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TMI Blog2021 (6) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... e factum of partition for the purposes of assessment it is not permissible to ignore the special meaning assigned to partition under the explanation, even if the partition is effected through a decree of the court. Ordinarily decree of a civil court in a partition suit is good evidence in proof of partition but under Section 171 a legal fiction has been introduced according to which a preliminary decree of partition is not enough. Instead there should be actual physical division of the property pursuant to final decree, by metes and bounds. The legislature has assigned special meaning to the expression partition under the aforesaid Explanation with a view to safeguard the interest of the revenue. Any assessee claiming partition of HUF must prove the disruption of the status of HUF in accordance with the provisions of Section 171 having special regard to the Explanation. The assessee must prove that a partition effected by agreement or through court s decree, was followed by actual physical division of the property. In the absence of such proof partition is not sufficient to disrupt the status Hindu Undivided Family for the purpose of assessment of tax. A reading of sub- section 171 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngan was the absolute owner of the agricultural lands at Ayanambakkam Village, Saidapet Taluk measuring about 6.28 acres of lands in 9 survey number. Shri Pandurangan died on 24.10.2003 leaving behind him, his wife, three sons and a daughter as the legal heirs. Shri A.R.Pandurangan's wife later died on 08.02.2006 leaving behind their three sons and a daughter as the sole surviving legal heirs. At the time of death of the father and mother,an agricultural land measuring an extent of 6.28 acres in Ayanambakkam village and a house on a 8 ground of lands situated at Ayanambakkam village was available for being partitioned. 3. It is the case of the petitioner that the brothers and sisters entered into oral partition and recorded the same in a Memorandum on 23.08.2007 recording the aforesaid oral partition. Share in the agricultural property was divided in certain proportion and that land to an extent of 3 acres out of 6.28 acres was sold and the sale proceeds was shared by each of the legal heirs of the Late Shri.P.R.Pandurangan. They also filed their respective Income Tax returns and claimed exemption under Section 54 F of the Income Tax Act, 1962 i.e. Exemption from payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax vide order dated 22.8.2014 passed a fresh order under section 263 of the Income Tax Act, 1961and once again set-aside the assessment order by holding that income earned from sale of the lands was assessable in the hands of the lateA.R.Pandurangan, (HUF) as there was only a joint sale of property and there was no new ownership by the coparceners and the property and income was assessable in the hands of lateA.R.Pandurangan, (HUF), the said order was set aside by the Tribunal. 11.It is submitted that though the original assessment made on 15.12.2010 allowing deduction under section 54F of the Income Tax Act, 1961 was held erroneous and had caused prejudice to the revenue and the original assessment was set aside the matter was remitted back to the original authority to pass a fresh assessment order, the said order dated 22.8.2014 passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961. 11A.The Appellate Tribunal vide its order 27.11.2015 in ITA No. 2702/Mds 2014 allowed the appeal filed by the petitioner's brother Shri.A.P.Began with the following observations:- 7. Heard both sides. Perused orders of lower authorities and the material on reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Commissioner of Income Tax passed under Section 263 of the Act and restore that of the Assessing Officer since the assessment order cannot be said to be erroneous and prejudicial to the interests of the Revenue. 10. In the result, appeal of the assessee is allowed." 12. It is submitted that before the order was passed by the Tribunal on 27.11.2015, the impugned notice dated 31.03.2015 was addressed to Estate of A.R.Pandurangan (HUF) Coparceners: Sri A.P.Oree, Sri A.P.Began, Sri A.P.Nambi and Smt.A.P.Nangai 3-A, Anakara Apartment, Gilchrist Avenue, Harrington road, Chetpet, Chennai 600 031. The deponent of the affidavit Shri.A.P.Oree and receipient of the impugned notice therefore sent a letter dated 22.04.2015 to the respondentto clarify as to the basis of notice dated 31.03.2015that was issued to "the Estate of A.R.Pandurangan (HUF) Coparceners: Sri A.P.Oree, Sri A.P.Began, Sri A.P.Nambi and Smt.A.P.Nangai 3-A, Anakara Apartment, Gilchrist Avenue, Harrington road, Chetpet, Chennai 600 031." It is further submitted that notice dated 31.03.2015 was dispatched after 31.03.2015 and therefore the impugned notice under Section 148 would be clearly time barred. It is submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llogical." 16.The learned counsel for the respondent further submits that as per Section 171 of the Income Tax Act, 1961 there was no valid partition. The learned counsel for the respondent further submits that though the Tribunal has accepted the case of one of the brothers viz., Shri.A.P.Began vide order dated 27.11.2015 in I.T.A.No.2702/Mds/2014, the Department is in appeal before this Court in TCA.No.714 of 2016. 