9911796707
TMI Blog2005 (5) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessed in the hands of the Hindu Undivided Family. In their returns, apart from declaring the amount received from the lottery prize during the previous year, the HUF had also offered a sum of ₹ 2,000/- as an income from its agricultural activities for tax purpose and no refunds were claimed. 3. The assessee by its letter dated 30.8.1980 even before completion of the assessment proceedings for the assessment year 1980-1981, had brought to the notice of the Income Tax Officer that the Hindu Undivided Family has been partitioned on 25.4.1980. Inspite of such intimation, the Income Tax Officer has passed the assessment order under Section 143(3) of the Act dated 28.11.1980 and has computed the tax liability on the total income of ₹ 4,97,480/- after allowing the permissible deductions under the Act. 4. The Income-tax Officer by an order made on 2.1.1984 has recognized the partition of the HUF for the subsequent assessment year, which we are not concerned in these proceedings. 5. The assessee - HUF, being aggrieved by the aforesaid assessment order passed by the Income Tax Officer had filed first appeal before the Commissioner of Income Tax (Appeals). In the said appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Tribunal was right in holding that the assessee - HUF could not have been assessed to income-tax in 1980-1981 on account of the fact that there was a partition in the joint family subsequent to the last day of the accounting year? II. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Section 171 were not applicable to this case in as much as the assessee - HUF had not been assessed earlier to 1980-1981? 8. Sri. Seshachala, learned Counsel for the Department would contend, that Section 140-A of the Act provides for self-assessment and therefore, there need not be yet another assessment order by the Income Tax Officer to satisfy the requirements of Section 171(1) of the Act. Secondly, it is contended that Section 171(1) of the Act provides for assessment after partition of the Hindu Undivided Family, and since the assessee itself had filed self-assessment, it is presumed that the Hindu Undivided Family had been "hitherto assessed" as Hindu Undivided Family and therefore, the Income Tax Officer was justified in passing in order of assessment in the hands of the Hindu Undi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 71 of the Act and particularly the words "family hitherto assessed as undivided" occurring in Section 171(1) of the Act. In the said case, it was held, that apart from Section 171 of the Income Tax Act, 1961, and perhaps, to a certain extent, sub-section (4) of Section 170 of the Income-tax Act, there is no machinery to assess a Hindu Undivided Family which had disrupted and the said machinery, provides only in the case of families "hitherto assessed as undivided"; it is difficult to find any machinery to assess a Hindu Undivided Family which had never been assessed before, after it had disrupted. 13. The above decision was followed by the same High Court in the case of Shyam Sunder Bajaj Vs. Income-tax Officer - 89 ITR 317 (Cal.), wherein it is held that if a HUF which has not at all been assessed had been disrupted, the assessment on the said family could not be made after disruption for the period when it was joint. 14. The Gujarat High Court in the case of Commissioner of Income Tax Vs. Kantilal Ambalal (HUF) - 192 ITR 376 (Guj.) has reiterated that Section 171 of the Act has no application to a HUF which has never been assessed before as a joint family i. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sum and substance the provisions of Section 171(1) of the Act are machinery provisions and not a charging provision. In order to apply Section 171 of the Act, the family should have been assessed earlier as HUF and if that element is not there, the revenue cannot proceed on the basis that the family is still undivided for the relevant assessment year. 18. Sri. Seshachala, learned Counsel for the revenue would contend that since the assessee - HUF had filed its return of income under Section 139 of the Act as provided under Section 140-A of the Act, it is deemed that HUF has been assessed to tax and therefore, the Income Tax Officer was justified in invoking the provisions of Section 171(1) of the Act to continue to assess the HUF, though it was made known to him that there was disruption of HUF as early as 25.4.1980 by intimation dated 30.8.1980. 19. To appreciate the stand of the learned Counsel for the revenue whether mere filing of a return under the provisions of Section 140-A of the Act by the HUF - assessee, would tantamount to an assessment order, the provisions of Section 140-A of the Act requires to be noticed and therefore it is extracted : "140-A (1) Where any ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin 30 days of the filing of the return. The Assessee need not wait for payment of such amount of tax until the provisional assessment is made under Section 141 of the act or the regular assessment proceedings are completed under Section 143 or 144 of the Act. Any amount of tax paid under self-assessment shall be deemed to have been paid towards the provisional assessment or regular assessment as the case may be. The Section is only a measure enacted for ensuring on filing of the return under Section 139 of the Act, wherein such total income is indicated. Section 140-A of the Act providing for self-assessment comes into operation and it becomes obligatory on the part of the assessee to discharge his liability which has arisen to pay the tax together with interest that may be payable for late furnishing of the returns. The tax payable on the basis of the returns filed by the assessee is treated as 'assessed tax'. It is not made dependant on any regular assessment being made, though in the event of regular assessment, the amount paid under sub-section (1) of Section 140-A of the Act is deemed to have been paid towards regular assessment. Section 2(8) of the Act defines