9911796707
TMI Blog1988 (9) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... relinquished her right of maintenance on the ground that she had adequate wealth for herself and did not want any further. Admittedly, the family of Mr. Ramaswamy was governed by the Southern School of Mitakshara Hindu Law. According to the peculiar customs existing in that School of Law, when there is a partition in a family the wife of the karta is not entitled to a share equal to that of son, since such a right had fallen to disuse since a very long time. For assessment year 1975-76 the wealth-tax return and for assessment year 1976-77 the income-tax returns were filed in the status of individuals. It was represented to us that for assessment on income-tax side for these years except assessment year 1976-77 were completed on regular basis under sec. 143(3) in the status of an individual. However, for assessment year 1976-77 the income-tax assessment was completed on protective basis in the status of individual. 2. For assessment year 1977-78 regular income-tax assessment was completed in the status of HUF. The assessee went in appeal before the Appellate Assistant Commissioner of Income-tax against the said regular assessment. The AAC allowed the assessee's appeal vide his ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on in dealing with the probable intention of the parties in effecting partition with a six year old son and virtually held that it is a part of tax planning scheme. However, the AAC made it clear that it is not his point to challenge the validity of the alleged partition between the karta and the six year old minor son since such partitions are held to be legally not impermissible and he cited the Supreme Court's decision in Apoorva Shantilal Shah v. CIT [1983] 141 ITR 558. He further held that if the returns were filed admitting the status as HUF consisting of Sri B. Ramaswamy and his wife Smt. B. Saroja Devi, that HUF would have suffered higher rate of tax because Mrs. B. Saroja Devi the member of the HUF is having an individual income/wealth attracting tax liability and that would have been assessed as specified HUF attracting higher rate of tax as per sub-para II of the Schedule to Finance Act, 1974. The AAC further held that adopting a device and by filing the return in the status of an individual the assessee managed to pay lesser tax to a considerable extent, but for the alertness of the officers of the revenue, revenue would have suffered enormously. Ultimately he had co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see filed only nil returns. So also on wealth-tax side notices under section 17 dated 4-3-1983 were issued to the assessee. It was submitted that in pursuance of those notices only nil returns were filed on wealth-tax side also. Whether the status was that of HUF or an individual the same wealth was offered for assessment. Because the assessee was under a bona fide impression that on partition whatever he got towards his share is his individual property and from the date of partition there is no joint family existing, even though his wife is living along with him, he thought that he is the sole surviving coparceners and he has got the full right and authority to dispose of any item of property which fell towards his share in the partition without the concurrence or consent of any other person in his family, therefore, he thought his status was that of an individual. The fact that he steadfastly held the same opinion would be proved by the fact that despite issue of notices under sec. 148 of the Income-tax Act and secs. 17 and 18 of the Wealth-tax Act only nil returns were filed by the assessee and it would amply prove the bona fide of his belief. Further, the AAC by his order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Special Tahsildar, Addanki [1988] 1 APIJ 1 (FB), it was held that neither the wife nor the mother gets a share in the joint family property when the joint family was governed by the Madras School of Mitakshara Law. In those circumstances we are of the opinion that the assessee has reasonable cause in entertaining a belief that his correct status is that of an individual and not that of a HUF. In Prem Chand's case decided by the Andhra Pradesh High Court, the parties do not belong to Southern School of Mitakshara Law but they are governed by Benaras School of Hindu Law. We are not for a moment disputing that as long as the marital tie between a man and his wife lasts, whether the wife was given any share or not in the family, she constitutes a member of the family and her husband. However, that is quite different from saying whether there is justifiable reason for belief for the assessee to hold the opinion that his correct status is that of an individual and not that of a HUF. In this connection admittedly the returns in the status of an individual were filed both on income-tax side as well as on wealth-tax side within time except for one assessment year for which a small penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the charge was that he did not file his returns in his true legal status. According to the Gujarat High Court decision cited, we hold that there is sufficient cause for delay in filing the returns. Further, the learned CWT, AP-I while revising the orders for 1978-79 and 1979-80 held as follows : " I direct the Wealth-tax Officer to take the status of the assessee for the two assessment years under consideration as HUF. Further as the assessee's wife Smt. B. Saroja Devi did possess taxable wealth for the two assessment years under consideration, I direct the Wealth-tax Officer to apply the rates of wealth-tax appropriate to a HUF having at least one member who has taxable wealth." Therefore, it is seen that the learned CWT himself did not feel any difficulty to treat the status of the assessee in a different way than the status of the assessee in a different way than the status disclosed in the wealth-tax returns. So, applying the same logic for these seven assessment years also nothing prevented the department to take the correct status and complete the assessments. Therefore, ultimately we find that there was turns and hence it is not a fit case where penalties should be susta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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