1970 (3) TMI 47 - HC - Income Tax

Writ application has been filed, in which the impugned notices issued for reassessment are, attacked as being without jurisdiction inasmuch as the order under section 25A has not been set aside and still stands good for all subsequent years - assessment cannot be reopened under sections 147 and 148 of the Income tax Act, 1961

Summary

Issues:
1. Jurisdiction of taxing authorities to issue notices for reopening assessments while the order under section 25A subsists.

Detailed Analysis:
The judgment involves a case where three sons of a deceased individual constituted a Hindu undivided family governed by the Mitakshara School of Hindu law. A partition was carried out among the sons, and an application under section 25A of the Indian Income-tax Act, 1922, was made to record the partition. The order under section 25A recognized the partition with effect from a specific date. Subsequently, the income-tax department issued notices under section 148 of the Income-tax Act, 1961, for reopening assessments for multiple years. The department's basis for reopening the assessments was a deed of settlement that allegedly indicated the partition was for tax evasion purposes. The core issue was whether the department had jurisdiction to reopen assessments while the order under section 25A recognizing the partition remained valid.

The High Court emphasized the significance of an order under section 25A in recording a partition claimed by members of a Hindu undivided family. The order enables separate assessments of family members in their individual capacities. In this case, the order under section 25A was passed in 1945, recognizing the partition from 1943. The court highlighted that as long as the order under section 25A remains unaltered, any attempt to reopen assessments would lead to conflicting positions. The court noted that allowing assessments to be reopened post a valid partition order would create inconsistency, as the members would be treated both as partitioned and as a Hindu undivided family for different assessment periods.

The judgment cited precedents, including decisions by the Punjab High Court and the Supreme Court, to support the conclusion that assessments cannot be reopened under section 34 of the Income-tax Act when a valid order under section 25A recognizing partition exists. The court reiterated that the law does not permit maintaining conflicting positions regarding the status of the family members based on assessments and recognized partitions. Consequently, the court held that the notices issued under section 148 of the Income-tax Act, 1961, were without jurisdiction as the order under section 25A recognizing partition was still in force. As a result, the court allowed the writ application, quashed the impugned notices, and awarded costs to the applicant.

In summary, the judgment delves into the jurisdictional aspect of taxing authorities to reopen assessments in the presence of a valid order under section 25A recognizing a partition in a Hindu undivided family. It underscores the legal significance of such orders and the necessity to avoid conflicting positions in assessments based on the status of the family members. The decision aligns with established legal principles and precedents, ultimately ruling that the notices for reopening assessments were without jurisdiction due to the subsistence of the partition recognition order under section 25A.