the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Income Tax Act, 1961, in respect of the total income of the previous year of every 'person'. Section 2(31) of the Act defines the meaning of the expression 'person', to mean, apart from others, Hindu Undivided Family (HUF) and is assessed to income tax as a distinct unit of assessment. Section 171 of the Act provides for assessment after a partition of a Hindu Undivided Family. Sub-section (1) of Section 171 of the Act applies only to a HUF, which has hitherto been assessed as undivided, by legal fiction provided in the sub-section for the purposes of the Act continues to be a HUF and continues to be so assessed as such unless the Income Tax Officer records by an order accepting partition. In the present case, prior to the assessment year 1980-1981, M/s. Lakkanna and Sons-assessee was not assessed as a HUF. It was only for the first time, by a letter dated 30.8.1980, the assessee had informed the Income Tax Officer, that there was a total partition of the HUF on 25.4.1980. The Income Tax Officer after enquiry and verification recognises the partition on 2.1.1984 for the assessment year, but for the assessment year 1980-1981, proceeds to accept the return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in definite proportions or if on account of some error or inadvertence if he fails to dispose of the claim. In all these cases, his jurisdiction to assess the income of the family hitherto assessed as undivided remains unaffected, for the reason, procedure for making assessment of tax is statutory. Any error or irregularity in the assessment may be rectified in the manner provided by the Statute alone, and the assessment is not liable to be challenged collaterally? Reliance is also place on the observations made by the Apex Court in Kalwa Devadattam Vs. Union of India - 49 ITR 165. The learned Counsel for the revenue placing heavy reliance on the observations made by the Apex Court in the case of CIT Vs. Shelly Products - 261 ITR 367 would contend that on filing of the return of income under Section 139 of the Act, wherein total income is indicated, Section 140-A of the Act providing for self assessment comes into operation and it is obligatory on the part of the assessee to discharge its tax liability. The tax payable on the basis of the returns filed by the assessee is treated as 'assessed tax and it is not dependant on any regular assessment'. Therefore, the learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and levy of tax. It is in this sense that the legal representative becomes an assessee by the fiction, and this fiction has to be fully worked out to its logical conclusion". 24. In A.N. Lakshman Shenoy Vs. Income Tax Officer and Another - 34 ITR 275, the Apex Court has observed that "in the context and collection of the words of the Finance Act, 1950, the word "assessment" is capable of bearing only the comprehensive meaning and would include "reassessment". "Reassessment" will without doubt come within the expression "levy, assessment and collection of income tax" occurring in Section 13(I) of the Finance Act". 25. The three expressions 'levy', 'assessment', and 'collection' are of widest significance and embrace in their broad sweep all such proceedings for raising money by the exercise of power of taxation. 26. In our opinion, the term "assessment" is flexible capable of many meanings. We say so, in view of the law declared by the Apex Court in its various decisions, which are brought to our notice by the learned Counsel for revenue. Therefore, in our view, what is the correct conn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth Tax Vs. G.E. Narayana and Others - 193 ITR 41 and in the case of CIT Vs. D.C. Basappa and Others - 251 ITR 673. Our attention is also invited to the observations made by the Supreme Court in the case of Roshan Di Hatti Vs. Commissioner of Income Tax, New Delhi - 68 ITR 177, wherein the Court has observed that "where a claims is made, that joint status of a HUF was dissolved before an order of assessment is made by the Income Tax Officer, the decision of the Supreme Court in Kalwa Devadattam's case - [1963] 49 ITR 165, will have no application because the Supreme Court in that case was not called upon to interpret the expression "hitherto assessed as undivided" in sub-section (1) and (2) of Section 25-A of Indian Income Tax Act, 1922, and did not lay down that a family not previously assessed to tax may be assessed after partition in the status of a Hindu Undivided Family until an order under Section 25-A of the Act is passed by the Income Tax Officer". 30. The learned Counsel for the assessee has brought to our notice, the observations made by the Gujarat High Court in the case of CIT Vs. Kantilal Ambalal (HUF) - 192 ITR 376, the decision of Andhra Prad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ;. 31. Since the observations made by the Gujarat High Court, Allahabad High Court and the Andhra Pradesh High Court is in consonance with our findings and conclusion reached, which we have noticed in our earlier partition of our order, we respectfully agree with those findings and conclusions. Before we conclude, we intend to observe, may be at the cost of repetition, that in the present case, M/s. Lakkanna and Sons, a HUF - assessee had filed its return of income for the assessment year 1980-1981. Even before the completion of the assessment proceedings, the assessee had intimated the Income Tax Officer the disruption of the HUF. At no point of time, HUF had been assessed to tax under the Act. In view of this factual position, the procedure prescribed under Section 171 of the Act will have no application, as the assessee was not 'hitherto assessed' as HUF and so the fiction created under that Section to deem it, as HUF will not arise. Therefore, the assessment made on the assessee as HUF is not valid. 32. In the result, both questions of law referred for our opinion are answered in the affirmative i.e. in favour of the assessee and against the revenue. Accordingly, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
