9911796707
TMI Blog1986 (7) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... individual status of Shri S.V. Anandmohan for the assessment year 1980-81 which assessment also was completed was Rs. 16,570. After the original assessments were thus completed the ITO reopened the assessment by giving notice under section 148/147(a) of the Income-tax Act, 1961 ('the Act') alleging that there was omission or failure on the part of the assessee to make a return or that the assessee failed to disclose fully and truly all material facts necessary for completing the assessment for 1980-81. The assessee-HUF filed a letter dated 27-6-1983 stating that the original return which he had filed may be treated as returns filed in the reopening proceedings. The assessee filed an agreement on a plain paper executed on 31-3-1979 between Shri S.V. Anandmohan, his wife and two unmarried daughters. Photostat copy of the agreement on two stamp papers of a total worth of Rs. 5 was filed before us in a paper compilation. In the recitals of the agreement it is stated that Shri S.V. Anandmohan, karta, his wife Vijayalaxmi and his daughter Sridevi who were members of HUF were having 60 per cent shares in Segu Venkata Narayana Setty Co. till 31-3-1979. Due to risks involved in the busin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nandmohan as a protective basis. However, for the assessment year 1982-83 an amount of Rs. 15,654 and for assessment year 1983-84 an amount of Rs. 23,608 were added in the hands of the assessee-HUF as income derived from the impugned company and the assessments were completed for 1982-83 and 1983-84 respectively. 6. Aggrieved against the reassessment for 1980-81 and the regular assessments for 1981-82 to 1983-84 the assessee came up in appeal before the AAC. The AAC considered the appeal for the assessment year 1980-81 and disposed it of by giving elaborate reasons. He had adopted the same order while disposing of the appeals pertaining to 1981-82 to 1983-84 also. The AAC found that he had found from the records that the wife and two daughters have gifted their share in the capital lying with the impugned company to Shri S.V. Anandmohan with effect from 1-4-1979. He further found that Shri S.V. Anandmohan became a partner of the firm in his individual capacity with effect from 1-4-1979. He also further found that the capital of the HUF stands in the name of Shri S.V. Anandmohan in his individual capacity but the HUF ceased to be a partner in the partnership firm. Ultimately he he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 493 (SC). (2) But where the property was not owned by a HUF before it came to be owned by a sole surviving coparcener living with female members of the family entitled to maintenance, the assessment has to be made as individual. The reason is that before it got converted as joint family property it was not owned by coparceners of a HUF. After conversion too the assessment remains so till a son is born. Such a conversion as joint family property occurred for the first time in the hands of the sole surviving coparcener by reason of the gift by the father in Kalyanji's case [1937] 5 ITR 90 (PC) and by reason of the sole coparcener throwing his separate property into family hotchpot in Chhabda's case [1975] 101 ITR 776 (SC). The property would have to be assessed as individual even in spite of the existence of female members, until a son was born who could have a right by birth. That is the rule in Kalyanji's case [1937] 5 ITR 90 (PC)." As can be seen from the second proposition stated above when the property was not owned by a HUF before it came to be owned by a sole surviving coparcener living with female members of the family entitled to maintenance, the assessment has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee that for the assessee to come out as a partner of the impugned company giving its place to Shri S.V. Anandmohan gift-tax was levied. The orders of the GTO dated 4-7-1981 were completed against Smt. Vijayalaxmi and Kumari Sridevi and the gift was not completed against the assessee-HUF. So, it is factually incorrect to contend that for giving place to Shri S.V. Anandmohan the assessee-HUF was assessed to gift-tax. 9. Now let us see whether any amount of the assessee-HUF was invested in the capital account of the impugned company after 1-4-1979. It is the case of the assessee that the amounts standing in the name of the assessee-HUF in the impugned company did not represent capital contribution of the partner but represents only money advanced to the said firm and in support of that contention the interest payments made for the period from 1-4-1980 to 31-3-1981 was filed. The truth of the extract now filed before us in the paper compilation regarding the interest payment was never disputed by the learned departmental representative. As can be seen from the date of interest payment the assessee-HUF was paid an amount of Rs. 3,457.77 on 31-3-1981 by the impugned company towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 40 per cent. The books of account of the firm should be closed to profit and loss for the first time by 31-3-1980 and later on by 31st March every year and the resultant profit and loss should be shared along with partners in the profit sharing ratio mentioned above. Nowhere in the partnership deed it was found that the amount standing in the name of the assessee-HUF should be treated as the capital brought in by Shri S.V. Anandmohan. If it were to be so then the amount standing to the credit of the assessee-HUF was an ascertained sum and it would have been mentioned in the partnership deed specifically. Further this deed of partnership dated 1-4-1979 was filed along with Form No. 11A before the same ITO and he had granted registration to the firm. In the registration order dated 24-5-1981, copy of which is furnished to us. It is stated that Shri S.V. Anandmohan ceased to be a partner in his HUF capacity with effect from 31-3-1979 and became a partner in his individual capacity with effect from 1-4-1979. Thus, even a reading of the partnership deed suggested to the ITO that Shri S.V. Anandmohan became a partner in his individual capacity in the impugned company and he ceased to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 and also in the returns for 1969-70 and 1970-71, the ITO accepted individual returns of S. The Addl. CIT wanted to revise the orders of the ITO under section 269. In the reference to the High Court it was held that the mere circumstance that S was the karta of the assessee-family and at the same time a partner in a firm would not lead to a presumption that he represented the assessee family in the partnership firm. If a karta declares that he is acting for himself alone, no such presumption can be raised. Whether he is acting for himself alone or on behalf of family is a matter governed by very different considerations. If he does not claim to act on behalf of the assessee, there must be clear and definite material, if the contrary is to be proved, linking the family with the business carried on by the karta. In that case their Lordships held that there is no evidence to show that S drew on the family funds or acted to the detriments of the family assets in carrying on of such business and there is no material concerned indicating that S was representing the family in the firm V. 12. Another decision which we came across in support of our decision is found in CIT v. Ram Narain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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