1982 (1) TMI 76 - AT - Income Tax

Summary

Issues Involved:
1. Validity of notices issued under section 148.
2. Validity of returns and assessments.
3. Compliance with provisions of section 171 regarding partition of HUF.
4. Correctness of assessed incomes for the years 1968-69 and 1969-70.

Detailed Analysis:

1. Validity of Notices Issued Under Section 148:
The primary contention was whether the notices issued under section 148 were valid. The assessee argued that the notices should have been addressed to Munna Lal Moti Lal, the original HUF, rather than to individual members. The Tribunal held that the ITO intended to assess Munna Lal Moti Lal or its successor, and any mistake in naming the assessee was cured by section 292B of the Act, which states that a notice shall not be invalid due to any mistake, defect, or omission. It was concluded that the notices were legally valid and correctly assumed jurisdiction by the ITO.

2. Validity of Returns and Assessments:
The assessee contended that the returns filed were invalid as they were not properly verified and that the assessments could not take place without valid returns. The Tribunal found no evidence to suggest that the returns were improperly verified. The returns were filed in compliance with the notices issued under sections 148 and 139(2), and the mere omission of the status column was inconsequential. The case cited by the assessee, Shyam Lal Moti Lal Khurja, was distinguished on the facts, as it involved an unsigned and unverified return.

3. Compliance with Provisions of Section 171 Regarding Partition of HUF:
The Tribunal found merit in the assessee's contention that the ITO should have complied with section 171, which requires an enquiry into the claim of partition of the HUF. The ITO had acknowledged the claim of partition in his reasons for reopening the assessments but did not conduct the necessary enquiry. The Tribunal directed the ITO to comply with section 171 and make fresh assessments for the years 1970-71 to 1976-77, as the claim of partition was duly brought to his notice.

4. Correctness of Assessed Incomes for the Years 1968-69 and 1969-70:
For the assessment year 1968-69, the Tribunal directed that the income declared as per the ledger seized during the search should be accepted, reducing the assessed income from Rs. 6,000 to Rs. 2,481. The inclusion of Rs. 4,000, being the income of Smt. Kamla Devi, was also deleted due to lack of evidence linking it to the HUF. Similarly, the unexplained investment in the construction of a house and the notional income from property were excluded. However, the addition of Rs. 4,000 for low withdrawals was sustained.

For the assessment year 1969-70, the Tribunal reduced the assessed income from Rs. 6,000 to Rs. 4,741 as per the ledger. The income of Smt. Kamla Devi and the investment in the name of Smt. Asha Rani were excluded due to insufficient evidence linking them to the HUF. The addition of Rs. 4,000 for low withdrawals was confirmed.

Conclusion:
The appeals were partly allowed. The Tribunal validated the notices issued under section 148 and the returns filed in response. It directed the ITO to comply with section 171 regarding the partition of the HUF for the years 1970-71 to 1976-77 and to make fresh assessments accordingly. For the years 1968-69 and 1969-70, the assessed incomes were adjusted based on the evidence available, with certain additions being sustained and others deleted.