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Issues:
Appeal against the order of the AAC confirming the ITO's decision under s. 171(3) of the IT Act regarding the recognition of a partial partition of the assessee-family for the assessment year 1977-78. Analysis: The appellant, Shri K.R. Sree Ramulu Chetty, appealed against the order of the AAC, which upheld the ITO's decision to not recognize a partial partition of the assessee-family on 31st March, 1977. The appellant, as the Karata of a joint family, had movable assets amounting to Rs. 55,911, which he claimed to have partitioned between himself and his two minor sons. The appellant provided evidence of this partial partition through an agreement on stamp paper and proper entries in the family business books. The ITO rejected the claim based on a decision of the Madhya Pradesh High Court, which was found to be in error as it misunderstood the nature of the partition claimed. The first appellate authority also upheld the assessment without considering the specific details of the partition. The appellant argued that the Madhya Pradesh decision should not override the Supreme Court decision in Charandas Haridas vs. CIT, which recognized the division between the adult Karta and minor coparceners. The Tribunal agreed with the appellant, noting that the Madhya Pradesh decision did not consider the Supreme Court ruling and relevant case law, and therefore, should not be followed blindly. The Tribunal carefully reviewed the records and arguments presented. It found that all necessary formalities for the partial partition of movable assets had been fulfilled by the appellant, and the objection raised was based on the Madhya Pradesh High Court decision. The Tribunal cited its previous decisions where it disagreed with the Madhya Pradesh decision, emphasizing that the law as established by the Supreme Court favored the taxpayer. Additionally, the presence of an agreement in the appellant's case, where the Karta acted on behalf of himself and his minor children as their guardian, distinguished it from the circumstances in the Madhya Pradesh case. Consequently, the Tribunal allowed the appeal, directing the ITO to recognize the partial partition of movable assets amounting to Rs. 55,911 as claimed by the appellant.
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