9911796707
TMI Blog1988 (3) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... HUF, the assessee filed returns of income in respect of the said family in the name and style of Smt. Shashirani, HUF, in respect of asst. yrs. 1979-80 1980-81 declaring therein incomes from two sources (i) income from dwelling house (ii) income from capital gains. Assessments for asst. yrs. 1979-80 and 1980-81 of the said family were taken up by the ITO, Survey Circle, Jabalpur, who made inquiries from assessee with regard to the investment in the said house. The assessee filed a letter before him dt. 21st Feb., 1982 disclosing therein the sources of investment in the original acquisition of the property and the subsequent re-construction and renovation of the said property. It will be appropriate to give extract of the aforesaid letter having a bearing on the above mentioned matter as follows; "That the assessee family purchased an old house No. Plot No. 22, Sarafa Ward, Jabalpur in the name of one member of the family, Smt. Shashirani at Rs. 42,000 on 21st Oct., 1978 from Smt. Ujali Bai w/o Sh. Girja Prasad. The said old house was purchased out of the following sources: (i) Rs. 14,000 Paid out of ancestral fund to the family for purchasing the above old ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. An affidavit of Smt. Kusum Bai w/o Sh. Dalchand Saraf, mother of the respondent Shri Shatrughan Prasad, was also stated to have been filed before the ITO. In the said affidavit the following depositions were, inter alia, made: "I, Smt. Kusum Bai w/o Dalchand Saraf, aged about 62 years, resident of 605, Sarafa, Jabalpur, the deponent do hereby state on oath as follows: 1. That my monthly income from house property is about Rs. 400 to 500 per month. 2. Presently, I possess about 10 to 11 Tolas golden ornaments. 3. I also advanced about Rs. 14,000 to my son, Shatrughan Prasad for purchase of family house. The aforesaid amount of Rs. 14,000 was available with me out of receipts from my husband and past savings. 4. I also possess about 4 acres of agricultural land at Tilwaraghat and the same was purchased in my name since last 25 to 30 years by my husband and some property at Hanumantal was also purchased by my father-in-law since last 50 years. This property (Baba) of Hanumantal was received by my husband in partition and therefore, I am taking its income. 5. I also possess and own open plots at Agarwal Colony and at Kusum Colony. 6. That on 23rd Aug., 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod under consideration, because the ITO Survey Circle had already examined that point while making the assessments for the asst. yrs. 1979-80 and 1980-81 on the HUF by observing, inter alia, as follows: "It is worth mentioning here that the re-construction/renovation took place in the year 1980 relevant to the asst. yr. 1981-82, hence there is no question of examining it in the assessment proceedings of earlier assessment year..............." 8. As to the status of the assessee as HUF, the ITO made inter alia, the following observations in his individual assessment: "The assessee's statement on solemn affirmation reveals that there is no partition till now in writing with his brothers. That in 1970 he separated from his father. In the beginning he was doing the job of goldsmithy. Since 1973-74, he started purchase and sale of gold and silver ornaments. The initial capital invested in this business is stated to be out of the savings of goldsmithy job. The assessee was specifically questioned as to what he got from his father while separating in 1970. He avoided to answer the question and instead of answering it, stated that his wife Smt. Shashi Rani Saraf got something. Fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et anything from his father. There is absolutely no ancestral nucleus for the business. The correct status of the assessee is, therefore, that of individual. In the year under consideration the assessee completed the reconstruction of the house which was purchased in the name of the assessee's wife Smt. Shashi Rani on 21st Oct., 1978 for Rs. 42,000. The assessee has also furnished another return declaring his status as individual and has shown income from business. As discussed above, there is no HUF hence the entire construction of house belongs to the assessee Shri Shatrughan Pd. Saraf and will be considered in his hands. The perusal of return of income filed by the assessee claiming the status as that of HUF reveals that in the coloum meant for assessee's name, the name of Smt. Shashi Rani w/o Sh. Shatrughan Pd. Saraf is mentioned. However, the verification has been signed by Sh. Shatrughan Pd. Saraf in the capacity of Karta of HUF and has returned N.F. income at Rs. 3,500. Though the return is not filled in properly, nor there is proper verification, however, no protective basis, without prejudice to the findings in the assessee's individual case, income returned is accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered, if