17.In any event, the petitioner can make such submissions before the respondent before Assessment Order is passed. It is further submitted that notice was also received in time by the notice in his capacity as the kartha of the HUF and therefore prayed for dismissal of the present Writ Petition. 18.The learned counsel for the petitioner relied on the decision of this Court in Alamelu Veerappan vs. The Income Tax Officer, Non Corporate Ward 2(2), Chennai, W.P.No.30060 of 2017. 19.The learned counsel also drew my attention to Section 114 of the Income Tax Rules which reads as under: " Where the total income of an assessee, not being a company, includes any interest on National Savings Certificates (First Issue), the tax payable by him on his total income shall be- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 22 of the typedset papers filed along with the writ petition shows the date of booking of the speed post as 1.4.2015 and not as 31.3.2015. 28.Thus, prime facie it appears notice dated 31.3.2015 was despatched on 1.4.2015. It wasthus despatched after the due date which had already expired on 31.3.2015. In the impugned order/communication dated 16.11.2016, a content of communication dated 7.11.2016 of the Seniors Superintendent of Post Office, Chennai City, North Division Chennai 600008 addressed to the respondent has been extracted. 29.It merely states that the request of the respondent Department regarding delivery of the post had been forwarded to the Manager, National Sorting Hub Chennai, Chennai 600016 from whom, the respondent may kindly wait for further communications. However, no further communication has been filed. 30.The counter filed by the respondent is alsosilent on the same. Therefore, on this preliminary ground itself the writ petition is to be allowed as the impugned notice appears to be prima facie booked for delivery beyond the period of limitation. 31.However, it is also noticed that no serious objection was raised on this ground at the earliest occasion ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case where at the time of making assessment under Section 143 or 144, a claim is made by or on behalf of any member of a Hindu family that a total or partial partition has taken place among its members. Then the claim would be investigated by the Income Tax Officer and if satisfied, the Income Tax Officer would record a finding that there has been such partition of the joint family property and the assessment of the total income of the joint family would then be made as if no such partition had taken place. And in such a case all the members would be jointly and severally liable for the tax assessed as payable by the joint family and for determining their several liability, the tax assessed on the joint family would be apportioned among the members "according to the portion of the joint family property allotted to" each of them. But it may happen that at the time of a making assessment under Section 143 or 144 no claim of partition, total or partial, is put forward on behalf of any member of a Hindu family, either because no such partition has taken place or because of inadvertent or deliberate omission on the part of the members of the Hindu family and where that happens, the Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessed as HUF, is deemed for the purposes of the Act to continue as HUF except where partition is proved to have been effected in accordance with the section. The section further provides that if any person at the time of making of assessment claims that partition total or partial has taken place among the members of the HUF, the Income Tax Officer is required to make an inquiry after giving notice to all the members of the family, and to record findings on the question of partition. If on inquiry he comes to the finding that there has been partition, individual liability of members is to be computed according to the portion of the joint family property allotted to them. What would amount to partition for the purposes of the section is contained in the Explanation to the section which defines partition as under: "Explanation.- In this section,- (a) 'partition' means- (i)where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition; or (ii)where the property does not admit of a physical division, then such divi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liminary decree of partition is not enough. Instead there should be actual physical division of the property pursuant to final decree, by metes and bounds. The legislature has assigned special meaning to the expression partition under the aforesaid Explanation with a view to safeguard the interest of the revenue. Any assessee claiming partition of HUF must prove the disruption of the status of HUF in accordance with the provisions of Section 171 having special regard to the Explanation. The assessee must prove that a partition effected by agreement or through court's decree, was followed by actual physical division of the property. In the absence of such proof partition is not sufficient to disrupt the status Hindu Undivided Family for the purpose of assessment of tax. 39. A reading of sub- section 171 of the Income Tax Act, 1961 makes it very clear that it is applicable only where a Hindu family was already assessed as an Hindu Undivided Family(HUF). Otherwise, there is no meaning to the expression "hither to" in Section 171(1) of the Income Tax Act, 1961. It shall for the purpose of the Act be deemed to continue to be a Hindu Undivided Family, except where and insofar as a f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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