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Partition of Hindu undivided family, assessment of wealth in the name of family members, inclusion of gifts made to grandchildren in the wealth of Hindu undivided family. Analysis: The case involved a reference under section 27(1) of the Wealth-tax Act, 1957, regarding the treatment of funds allegedly given to Smt. Badamibai and gifts made by her to her grandchildren in the context of the assessee-Hindu undivided family. The assessee claimed partial partition of the family, but the Wealth-tax Officer deemed it sham and included the wealth in the name of Smt. Badamibai in the family's assessment. The Appellate Assistant Commissioner upheld this decision, including gifts made by Smt. Badamibai to her grandchildren. The Tribunal affirmed these findings, stating that funds and income continued to belong to the Hindu undivided family due to the non-acceptance of partition. The Tribunal also noted that the gifts made by Smt. Badamibai to her grandchildren were part of the family's wealth, except for a portion given out of her stridhan. The Tribunal's decision was challenged by the assessee, leading to the reference before the High Court. The High Court considered previous judgments related to the matter under the Income-tax Act and concluded that the funds given to Smt. Badamibai indeed belonged to the Hindu undivided family and were assessable under the Wealth-tax Act. However, the High Court disagreed with the Tribunal's inclusion of gifts made to the grandchildren in the family's wealth. The court held that the gifts to the minor grandchildren were genuine and not liable to be included in the assessment of the Hindu undivided family. The court aligned its decision with previous judgments under the Income-tax Act, emphasizing the distinction between the funds given to Smt. Badamibai and the genuine gifts made to her grandchildren. Consequently, the court answered the reference by affirming the inclusion of funds given to Smt. Badamibai in the family's wealth but excluding the gifts to the grandchildren from assessment. In conclusion, the High Court clarified the treatment of funds given to Smt. Badamibai and gifts made to her grandchildren in the context of the assessee-Hindu undivided family. While the funds were deemed part of the family's wealth, the genuine gifts to the grandchildren were excluded from assessment. The court's decision was based on the non-acceptance of partition and previous judgments under the Income-tax Act, ensuring a clear distinction between the two aspects in the assessment process.
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