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TMI Blog1982 (3) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... ding the two suit houses at Seoni and agricultural lands. It also carried on business in the name of Shivnarayan Prabhudayal. The said HUF was assessed for the assessment years 1957-58 and 1958-59 and revenue recovery certificates for recovery of Rs. 1,81,015.54 and Rs. 24,413.65 for these years, respectively, were sent by the ITO to the Tahsildar, Seoni. Prabhudayal died on 26th May. 1964. The Tahsildar in recovery proceedings passed orders on 23rd November, 1964, for attachment of the property of Harishchandra as a result of which the two suit houses were attached. Objections were filed by Seth Gopikishan which were rejected by the Tahsildar on 28th July, 1966. Thereafter, the suit in which this appeal arises was filed by Seth Gopikishan as a trustee for the estate of three minors, viz., Omprakash, Jaiprakash and Vijaykumar, all sons of Harishchandra, against the Union of India and Harishchandra for declaration and injunction. The plaint alleged that there was a complete partition of the joint Hindu family of Prabhudayal. The partition was effected by Prabhudayal on 16th May, 1953, a memorandum of which was executed in the form of a letter on 20th May, 1953. In this partition, P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artition and the HUF must be deemed to continue for purposes of the I.T. Act. The trial court disbelieved the oral partition but held that a valid partition took place on 9th April, 1957, when the registered partition deed was executed and that in that partition the suit houses fell to the share of Harishchandra and Prabhudayal jointly. It was further held that the sale deed executed in favour of the plaintiff was fictitious and sham and was executed with a view to defeat the recovery of income-tax dues. The trial court also held that the HUF continued for the purposes of the I.T. Act as there was no adjudication by the ITO about partition and consequent disruption of the family. On these findings, the trial court dismissed the suit., The appeal was filed by Seth Gopikishan as a trustee on behalf of the three minors, but as the minors became major during the pendency of the appeal, they, become appellants in their own right and the name of Seth Gopikishan was struck off. The first question that has been argued before us by the learned counsel for the appellants is that there was an oral partition as alleged in the plaint on 16th May, 1953, and as evidenced by the memorandum of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n prior to the registered partition dated 9th April, 1957, that the sons had become separate which goes to show that there was an oral partition in May, 1953. We will now refer to this evidence. The return for the assessment year 1954-55 is not on record. The answers to the interrogatories submitted by the Union of India have been admitted into evidence and they are relevant here. It is disclosed from them that the return for the assessment year 1954-55 was submitted in the status of an HUF by Shivnarayan Prabhudayal. However, on 8th July, 1954, Prabhudayal intimated that movable and immovable properties were divided amongst his sons, Harishchandra and Rameshchandra. No action was taken on this intimation and the assessment was completed in the status of an HUF Exhibit D-5 is the income-tax return submitted on 24th August, 1955, for the assessment year 1955-56. The return is in the name of Shivnarayan Prabhudayal, an HUF.. It, however, mentions Prabhudayal only as the member of the family stating that his sons had become separate. Here again no action was taken on the alleged separation and assessment was made in the status of an HUF. Exhibit D-4 is the return for the assessment ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 1959-60 the partition was clearly shown from May 1957. From the evidence on record, it is not possible for us to accept the case of the plaintiff of oral partition in May, 1953, or at any time prior to the execution of the partition deed dated 9th April, 1957. The complete partition of the family of Shivnarayan Prabhudayal took place in April/May, 1957, and not in 1953 as pleaded. The partition deed dated 9th April, 1957 (Ex. P-10), which divides the urban properties, refers to Prabhudayal, Harishchandra, Kesarbai and Rameshchandra as members of a joint Hindu family, which shows that till then they were not separate. Further, as already seen, partition in the family in May, 1957, was reported to the ITO by the munim, Bharatlal, as a note to the return for the assessment year 1957-58. This partition is also referred to in the income-tax return for the year 1959-60 (Ex. D-1), to which reference has already been made and which was submitted by Harishchandra, father of the appellants, stating that there was separation in the family in May, 1957. It thus appears that the complete partition pleaded in the plaint did not take place in May, 1953, but in April/May, 1957. The learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-recording of order of partition would not make the assessment void liable to be challenged in a civil suit. This was clearly laid down by the Supreme Court in Kalwa Devadattam v. Union of India [1963] 49 ITR 165 (SC). The remedy in such cases to a party aggrieved by the omission of the ITO to take steps for recording of the partition is to resort to the machinery provided under the Act and not by recourse to a civil suit. In Adl. ITO v. A. Thimmayya [1965] 55 ITR 666 (SC), the Supreme Court again, with reference to s. 25A of the 1922 Act, ruled that the failure to make an order on the claim of partition does not affect the jurisdiction of the ITO to make an assessment of the Hindu family which had hitherto been assessed as undivided. It was observed that the ITO may assess the income of the Hindu family, hitherto assessed as undivided, notwithstanding partition if no claim in that behalf has been made to him or if he is not satisfied about the truth of the claim or if on account of some error or inadvertence he fails to dispose of the claim and that in all these cases the jurisdiction to assess the income of the family hitherto assessed as undivided remain unaffected, for the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en as envisaged by sub-ss. (2) and (3) of that section and the assessment order would not be binding on the members of the family. The decision of the Andhra Pradesh High Court in this case was not given in, a suit but under art. 226 of the Constitution where the jurisdiction to interfere is much wider. Moreover, the view taken by the Andhra Pradesh High Court appears to be of doubtful authority and cannot be applied in the face of the Supreme Court decisions in Kalwa Devadattam [1963] 49 ITR 165 (SC) and A. Thimmayya [1965] 55 ITR 666 (SC). The learned counsel for the appellants then contended that as properties of the family ceased to be joint family properties because of the partition, income from such properties could neither be assessed as income of the HUF nor the properties could be proceeded against for recovery of the tax dues of the HUF. Acceptance of such a contention would make the fiction contained in sub-s. (3) of s. 25A wholly nugatory. A similar contention with respect to partial partition, which is now covered by s. 171 of the 1961 Act was negatived by the Supreme Court in Kalloomal Tapeswari Prasad v. CIT [1982] 133 ITR 690. In that case it was observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were later transferred by a trust deed executed by Seth Gopikishan in favour of the sons of Harishchandra on 12th November, 1965 (Ex. CP-2). This trust deed recites that from the very beginning, i.e., from the date of purchase itself, it was made clear by Seth Gopikishan that he took the houses in reverence to sentiments of his father-in-law, i.e., Prabhudayal, and that he had at that very time clearly given out to Harishchandra that he had absolutely no intention to have any beneficial interest in the property and he shall be holding the same as a trustee for and on behalf of the minor sons of Harishchandra till the youngest of them became major and that till then the family of Prabhudayal and Harishchandra will recover the rent and profits of the property and utilise them for the maintenance and education of the children, the beneficiaries. It will be seen from these documents that there was no real transfer in favour of Seth Gopikishan who had not the slightest intention of taking the property and by the device of sale and creation of trust the real purpose was to shield the suit houses from being proceeded against by the income-tax authorities for recovery of income-tax dues of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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