1986 (2) TMI 121 - AT - Wealth-tax

Summary

Issues:
Status of assessee as HUF or ordinary HUF, Validity of assessment reopening, Requirement of declaration by family members for HUF specified status, Change of opinion for assessment reopening, Validity of assessment reopening reasons, Interpretation of wife's membership in HUF.

Analysis:
The case involved the status of the assessee as Hindu Undivided Family (HUF) or ordinary HUF, validity of assessment reopening, and the requirement of declaration by family members for HUF specified status. The assessee contended that the wife had relinquished her rights in the property and was no longer a member of the joint family, thus the status should be ordinary HUF. The department argued that as no declaration was filed by the wife, the status was correctly taken as HUF (specified) and the assessment reopening was valid.

The Tribunal noted that for an HUF to be considered as HUF (specified), there must be at least one member with taxable income or wealth. The absence of declarations from family members does not automatically warrant HUF (specified) status unless the revenue proves taxable income or wealth. In this case, only the karta had filed a declaration, and the revenue failed to establish taxable income or wealth for other family members. Therefore, the status should be ordinary HUF, not HUF (specified).

Regarding the assessment reopening, the Tribunal found the reasons provided were invalid. The assessment for the subsequent year had already been completed when the reasons for reopening were recorded, indicating a change of opinion rather than new information. The Tribunal concluded that the reassessment orders for the year in question were canceled, and the status for the subsequent year should be ordinary HUF, not HUF (specified).

The contention that the wife relinquishing her rights in the property severed her membership in the HUF was rejected based on a precedent stating that the wife remains a member of the HUF as long as the marital tie exists. Therefore, the appeals were allowed, and the reassessment orders were canceled for the relevant year, with the status determined as ordinary HUF for the subsequent year.