9911796707
TMI Blog2022 (11) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... er the disruption of the HUF. It was held by the Hon ble Court that fiction that a joint family shall be deemed to continue, enunciated in section 171(1) of the I.T.Act is only for limited purpose of roping in cases of joint families which had hitherto been assessed. It was further observed by the Hon ble Court that it is not possible to extend that fiction beyond the field legitimately intended by the statute. It was held by the Hon ble Court that the expression hitherto assessed occurring in section 171 of the I.T.Act is significant and only HUF which had suffered in the past would deem to continue to be HUF till an order of partition u/s 171(1) is recorded HUF was partitioned on 30.06.2002. Admittedly, the said partition deed was forming part of the seized document during the course of search. The Assessing Officer, who passed the original order u/s 153C of the I.T.Act in the individual case had accepted the partition, which was part of seized material. The assessment order u/s 144 r.w.s. 147 of the I.T.Act in the case of HUF was completed on 25.03.2013. In the instant case, the HUF was disrupted / partitioned as on the date of assessment (Assessment order in case of HUF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. The brief facts in relation to the above case are as follows: A search and seizure operations were conducted in the case of one Shri K.J.Purushotham Reddy on 26/8/2008. During the course of search operations, the residential premises of Shri C.Rajkumar (kartha of assessee), were also covered. It was stated that as a result of search and seizure operations, certain documents belonging to the assessee were found and seized by the Investigation Wing of the Department. During the course of search operations, it was stated by Shri Rajkumar who is the kartha of the present assessee i.e. Rajkumar C, HUF that regular returns of income were being filed in the individual capacity and no returns were filed in the status of Rajkumar C, HUF , assessee herein. It is stated that Shri Rajkumar appeared before the Investigation Wing of the Department and gave a statement on 26/08/2008 and also filed a letter dated 24/12/2008 before the ADIT, Investigation Wing that the income earned from real estate activities belong to the HUF. However, no returns were filed. While matter stood thus, assessments were completed in the hands of Shri Rajkumar, in his individual capacity u/s 143(3) read with s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not in his individual capacity. The income earned in the individual capacity of Rs.54,72,500/- has been separately admitted by revising their returns and hence, it is held that A.O. shall take steps to assess the balance income of RS.2,40,25,150 (Rs.2,37,96,270 + Rs.2,28,880) only in the hands of their HUF as directed in 2005-06. 4. Consequent to the above directions, notice u/s 148 of the I.T.Act was issued to the assessee, namely, the HUF and reassessments were completed. The view taken by the A.O. in assessing the income in the hands of the HUF for assessment years 2005-2006 to 2007-2008 was confirmed by the CIT(A). On further appeal by the assessee, the Tribunal decided the issue of validity of reassessment in favour of the assessee. As mentioned earlier, the Tribunal order was set aside by the Hon ble High Court. 5. The learned AR submitted that the Assessing Officer is required to pass order u/s 153C of the I.T.Act and not u/s 144 r.w.s. 147 of the I.T.Act. It was further contended that the Assessing Officer should have given specific opportunity u/s 153(3) Explanation 3 to the assessee, which was not provided to the assessee. Lastly, it was contended that the HUF h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the course of search. The Assessing Officer, who passed the original order u/s 153C of the I.T.Act in the individual case had accepted the partition, which was part of seized material. The assessment order u/s 144 r.w.s. 147 of the I.T.Act in the case of HUF was completed on 25.03.2013. The Hon ble jurisdictional High Court in the case of CIT v. M/s.Lakkanna Sons in IT Reference Case No.57/1994 (judgment dated 26.05.2005) had held that when HUF was not assessed in that status prior to the relevant assessment year, the Assessing Officer has erred in assessing the assessee as an HUF after the disruption of the HUF. It was held by the Hon ble Court that fiction that a joint family shall be deemed to continue, enunciated in section 171(1) of the I.T.Act is only for limited purpose of roping in cases of joint families which had hitherto been assessed. It was further observed by the Hon ble Court that it is not possible to extend that fiction beyond the field legitimately intended by the statute. It was held by the Hon ble Court that the expression hitherto assessed occurring in section 171 of the I.T.Act is significant and only HUF which had suffered in the past would deem to cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided in the Act or under the general principles of the Hindu law after the disruption of the family. The general law does not provide for any machinery to determine the liability of the individual members of the undivided family before disruption. Unfortunately, the machinery provisions of Section 171 and the corresponding provisions in Section 25A are limited in scope to tax only the Hindu undivided family, which has been 'hitherto assessed'. Undoubtedly, after Hindu undivided family had disrupted and in the view of the fact that assessment were completed after the HUF got disrupted, it must be held, therefore, that the proceedings were irregular and without jurisdiction. The following judicial pronouncements lays down the view as stated above: Roshan Di Hatti v. CIT [1968] 68 ITR 177 (SC), Rameswar Sirkar v. ITO [1973] 88 ITR 374 (Cal.), Shyam Sundar Bajaj v. ITO [1973] 89 ITR 317 (Cal.). Thus, we are of the view that the assessment made on 30.11.2006 on the assessee as HUF is not valid as on that date, the HUF was not in existence. Thus, we cancel the assessment made on the assessee in the status of HUF. 9. In the instant case, the HUF was disrupted / partition ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
