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TMI Blog1990 (7) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... e entire estate on the basis of rule of primogeniture, which statement is incorrect on facts. The Hon'ble ITAT has already decided that the status of late Maharaja was Karta of HUF and this decision is being followed till date during the pendency of Reference before Delhi High Court. " 2. " On the facts and in the circumstances of the case the impugned order is illegal and without jurisdiction as the same has been passed without giving an opportunity to the Coparceners/members of the HUF in spite of their request on record seeking such an opportunity in order to defend their interest. The order being violative of natural justice is liable to be quashed and appeal restored to the file of the CWT/CIT (Appeals) to be heard de novo after giving an opportunity to the Coparceners and members of the family. " The grounds of appeal taken up by the department for the Wealth-tax assessment year 1983-84 is as follows :---- 1. " On the facts and in the circumstances of the case, the CIT(A) erred in setting aside the assessment and not determining the correct status of the estate of H.H. Maharaja Man Singh keeping in view the decision in the case of Shri Narain Rao Sham Rao Deshmukh [1987 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an insignificant part of the properties of the HUF, keeping in view the size of the HUF assets. The Income-tax assessments from Asst. year 1963-64 onwards were restored to the Income-tax Officer by the CIT (Appeals) in the light of the above mentioned finding of the Appellate Tribunal. For the Asst. years 1961-62 to 1970-71, the CWT (Appeals) following the aforesaid findings of the Appellate Tribunal, held that the proper status of Late Maharaja was HUF in respect of the assets returned in that status. Relying upon the decision of the Supreme Court in the case of Gurupad Khandappa Magdum v. Hirabai Khandappa Magdum [1981] 129 ITR 440, the CWT (Appeals) held in the case of Sir Sawai Man Singhji for the Asst. years 1971-72 to 1976-77 that though the Bigger HUF existed before the death of the Maharaja, it ceased to exist after his death as a notional and statutory partition of the said HUF was to be deemed just before his death. He therefore, annulled the Wealth-tax assessments. Delhi Bench 'A' of the Tribunal vide its order dated 4-4-1986 in WTA Nos. 1740 to 1745/Del/82 204/Del/82 and 1677 to 1682 2000/Del/1982 for Asst. years 1971-72 to 1977-78 had held in the case of Maharaja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bigger or smaller) which were pending before the Inspecting Asstt. Commisisoner declaring Nil income and wealth. So far as the returns in the individual status are concerned the assessee has revised those accordingly so as to include all those properties/income which were previously shown under smaller and bigger HUF. At the Appellate stage the assessee is conceding the ground where it is claimed by him that the property and income thereof belongs to the HUF and not to the individual. " He observed that Reference filed by the department against the Tribunal's decision regarding the correct status of Late Maharaja Sawai Man Singh was pending decision before the Delhi High Court. Further mentioning that since Lt. Col. Bhawani Singh had accepted the department's stand that the entire assets of the late Maharaja devolved upon him in his individual capacity, the learned CWT (Appeals) set aside the assessment completed in the status of bigger HUF with the direction to pass fresh orders after determining the correct status in the light of the provisions of sec. 5(ii) of the Hindu Succession Act, 1957, the rule of primogeniture, and accession agreement as well as the acceptance of depart ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. Shri Parasaran next referred to another decision of the Supreme Court in the case of Kunwar Shri Vir Rajendra Singh v. Union of India AIR 1970 SC 1946 at page 1950 to the effect that the distinction between recognition of Rulership and succession to private properties of the Ruler has to be kept in the forefront. For the same proposition he also referred to the decision of Gujarat High Court in the case of Pratapsinhji N. Desai v. CIT [1983] 139 ITR 77 at p. 90. He also argued that the nature and value of the admission made by the Karta Lt. Col. Bhawani Singh would also have to be examined before deciding the matter of status, particularly when there was already a decision of the Appellate Tribunal and against which reference was pending. In this connection he also pointed out that in the letter dated18-3-1987quoted by the CWT (Appeals) in his order for the Asst. year 1982-83, the erstwhile Karta had set up a title adverse and hostile to the bigger HUF whom he represented and therefore, he could not represent the bigger HUF any longer. In that connection, reliance was placed by him onMaine's Hindu Law 12th Edition at pp. 575 576. He pointed out that Suit No. 870 of 1986 for pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) in these cases. However, in regard to the department's appeal for the Asst. year 1983-84, he reiterated that the Commissioner (Appeals) had erred in law in setting aside the assessment and in not determining the correct status of the estate of Maharaja Sawai Man Singhji, keeping in view the decision in the case of Narayan Rao Sham Rao Deshmukh and the provisions of sec. 5(ii) and sec. 6 of the Hindu Succession Act, 1956. 4. The rival submissions as also the decisions referred to above have been heard and duly considered. It is clear from the department's appeal for the Asst. year 1983-84 as also from the other appeals on behalf of the bigger HUF that both the parties are aggrieved of the order of the Commissioner (Appeals) by which he set aside the matter to the assessing officer. The matter raised before the Commissioner (Appeals) very important points in regard to the determination of the status particularly in view of the fact that the Tribunal had decided for earlier years that the bigger HUF existed and that it had not been disrupted. No doubt the department's Reference against the same may be pending, but so long as the Reference was not answered by the High Court in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs setting up the claim that he is the owner of all the properties and that no HUF existed at all may not be sufficient to convert the HUF properties or the status of HUF into that of individual or vice-versa unless all the members of the family are heard on the subject, as such a stand would amount to the reversal of the entire assessment process in all the previous assessment years as well as of the Appellate orders, which have a binding nature on the parties before it insofar as their rights are concerned vis-a-vis the Income-tax Act. It is also detrimental to the interests of the other coparceners as it would entail in either freeing from or fastening the tax liabilities a new. A matter is thus fraught with dire consequences and therefore, any such claim has to be viewed with great circumspection and decided only after hearing all the concerned parties to the dispute in the light of the settled principles of law. The Commissioner of Income-tax unfortunately has not done this exercise and therefore his orders are liable to be set aside to decide the matter afresh. When the matter goes back to him for reconsideration, he may keep the matters pending till the High Court answers th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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