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TMI Blog1987 (11) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... ssments for the said assessment years 1961-62 to 1965-66 were completed on the basis of the returns filed as aforesaid treating the Hindu undivided family as the assessee. From the orders of assessments, appeals were preferred by the assessee before the Appellate Assistant Commissioner wherein the assessments were sought to be impugned on certain points including the valuation of the properties and assets. From the orders of the Appellate Assistant Commissioner, the assessee preferred further appeals before the Tribunal. At the hearing of the appeals before the Tribunal, the assessee sought to raise by way of an additional ground of appeal that the properties and assets of the deceased G. S. Atwal were inherited by his legal heirs and representatives individually under the Hindu Succession Act, 1956, and the same could not be assessed in the hands of any Hindu undivided family. The Tribunal did not allow the said ground to be raised in the proceedings, inter alia, on the ground that to adjudicate on the said ground further evidence of fact would be necessary. For the assessment years 1966-67 to 1969-70 with which we are concerned, the assessee also filed returns of net wealth i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r intended to do so. The filing of returns in the status of a Hindu undivided family and the fact that the question was not raised in the earlier assessment years was the result of a bona fide misconception of Hindu law and in particular the Hindu Succession Act, 1956. It was also held that the widow, as one of the heirs of the deceased had acquired a definite share in the properties and assets devolved as full owner under section 14 of the Hindu Succession Act and could not impress such property with the character of joint family property. He concluded that the properties and assets of the deceased could not be held by his heirs in the status of a Hindu undivided family and under section 5 of the Wealth-tax Act, 1957, the same were chargeable to tax separately in the hands of the five heirs on their respective shares. He cancelled the assessments made on the Hindu undivided family and directed the Wealth-tax Officer to make separate assessments under section 17A(4) of the Wealth-tax Act. Being aggrieved, the Revenue preferred appeals from the order of the Appellate Assistant Commissioner to the Tribunal. It was contended on behalf of the Revenue before the Tribunal, inter alia, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the heirs of the deceased to bring their individual properties into the common hotchpot of the Hindu undivided family was a question of fact and the filing of returns by the assessee as a Hindu undivided family prima facie indicated such an intention. It was to be established by the assessee that they had no intention to form a Hindu undivided family and that they had filed their returns under a mistaken belief of law. It was on record that the heirs of the deceased had declared themselves to be Hindu undivided family and that J. S. Atwal was the karta thereof in their returns and duly verified the same. There was also nothing on record to show that such returns had been filed for 10 years without knowing the correct law or under a mistaken belief of law or that the persons concerned came to know the correct position in law only later. It was held that the aforesaid were questions of fact and a mere averment of the assessee that they had filed the returns under a mistaken belief of law was not established. The Tribunal held further that filing of the successive returns with verified declarations therein constituted evidence to establish the intention of the heirs of the dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... throw her share of the properties and assets into the common hotchpot by merely declaring her intention to do so. The properties and assets consisted, inter alia, of immovable properties and the same could not be transferred by the widow except through a registered deed of transfer. The Tribunal, it was contended, erred in holding that a mere intention of the heirs of the deceased as indicated by the returns filed in the instant case would be sufficient to constitute a Hindu undivided family in law, as no such Hindu undivided family had been constituted in fact. On the facts as found, it was obvious that the returns had been filed declaring the status of the assessee to be a Hindu undivided family under a mistake. In support of his contentions, the learned advocate for the assessee relied on and cited the following decisions: (a) Sirdar Bahadur Indra Singh v. CIT [1943] 11 ITR 16 (Pat). In this case, the assessee was assessed to income-tax since 1924-25 in the status of a Hindu undivided family on the basis of the returns filed by him. In the assessment year 1938-39 also, the assessee filed the return declaring its status to be that of a Hindu undivided family, but in appeal fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it is voluntarily thrown by him into the common stock with the intention of abandoning his separate claim therein. The separate property of a Hindu ceases to be separate property and acquires the characteristics of joint family or ancestral property not by any physical mixing with his joint family or his ancestral property but by his own volition and intention by his waiving and surrendering his separate rights in it as separate property. The act by which the coparcener throws his separate property in the common stock is a unilateral act. There is no question of either the family rejecting or accepting it. By his individual volition, he renounces his individual right in that property and treats it as a property of the family. No longer he declares his intention to treat his self-acquired property as that of the joint family property, the property assumes the character of joint family property. The doctrine of throwing into the common stock is a doctrine peculiar to the Mitakshara school of Hindu law." (d) Pushpa Devi v. CIT [1977] 109 ITR 730 (SC). In this case, the assessee had made a declaration declaring unequivocally her intention to treat some of her absolute property