1990 (7) TMI 168 - AT - Wealth-tax

Issues Involved:

1. Determination of the correct status of the estate of Late H.H. Sir Sawai Man Singhji (HUF) for Wealth-tax and Income-tax purposes.
2. Violation of natural justice by not providing an opportunity to the coparceners/members of the HUF to defend their interests.
3. The legality of the Commissioner (Appeals) setting aside the assessments based on the Karta's statement.
4. The department's appeal regarding the status determination of the estate under the Hindu Succession Act, 1956.

Detailed Analysis:

1. Determination of the correct status of the estate of Late H.H. Sir Sawai Man Singhji (HUF):

The primary issue revolves around whether the estate of Late H.H. Sir Sawai Man Singhji should be assessed in the status of an individual or as a Hindu Undivided Family (HUF). The Tribunal had previously decided that the correct status was that of a bigger HUF, and this decision was pending before the Delhi High Court. Despite this, the Commissioner (Appeals) set aside the assessments based on the Karta's statement that the status was individual. The Tribunal emphasized that the status determination should consider the Tribunal's earlier decisions and the absence of any order under sec. 171 of the Income-tax Act and the corresponding section under the Wealth-tax Act. The Tribunal concluded that the matter required a fresh hearing with all concerned parties.

2. Violation of natural justice by not providing an opportunity to the coparceners/members of the HUF to defend their interests:

The Tribunal found that the Commissioner (Appeals) violated the principles of natural justice by not giving the other members of the bigger HUF an opportunity to be heard. The appeals were filed by the bigger HUF through Maharaja Prithvi Raj, a coparcener, as the erstwhile Karta, Lt. Col. Bhawani Singh, had set up a title adverse and hostile to the HUF. The Tribunal highlighted that the family was not properly represented before the Commissioner (Appeals), and the affected members were not heard despite their written request. This lack of hearing rendered the orders violative of natural justice, necessitating a fresh hearing.

3. The legality of the Commissioner (Appeals) setting aside the assessments based on the Karta's statement:

The Tribunal noted that the Commissioner (Appeals) set aside the assessments merely on the statement of the Karta, Lt. Col. Bhawani Singh, who accepted the department's stand that the status was individual. This statement was factually incorrect, as the Tribunal had already decided the status as that of a bigger HUF. The Tribunal emphasized that the value of the Karta's admission needed examination, especially since he was setting up a title adverse to the HUF. The Tribunal concluded that the Commissioner (Appeals) should have considered the Tribunal's earlier decisions and the pending reference before the High Court before setting aside the assessments.

4. The department's appeal regarding the status determination of the estate under the Hindu Succession Act, 1956:

The department contended that the Commissioner (Appeals) erred in not determining the correct status of the estate in light of the Supreme Court decision in Narayan Rao Sham Rao Deshmukh and the provisions of sec. 5(ii) and sec. 6 of the Hindu Succession Act, 1956. The Tribunal acknowledged this contention but noted that the matters were being sent back to the Commissioner (Appeals) for a fresh decision. The department could raise its objections during this fresh hearing.

Conclusion:

The Tribunal set aside the orders of the Commissioner (Appeals) as violative of the principles of natural justice and restored the appeals to his file for a fresh decision. The Commissioner (Appeals) was directed to hear all concerned parties, including the coparceners and members of the family, and decide the matter in light of the Tribunal's earlier decisions and the pending reference before the High Court. The Tribunal also suggested that the Commissioner (Appeals) might keep the matters pending until the High Court answered the reference or the Civil Court decided the partition suit. The appeals were considered partly allowed.

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