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2021 (9) TMI 987 - AT - Income TaxValidity of the order of assessment passed in the status of an HUF - assessment in the hands of the non exisiting HUF - whether assessment can be made in the case of disrupted HUF when the HUF ceased to exist on the date when the order of assessment is made? - whether an HUF which was not hitherto assessed in the status of a HUF, can be assessed by taking recourse to Sec.171? - HELD THAT:- The words 'hitherto assessed as undivided' [u/s 171(1)] are very important while considering the section. If the family has already been assessed as a Hindu family, then, under the above provision, it shall be deemed to continue to be undivided family. In the instant case, prior to the assessment year 2002-03, the assessee-family was not assessed as a HUF. Hence, on 30.11.2006, when the assessment was made, the HUF was not in existence. In such a case, the procedure prescribed under Section 171 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. Where a claim was made on the basis of statute, viz., the provisions of Section 14(1) or Section 6 of the Hindu Succession Act, 1956, insofar as income tax law is concerned the matter has to be governed by Section 171(1) of the Act. The aforesaid decision is on completely different facts and not applicable to the present case in which the HUF was never assessed to tax prior to its disruption and hence provisions of Sec.171 of the Act are not attracted at all. The decision in the case of Thimmaiah [1964 (11) TMI 12 - SUPREME COURT] is on a different point as to whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Income-tax Officer, while passing the order under section 155 of the Act, was not justified in treating the share income of profit from the partnership firms as unearned. The same is of no relevance to the present case. The decision in the case of Narendra Kumar J. Modi [1976 (8) TMI 1 - SUPREME COURT] is a case where there was a challenge to an order passed under Sec.25A (3) of the Income Tax Act, 1922. The Hon’ble Supreme Court held that Sub section (3) of s. 25A provides that where an order accepting partition had not been passed in respect of a Hindu Undivided Family assessed as undivided, such family shall be deemed for the purposes of the Act to continue to be Hindu Undivided Family. It was further held that a junior member of the family can, with the consent of all the other members act as a karta, if the senior member gives up his right. The aforesaid decision has no application to the facts of the present case. We allow the appeal of the Assessee and hold that the assessment in the hands of the HUF is liable to be held as invalid and consequently annulled. In view of the above conclusion the other grounds of appeal are not taken up for consideration. - Decided in favour of assessee.
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