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TMI Blog1981 (10) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-3-1975 under section 14 of the Income-tax Act were served on the karta of the family. He made a claim that there had been a partition on 31-3-1973 even before the notices were issued and, therefore, the proceedings were invalid. In the income-tax proceedings, though the ITO did not accept this claim, the Appellate Tribunal by its orders dated 27-1-1979 in IT Appeal Nos. 2127 and 2133 of 1977-78 and dated 30-1-1979 in IT Appeal Nos. 2128 to 2132 and 2135 of 1977-78 held, following the decision of the Calcutta High Court in the case of Rameshwar Sirkar v. ITO [1973] 88 ITR 374, that the HUF which had not been assessed earlier cannot be assessed after it was disrupted and, hence, the reassessment proceedings under the Income-tax Act could not be initiated against a disrupted family. However, in the wealth-tax proceedings with which we are concerned, the WTO held that there was no partition of the movable properties and, hence, the alleged partition could not be accepted and as far as he was concerned, the family continued to be in existence. He, therefore, proceeded to assess the HUF for the purpose of wealth-tax. On appeal, the AAC found that in fact a partition actually took plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiation of proceedings in the analogous provisions of the Income-tax Act have been held to be invalid by the Tribunal following the decision of the Calcutta High Court in the case of Rameshwar Sirkar. In that case, it was pointed out by the Calcutta High Court that a HUF is a taxable entity and a juristic person and could be proceeded against only in the manner provided in the Act or in general principles of Hindu Law. Earlier it had been pointed out by the Supreme Court in the case of Lakhmichand Baijnath v. CIT [1959] 35 ITR 416 that under the provisions of the Indian Income-tax Act, 1922, as they stood prior to the amendment in 1928, no assessment could be made on an undivided family if at the time of assessment it had become divided, because at that point of time, there was no undivided family existing which could be taxed, though when the income was received in the year of account, the family was joint. Nor could the individual members of the family be taxed in respect of such income as it was exempt under section 14(1) of the said Act. It was to remove this defect that an amendment was made by introducing section 25A to the said Act by which, if at the date when the liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary decree for partition was passed long prior to the relevant valuation date and, therefore, the only question was whether the family could be deemed to continue as a joint family on the relevant valuation date for the purpose of assessing it as a joint family. The Court answered the question in the negative and in favour of the assessee because there was no question of the family being continued to be liable to be assessed under section 20(2) when it had not been assessed as a HUF before. Moreover, once the partition of the family had been accepted, there was no question of assessing it as a family in respect of the wealth on valuation date subsequent to the partition. The facts of the present case are quite different inasmuch as we are concerned with the machinery for assessing a joint family in respect of wealth on the valuation dates prior to the partition. In that case itself, it was noted that the power or authority has been given to the WTO to make the assessment on the HUF as such, including the year relevant to the previous year in which the partition has taken place. Moreover, that was a case in which section 20(2) was sought to be applied, unlike the present case, in wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment has been made before. Hence, it is clear that the machinery provided for the WTO to determine the liability of the family is available at the time of making assessments under section 17 as well. 6. The real question of importance is whether the WTO could initiate proceedings under section 17 in respect of a joint family which has already been disrupted. According to the assessee, a joint family which is a taxable entity and a juristic person must be considered to be dead when it is disrupted by a total partition and ceases to exist. The argument goes that there can be no assessment on a dead person. But, there are several reasons why this argument cannot be accepted. Firstly, though there cannot be an assessment on the wealth of a dead person in respect of the assessment year after the death, there can definitely be an assessment in respect of the assessment years prior to the death as there is machinery provided in the Act for assessing that wealth and collecting the tax from the legal representatives. The case of a HUF which is totally disrupted is no different. Even though the counsel for the assessee may regard it on disruption as a person who is dead, we are concerne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... must have reasons to believe that by reason of the failure on the part of the HUF to make a return, net wealth of that family has escaped assessment. It cannot, therefore, be said that the WTO has reason to believe that there was total partition and not merely a severance in status until he is satisfied after an enquiry under section 20(1) which can necessarily be made only after the notices were issued. The assessee has not been able to place before us any particular reason why the decision of the Gujarat High Court should not be applied to the facts of this case as it was decided on almost identical facts unlike the decision of the Calcutta High Court. The Calcutta High Court decision was primarily with reference to section 20(2) whereas we are concerned with the application of section 20(1). It is obvious that section 20(1) is not in pari materia with section 171(1) of the Income-tax Act and the absence of the words "hitherto assessed" makes a vital difference to the scope of the section. It follows that the decision of the Tribunal in cancelling the assessments under section 17 can in no way affect our decision in upholding the assessments under section 20. 7. In the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X
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