1982 (6) TMI 113 - AT - Income Tax

Summary

Issues:
Recognition of partial partition in Hindu Undivided Family (HUF) under section 171 of the Income Tax Act.

Detailed Analysis:

1. Facts and Legal Position:
The appeal concerns the recognition of a partial partition in an HUF. The assessee, headed by Kashi Ram, filed for partial partition claiming division of capital among family members. The ITO refused recognition citing non-inclusion of Babulal's wife in the partition, deeming it against Hindu Law principles. The AAC upheld the ITO's decision, emphasizing the absence of evidence of the wife's consent to the partition. The appeal was then brought before the ITAT Delhi.

2. Arguments by Assessee:
The assessee argued that the partition should be recognized despite the wife not claiming her share. They contended that the partition could still be considered valid as it was partial and did not address the issue of Stridhan or other properties. They relied on a judgment from the Allahabad High Court to support their position that the partition was not void ab initio and that the department lacked the authority to declare it so.

3. Arguments by Revenue:
The revenue representative countered that the lower authorities' decisions were valid, pointing to Mulla's Hindu Law and distinguishing the cited Allahabad High Court judgment. They highlighted the difference in circumstances, emphasizing that a lawful family member was excluded from the partition in this case.

4. Judgment by ITAT Delhi:
The ITAT accepted the assessee's argument, ruling that the partial partition should be recognized. They held that the partition was not void ab initio and could be voidable at the wife's instance. Citing the Allahabad High Court decision, they concluded that the department lacked the authority to declare the partition void. The ITAT set aside the lower authorities' orders and directed the ITO to recognize the partial partition established by the assessee HUF on 19th July 1979.

In conclusion, the ITAT Delhi allowed the appeal, emphasizing that the partial partition should be acknowledged despite the absence of Babulal's wife in the division of capital. The judgment underscored the distinction between void ab initio and voidable partitions, asserting that the department had no standing to declare the partition void.