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TMI Blog1982 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... hanna. Earlier, the assessee HUF was a partner in the firm M/s Sanwal Das Khanna which carried on cloth business. In terms of a memorandum drawn up on 1st July, 1965 a partial partition of the assessee HUF was effected as regards the business interest and the share of profit was divided amongst its members. The said partial partition was accepted vide order dt. 21st February, 1969 of the ITO passed u/s 171. Thereafter the share income from M/s Sanwal Das Khanna was assessed in the individual hands of the three members of the assessee HUF. However, the Firm M/s Sanwal Das Khanna was dissolved w.e.f. 23rd June, 1971 and the assessee HUF started doing the same business on its own account in the name of Sanwal Das Prem Kishore Khanna by utilisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the capacity of an HUF and that the cases were time barred, the ITO proceeded to complete the assessments of the assessee HUF in a protective manner. The two assessments were completed accordingly on a protective basis and the entire business income was taxed in the hands of the assessee HUF. 3. In the appeal against the ITO's order u/s 171 the partial partition claimed was sought to be justified by the assessee u/cl (a) (ii) of the Explanation to s. 171 as the tenancy right and goodwill received were incapable of division. It was also reiterated that the claim of such a partial partition had already been recognised by the ITO vide his order dt. 21st July, 1969. The AAC accepted the submission of the assessee and held that the claim of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appellate Tribunal also did not notice that in the original as well as in the revised form of appeal, the name of the assessee was so given as not to show that it was an HUF and not an individual. It is on the basis of this omission that the preliminary objection has been taken on behalf of the assessee. In the application dt. 26th May, 1980 the assessee pointed out that the appeal had been filed in the name of P.K. Khanna, individual and therefore there was no occasion to file any revised memo and that in any case the revised memo filed on 19th December, 1979 was out of time as the date of the service of order was 8th May, 1978. In continuation of the said application another application was moved on behalf of the assessee on 27th August, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bjection taken by the assessee and accept the ITA No. 827/Alld/1978-79 as an appeal dully filed with reference to P.K. Khanna, HUF which was filed in time. 5. So far as the appeal in regard to s. 171 matter is concerned, Shri R.K. Upadhyay, the ld. Department representative pleaded strong reliance on the order of the ITO and submitted that the alleged partial partition of the basis of the memo dt. 25th June, 1971 was rightly not accepted as it was only a case of division of income without any division of assets. He pointed out that the balance sheet did not show any division of capital. Reliance was also placed by him on the decision of the Hon'ble Madras High Court in the case of T.G.K. Raman, HUF vs. CIT (1982)26 CTR (Mad) 440 : (1983) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n conformity with that order. Therefore, even though the firm M/s Sanwal Das Khanna was dissolved w.e.f. 23rd June, 1971 and the assessee HUF started doing the same business on its own account in the name of Sanwal Das Prem Kishore Khanna by utilising the tenancy rights and goodwill etc. of the dissolved firm, the efficacy of the order which stood passed u/s 171 reminded unaffected. The assessee HUF had continued to divide the business profits amongst its members as per the original arrangement. It is only with a view to strengthen up the matters on account of subsequent events that the subsequent memorandum dt. 25th June, 1971 came to be recorded. It could not be said that there was again a partial partition which required to be again reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o be assessed separately in the hands of the 3 members of the assessee HUF. The observation of the ITO that the correct status of the assessee should be that of an AOP was also rightly held by the AAC to be incorrect. We also uphold the order of the AAC setting aside the two assessments made by the ITO, for the assessment years in question directing the ITO to reframe the assessment by recomputing the correct total income assessable in the hands of the assessee HUF, the business income being assessed in the hands of the 3 members of the assessee HUF individually. 8. In the result, ITA Nos. 825 and 826 (All) of 1978-79 fail and are dismissed. ITA No. 827 (All) of 1978-79 also fails in substance and is dismissed in the light of our above o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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