9911796707
TMI Blog1984 (7) TMI 151X X X X Extracts X X X X X X X X Extracts X X X X ..... quent purported rectification was wrong, as the amendment did not apply for the assessment year 1979-80. The order passed on 30-11-1979, therefore, now stands restored. The learned counsel would, therefore, argue that since the original order stands restored, the partial partition should have been given effect even for later years. It is pointed out that section 171(1) refers to the aggregation of income from partitioned assets only in respect of total partition and not in respect of partial partition. There is no charging section for including the income of assets, which had left the family on a valid partial partition. In respect of converted property which has been blended, there is a clear charge as under section 64 of the Act. There is no such provision with the result that the non-recognition of partial partition or treating an order passed recognising partial partition effected after 31-12-1978 as null and void, cannot have the effect of charging the income from such partially partitioned assets in the hands of the family. It is pointed out that the Andhra Pradesh High Court in CIT v. Dara Seshavataram [1981] 129 ITR 339 had clearly laid down that income from the partially ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Tapeswari Prasad (HUF) v. CIT [1982] 133 ITR 690 and also a number of the other High Courts decisions. In the opinion of the author, the Supreme Court decision did not refer to the Kerala High Court decision in Smt. Sarda Thampatty's case which has dealt with exhaustively as to the scope of legal fiction envisaged under section 171 and that the arguments based upon this and some other decisions of the other High Courts had not been pressed into service by the elders (sic) appearing in the case of Kalloomal Tapeswari Prasad (HUF)'s case. In view of the various other High Courts (apart from the three mentioned in an earlier article) as of the Madras High Court in the case of Seethammal v. CIT [1981] 130 ITR 597 and some other Supreme Court decisions, the legislation does not appear to be effective for the purposes for which it was enacted unless certain further amendments are made to section 171 and/or 155 of the Act. The learned counsel claimed that the decision of the Supreme Court in Kalloomal Tapeswari Prasad (HUF)s case was rendered in the context of a finding by the Supreme Court that there was no partial partition as contended. In fact, the High Court itself had held so, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e recorded under sub-section (3) that such partial partition had taken place and any finding recorded under sub-section (3) to that effect whether before or after the 18th day of June, 1980, being the date of introduction of the Finance (No. 2) Bill, 1980, shall be null and void ; (b) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place ; (c) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition ; (d) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition, " Here is a case where partial partition was made on 24-3-1979, which falls after 31-12-1978. This was recognised by the ITO by an order under section 171 passed on 30-11-1979. This order was validly passed and has also complete effect for the assessment year 1979-80 even as held by us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asoning that one of the articles mentioned earlier described the amendment introduced by the Finance (No. 2) Act, 1980, as having 'missed the fire' following the language of Kanga and Palkhivala in The Law and Practice of Income-tax with reference to the provisions under the 1961 Act, requiring recognition of partial partition, Volume 1, Seventh edn., p. 980. Even as noticed in the various articles relied upon by the learned counsel and the citations, a number of the High Courts took the view in respect of partial partitions. In fact, the Andhra Pradesh High Court in Dara Seshavataram's case has clearly said so. The Supreme Court in the case of Kalloomal Tapeswari Prasad, no doubt, rendered its decision in the context of the facts of a case where a partial partition was considered to be non-recognisable because there was no division by metes and bounds, though it was possible to have such a division. But the decision goes further than that. It did refer to earlier decision of the Supreme Court in Govinddas's case and its still earlier decision in Sir Sundar Singh Majithia v. CIT [1942] 10 ITR 457 (PC). Referring to the latter decision, it said that it was rendered in the context of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n had taken place, the HUF should be deemed for the purposes of the Act to be the owner of the property which is the subject-matter of partition and also the recipient of the income from such property. The assessment should be made as such and the tax assessed can be recovered as provided in the Act. In the circumstances, the decision of the High Court on the second question has to be reversed. We, accordingly, record our answer to the second question in the affirmative and in favour of the department. " The above passage clearly shows that the exclusion, if at all, can be justified only on alienation to a stranger but not to members. It points out clearly that the acceptance of an argument for exclusion of any income in respect of assets which have been partitioned even without a recognition from the ITO would nullify the scheme itself. The purport of the decision is clearly that the exclusion is possible only if there is a recognition of partial partition. In the assessee's case, the recognition once made has become null and void. In other words, the recognition cannot help any assessment even if made as long as it was a case of partial partition after 31-12-1978 because the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em before us in this case', where there was admittedly a partial partition in respect of Rs. 1,50,000 taken out of joint family funds on 29-1-1980 which, unfortunately for the assessee, fell after 31-12-1978. We are in agreement with the majority decision of the said Special Bench decision. We are of the view that after the decision of the Supreme Court in Kalloomal Tapeswari Prasad (HUF)'s case, there is no scope for argument that notwithstanding non-recognition of partial partition, aggregation of the income from such partitioned (partially) assets could not be done. Even if we were to take the observation reproduced earlier as a mere obiter on the ground that the facts of that case were different, such obiter of the Supreme Court is certainly binding on us. Apart from the said decision, we also find that much of the criticism levelled against provisions regarding partial partitions prior to the amendment by the Finance (No. 2) Act, 1980 can no longer be valid for more than one reason. Firstly, section 171(9) is now a self-contained code ; secondly, words 'such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place' in sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of section 154. Authorities were sought to be cited by both sides. We do not think that we have to discuss this matter in any detail. The law is now well established. The mistake, in order that it can be rectified, should be a mistake 'apparent from the record'. Such a mistake may well be a mistake of law also. Overlooking a mandatory provision of law which leaves no option or discretion to the taxing authority, e.g., omission to charge tax, surcharge or interest, is a mistake apparent from the record. These propositions are now well established. No doubt, a debatable question of law or failure to apply the law to a set of facts which remain to be investigated cannot justify the jurisdiction under section 154. Section 154 will certainly not justify a review. A mistake which can be established by a long process of reasoning cannot obviously be a mistake apparent from the record. These again are the principles about which there is and could be no controversy...... " The learned counsel would say that the very fact that the matter was argued at such length by him before us and the further fact that the first appellate authority agreed with him and one of the Members of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
