1982 (11) TMI 67 - AT - Income Tax

Summary

Issues involved:

1. Jurisdiction.
2. Inclusion of dividend income, interest from banks, and annuity refund.
3. Charging of interest under sections 139(8) and 215 of the Income-tax Act, 1961.

Issue-wise Detailed Analysis:

1. Jurisdiction:

The assessee challenged the jurisdiction of the ITO, central circle VI, Ludhiana, arguing that the assessment was illegal and bad in law since it was reassessed by another ITO after an initial assessment by ITO, Distt. II(4). The Commissioner (Appeals) held that the assessment completed by ITO, Distt. II(4) under section 143(1) was without inherent jurisdiction, making it a nullity. The Tribunal agreed, confirming that the valid order was passed by the ITO, central circle VI, who had the jurisdiction over the assessee as an individual. The assessee's contention was rejected due to lack of supporting authority.

2. Inclusion of Dividend Income, Interest from Banks, and Annuity Refund:

The assessee argued that the income from dividends, bank interest, and annuity refund should be taxed in the status of HUF, not as an individual, due to a partial partition in the family and subsequent birth of a daughter. The ITO and Commissioner (Appeals) rejected this claim, asserting that the birth of a daughter did not create an HUF. The Tribunal, after considering various legal precedents and the facts, found that the assessee, his wife, and his daughter constituted an HUF. The Tribunal relied on several judgments, including those from the Supreme Court and High Courts, which supported the contention that a single male member with female members could form an HUF. Thus, the Tribunal concluded that the income should be taxed in the status of HUF.

3. Charging of Interest under Sections 139(8) and 215:

The assessee contended against the charging of interest under sections 139(8) and 215. The Commissioner (Appeals) held that no appeal lies against the charging of interest under these sections. The Tribunal confirmed this view but noted that if the assessee received relief regarding the exclusion of income from property acquired on partition, the corresponding relief in interest would also be granted.

Conclusion:

The Tribunal partly allowed the appeal, confirming the jurisdiction of the ITO, central circle VI, and recognizing the assessee's status as HUF for the inclusion of dividend income, bank interest, and annuity refund. The charging of interest under sections 139(8) and 215 was upheld, subject to consequential relief based on the Tribunal's findings on the status issue.