necessary in the hands of the HUF. The additions of Rs. 10,000 and Rs. 6,000 will, therefore, be deleted." In the case of HUF being ITA No. 208 of 1986, the observation of the learned AAC was that the assessment made on the HUF should be treated as substantive and not protective. His observations were as below: "3. After carefully considering the relevant facts it is seen that the status of HUF was shown by the appellant in the return filed by her on 27th Jan., 1982. As per order of the learned CIT(A) in the case of M/s Nav Rang Jewellers the house property has been held to belong to the HUF. In the circumstances, I find no justification on part of the ITO to adopt the status of individual with regard to income from house property in this year. He is directed to adopt the status of HUF. I also find no justification for making protective assessment as the addition of income from H.P. shown by the appellant made in the hands of M/s Nav Rang Jewellers for the asst. yr. 1981-82 has been deleted by learned CIT(A) vide his order dt. 3rd June, 1985. In the light of above discussion the ITO is directed to make a substantive assessment with regard to income from ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examined the issue on appeal did not have any occasion to go into the dispute regarding the ownership of the property as is clear from the combined order of the learned AAC passed in the case of the HUF for asst. yrs. 1979-80 and 1980-81. The learned CIT(A) was, therefore, entirely in error in believing that the learned AAC had examined this question of ownership of the said property and come to conclusion that the property belonged to the assessee. The submission made by the assessee before the learned CIT, therefore, that "even in appeal the learned AAC has also considered the question of status" is palpably wrong and for these reasons, the order of the CIT(A) deserved to be set aside. He should be directed to re-examine the entire issue on merits in respect of asst. yr. 1981-82 in which year the issue has been raised by the ITO in the case of the individual for the first time and has been examined in details. The learned CIT(A) was in error in not examining the assessment in the light of the facts brought on records by the ITO and brushing aside the entire subject matter by merely observing that the status of the HUF had been accepted in the case of the assessee for earlier ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry Hindu male has an HUF for jointness of the family is the normal state of the Hindu Society. The assessee, no doubt, had an HUF consisting of himself and his wife. The real question to be examined in these appeals is whether this family unit viz. the assessee and his wife, had any ancestral property with them, which could be the nucleus of HUF property in their hands and with the help of which the assessee could be said to have acquired the immovable property in question. From what has been stated by the assessee in varied submissions, it is clear that he is the only earning member of the aforesaid family unit and that his wife had no separate source of income and it was he, who had acquired the property in the name of his wife. It was the assessee to explain as to what was the nucleus of HUF property with him with the help of which he had acquired the said property. The only explanation given by the assessee is that contained in his letter dt. 22nd Feb., 1982 and the affidavit of his mother which were filed by the assessee before the CIT(A). The ITO had examined the assessee in the light of the said evidence and had brought out further material on record to show that the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for determination on the basis of the evidence on record and it would be wrong to shut out the controversy merely because in some earlier years somebody else had claimed the ownership of the property and that on that footing the assessments had been made on that other person. The order of the learned CIT(A) is, in our opinion, patently wrong. He should have examined the matter on merit and should not have applied the principles of res judicata on the facts and circumstances of the present case. His order, therefore, is hereby set-aside and the entire matter is restored to him for re-determination of the question of ownership of property De novo on the basis of such material as may be placed before him, and as may already be on record. In view of this, the order of the learned AAC for asst. yr. 1981-82 is also hereby set-aside and the same would be the position in regard to the orders of first appellate authority for the asst. yr. 1982-83 for whatever would be the finding in respect of asst. yr. 1981-82 would be followed in respect of asst. yr. 1982-83, facts of both the year being the same. 17. With these observations, we accept the departmental appeals and restore the appeals ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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