherited from a major HUF or put into a common stock with his sons, forming a smaller HUF. The court noted that the revenue accepted the assets as Sardar Santokh Singh's separate property. According to Hindu law, separate property can be voluntarily thrown into the common stock, becoming joint family property through a unilateral act of the coparcener. The court cited precedents, including Bhagwan Dayal v. Reoti Devi and Mallesappa Bandeppa Desai v. Desai Mallappa, affirming that such an act converts the property into joint family property. The court concluded that the Tribunal should re-examine whether Sardar Santokh Singh's status could be that of an HUF based on the legal principles discussed.

2. Tenability of the Claim Under Section 171(1) of the Income-tax Act, 1961:

The second issue was whether the claim laid under section 171(1) of the Act was tenable. The Income-tax Officer had rejected the claim for recording a partial partition on the ground that Sardar Santokh Singh was assessed as an individual. The court held that this matter should be reconsidered by the Tribunal after determining the first issue. The court emphasized that the tenability of the claim under section 171(1) depended on the final determination of Sardar Santokh Singh's status as an HUF.

3. Validity and Admissibility of the Registration of a Firm Under Section 185 of the Act:

The third issue involved the registration of the firm "Autoways (India)" for the assessment years 1965-66 and 1966-67. The registration was claimed by Sardar Santokh Singh and his family members, who purportedly constituted the firm. The Income-tax Officer rejected the application, and subsequent appeals were unsuccessful. The court noted that the validity of the firm's registration was interlinked with the other issues, particularly the determination of Sardar Santokh Singh's status as an HUF and the partial partition claim. Therefore, the court directed the Tribunal to decide on this issue after resolving the first two issues.

Conclusion:

The court directed the Tribunal to re-examine all three issues based on the legal principles discussed, emphasizing the need for a factual determination of Sardar Santokh Singh's status and the nature of the properties involved. The court refrained from answering the referred questions directly, instead remanding the matters for reconsideration by the Tribunal.

Separate Judgments:

N. K. Das J. concurred with the judgment delivered by R. N. Misra J., and no separate judgment was provided.