as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at there was a clear intention on the part of the coparcener to waive his separate rights and such an intention cannot be inferred merely from the physical mixing of the property with his joint family or from the fact that other members of the family are allowed to use the property jointly with himself or that the income of the separate property is utilised out of generosity or kindness to support persons whom the holder is not bound to support or from the failure to maintain separate accounts for an act of generosity or kindness cannot ordinarily be regarded as an admission of a legal obligation. " (h) Malchand Thirani Sons v. CIT [1980] 121 ITR 976 (Cal). In this case, a person, his wife, three sons and two unmarried daughters had constituted a Hindu undivided family. Subsequently, the family was divided and there was a partition of the properties by a registered deed of partition. The partition was recorded in the relevant income-tax assessment and the person concerned was thereafter assessed as an individual. The said person died intestate leaving him surviving the aforesaid members of his family as also two other married daughters. The widow and all the daughters relinquis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessity of registration and there was a valid declaration of the transfer. (j) CGT v. Smt. Ansuya Sarabhai [1982] 133 ITR 108. In this case, the Gujarat High Court considered the case of a release by beneficiary of a part of her right to receive income from a trust in favour of others. It was held that the said lease was neither an actual nor a deemed gift within the meaning of the Gift-tax Act and was not assessable under the Gift-tax Act. Learned advocate for the Revenue submitted, on the other hand, that as the assessee in this case by voluntarily filing returns for the years declared the status to be that of a Hindu undivided family, it must be held that the persons concerned had voluntarily abandoned or surrendered their interest in their individual properties and had impressed such properties with the character of joint family property. A unilateral declaration by a person was sufficient to impress his individual property with the character of joint family property. In the instant case, under the provisions of the Hindu Succession Act, 1956, the heirs of the deceased might have acquired separate interest in the properties of the deceased but there was no bar on such prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee had not expressed his intention properly. It is true whatever is done by the Income-tax Officer in one assessment year is not res judicata for the subsequent assessment year, but that is not the point. The question is whether the assessee had expressed the intention to treat his self-acquired property as the property of the Hindu undivided family, though we do not propose to go into the question whether declaring one's self-acquired property as the property of a Hindu undivided family will attract gift-tax or not. The fact remains that a certain attitude, namely, that the assessee was a Hindu undivided family, was persisted with for a number of years and if in the preceding year, the Department itself has accepted the status of the assessee as a Hindu undivided family, then we can clearly come to the conclusion that the assessee has, by expression of a clear intention, blended his self-acquired properties with the property of the Hindu undivided family and has thereby put it in the hotchpotch." (b) Gundlapalli Mohan Rao v. Gundlapalli Satyanarayana [1972] 84 ITR 685 (AP). In the suit, one of the questions involved was whether the first defendant had by declaration or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade a gift of her separate share in the properties of the deceased to the joint family. On the facts and circumstances, it cannot be disputed that on the death of G. S. Atwal, his individual properties and assets devolved on his heirs, viz., his widow and his four sons, in their individual capacities and that they acquired the same not as joint tenants but as tenants-in-common. Under section 8 of the Hindu Succession Act, 1956, such was the devolution. This position has not been disputed on behalf of the Revenue. It is the contention of the Revenue that subsequent to the death of G. S. Atwal, his heirs voluntarily constituted themselves into Hindu undivided family and threw their respective shares in the properties and assets of the deceased inherited by them into the hotchpot of Hindu undivided family. This was established by the successive returns filed by the assessee in the status of a Hindu undivided family. By filing the aforesaid returns and declaring therein their status to be that of Hindu undivided family, the heirs of the deceased not only indicated their intention to constitute a Hindu undivided family but also indicated that they had voluntarily surrendered their int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erial whether the heirs of the deceased filed their returns of wealth-tax declaring their status to be that of a Hindu undivided family deliberately or under a mistake. It will have to be established whether in fact and in law a Hindu undivided family came to be constituted or not. In our view, while it was possible for the four sons of the deceased to constitute a Hindu undivided family by merely declaring their intention to do so and by blending their separate shares of the said properties and assets in the common pool and impressing them with the character of joint family property, it was not possible for the widow of the deceased to become a member of the Hindu undivided family by merely declaring her intention to do so. A further positive act, viz., the transfer of her separate share of the said properties and assets by way of gift was required. This is absent in the instant case and from the facts and evidence on record, it cannot be said that Hindu undivided family was constituted by the widow and four sons of the deceased and the properties inherited by them individually became the properties of the said Hindu undivided family. We hold that the filing of the returns and t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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