9911796707
TMI Blog1984 (1) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... and his wife agreed to live apart by virtue of a mutual agreement dated 15-11-1974 and they were in fact living apart. Therefore, it was stated that his status should be taken correctly as 'individual' as the HUF ceased to exist from the day the assessee and his wife agreed to live apart. However, the WTO refused to accept the contention put forward by the assessee. According to him, there cannot be any legal separation between the husband and wife except by a decree of the Court. Before completion of assessment on the return filed, the WTO again issued a notice under section 17B of the Wealth-tax Act, 1957 ('the Act') to which the assessee submitted that proceedings initiated under section 17B in pursuance of an audit objection cannot be maintainable in view of the judgment of the Supreme Court in the case of Indian Eastern Newspaper Society v. CIT [1979] 119 ITR 996. According to the WTO, since the assessee himself filed return of wealth in the status of HUF declaring taxable wealth as nil and since the department is of the view that the HUF ceased to exist, the assessment for this year was completed in the status of HUF. 3. Similarly for the assessment year 1978-79, the WTO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pearing for the assessee was that the department did not consider the fact that at the time of original assessment as individual, the assessing authority has recorded his finding in the assessment year 1975-76 that there was a change in the status and this finding cannot be altered due to a mere change of opinion of a successor officer as assessing authority. 7. On the other hand, the learned departmental representative supported the orders passed by the AAC. 8. We have heard the rival submissions made by the parties. The assessee in this case was assessed to wealth-tax till the assessment year 1974-75 in the status of HUF. For the assessment year 1975-76, the assessee filed his return of wealth in the status of HUF wherein the net wealth was declared as nil. According to the assessee, the said HUF ceased to exist from 15-11-1974 inasmuch as the assessee, and his wife who constituted the HUF, by an agreement dated 15-11-1974 agreed to live apart. In the agreement dated 15-11-1974, it was stated as under : " I, Kookati Kousalyamma, Gandhinagar, Nellore, do hereby declare that I have agreed to be legally separated from my husband (Shri Kookati Kodandarami Reddy, sole surviving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndu joint family consists of persons lineally descended from an ancestor and includes their wives and unmarried daughters. The question that arises for consideration in these appeals is whether a division in status can be effected by declaration to become divided or separated from other member or members. Hindu joint family is a creature of law and cannot be created by an act of parties except insofar as that by adoption or marriage a stranger may become a member/coparcener of the joint family. Owning of joint family property is not a sine qua non for the existence of a joint Hindu family. According to the facts appearing in the present case, Smt. Kousalyamma has relinquished all her rights and interest in the joint family property by executing a deed dated 15-11-1974. At the same time it could be seen from the document that all that she relinquished was only her right to maintenance from her husband's family property. Simply because the wife is living separately from her husband, that does not mean that her marital status was put to an end. The fact also remains that she has not relinquished her right to have a share in her husband's property. What was surrendered by her was her r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ye of law. It also remains to be seen that for the assessment year 1975-76, the assessment was finalised in individual capacity at an earlier point of time and the agreement dated 15-11-1974 was brought to the notice of the assessing authority which finalised the assessment of the assessee in the individual status. It was after issue of this notice that the assessee was assessed in the status of an individual. The AAC was of the view that inasmuch as the same assets were subjected to tax which otherwise were included in the hands of the HUF for the assessment year 1975-76 at a later point of time, there was no justification in subjecting the same assets to wealth-tax twice, both in the hands of individual and HUF. Our attention was also drawn to a judgment of the Supreme Court in the case of CIT v. Murlidhar Jhawar Purna Ginning Pressing Factory [1966] 60 ITR 95. In that case it was held that the partners of an unregistered firm might be assessed individually or they might be assessed collectively in the status of an unregistered firm, the ITO could not, however, seek to assess the one income twice--once in the hands of the partners and again in the hands of the unregistered fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hindu undivided family 'hitherto' assessed as undivided, may be assessed separately if an order under section 25A (1) had been passed. When such an order is made, the family ceases to be assessed as a Hindu undivided family. Thereafter, that family cannot be assessed in the status of a Hindu undivided family unless the order is set aside by a competent authority. Under clause (3) of section 25A if no order has been made notwithstanding the severance of the joint family status, the family continues to be liable to be assessed in the status of a HUF, but once an order has been passed, the recognition of severance is granted by the Income-tax Department, and clause (3) of section 25A will have no application. " In the facts of the case, we consider that the ITO was justified in arriving at the conclusion that the correct status of the assessee is HUF. The question of option as assumed by the first appellate authority does not arise as the ITO has no option to assess family income in the hands of individual or vice versa. No doubt, the AAC's approach that it is not open to the ITO to assess the same asset in the hands of both is certainly correct. But the remedy lies in cancelling t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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