TaxTMI 
TaxTMI 
2003 (6) TMI 197
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....t years 1983-84, 1984-85 & 1985-86 1. "For that the Commissioner of Income-tax (Appeals) had erred in law and in facts holding that there is valid HUF in existences assessable to tax and cancelling the protective assessment. 2. For that the Commissioner of Income-tax (Appeals) had erred in law and in facts in holding that the FDRs in the balance sheet and its income will be considered in the hands of the said HUF on a substantive basis." 2. The assessee filed its return of income claiming the status of HUF. In the assessment year 1988-89 while completing the assessment on 6-3-1992 the Assessing Officer held that the HUF is non-existence and he has taken the status of the assessee as AOP and assessed the income shown on protective basis. The Assessing Officer also held that the same income is assessable on a substantive manner in the hands of Ajit Barkataky and Krishna Kanta Barkataky. The assessment for the assessment years 198384 to 1985-86 have also been completed on 17-3-94 with similar observations and findings in the status of AOP. 3. The Assessing Officer has recorded that Gauri Kanta Barkataky died sometime in 1947 leaving behind his four sons, out of which two sons, nam....
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....f the entire funds of the said HUF. It was held that there is a valid HUF in existence assessable to tax and determined the status of the assessee as that of an HUF. The protective measure of the assessment was cancelled and it was held that the FDRs of the said HUF and its income will be assessed in the hands of the said HUF on substantive basis and not in the hands of Krishna Kanta Barkataky and Ajit Barkataky. 5. We have considered the rival submissions at length and perused the orders of the lower authorities in light of the materials available on record. We have duly considered the various papers placed before us in the paper book. We have also considered the various case laws relied upon by the learned A.R. of the assessee but we are of the considered opinion that the said case laws do not conclusively establish the contention of the respondent. It is observed that the point of time at which Sri B.K Barkataky and Sri K.K. Barkataky exercised their claimed volition to form HUF is netiher spelt out nor established. The state of facts during the period 1947 to 1970 are not on records. However, a scrutiny of the financial statements of the assessee shows that the source of incom....
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....orders of the first appellate authorities to the extent it cancelled the protective description of the assessment. The appeal of the Revenue in respect of this issue is dismissed. 9. In the result, the appeals of the Revenue is partly allowed. Per B.R. Mittal, J.M.--The order proposed by Learned Brother A.M. has been gone through by me carefully. I have agreed with Learned Brother in respect of the issue involved in these appeals that the claim of the status by the assessee as HUF is not conclusively proved but have not been able to persuade myself to agree with his conclusion arrived at. Therefore, I proceed to express my dissenting views. 2. The question for our consideration in these appeals is, whether there was a valid HUF in existence assessable to tax or not. For the sake of clarity, I consider it necessary to state the grounds on which the department has filed these appeals and the same are as under: ITA Nos. 11, 12 & 13 (Gau.) of 1996 (Assessment Years: 1983-84, 1984-85 & 1985-86) "1. For that the Commissioner of Income-tax (Appeals) had erred in law and in facts holding that there is valid HUF in existence assessable to tax and cancelling the protective assessment. ....
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....set aside the assessments to the file of the Assessing Officer. 6. Presently, these appeals arise out of the assessment orders made for the assessment years 1983-84, 1984-85 and 1985-86 under section 143(3)/251/144A all dated 17-3-1994. The Assessing Officer in the assessment orders after considering the facts and the requirements of legal position under Dayabhaga Hindu Law, has held that there is no HUF assessable to tax as the status of HUF has not been accepted by the department from assessment year 1980-81 onwards. Since the returns were filed, the Assessing Officer completed the assessment as a protective measure in the status of AOP. Assessing Officer, further held that the FDRs as shown in the balance sheet and the income would be assessed in the hands of the person(s) in whose name the FDRs were found viz., K.K. Barkataky and Ajit Barkataky on a substantive basis. 7. Similarly, in respect of assessment year 1988-89, the Assessing Officer completed the assessment under section 143(3) by order dated 30-3-1992 by denying the existence of HUF and assessing the returned income on protective basis in the status of AOP but on substantive basis in the hands of the concerned perso....
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....assessment in the status of AOP, as the Assessing Officer did not find HUF as an entity assessable to tax but to complete the assessment. On the other hand, the Learned CIT(A) accepted the existence of the HUF and accordingly, held to assess the income shown by the assessee on substantive basis and consequently cancelled the protective assessment and also cancelled the order of the Assessing Officer to make the substantive assessment of the income in the hands of the other persons namely K.K. Barkataky and Ajit Barkataky. I am of the considered view that in the facts and circumstances of the case, the order of the Assessing Officer that there is no existence of valid HUF is to be confirmed but the protective assessment made in the hand of AOP without making any investigation by him is to be cancelled and consequently the returned income is to be assessed in the hands of the other persons namely KK Barkataky and Ajit Barkataky on a substantive basis. 14. In view of the above, I allow both the grounds of appeal for the assessment years 1983-84, 1984-85 and 1985-86 and also allow the only ground of appeal for the assessment year 1988-89 on the appeals filed by the Department by accep....
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....ts of difference in these appeals. 2. The points of difference are as under: As per Accountant Member-- (1) Whether, in view of the facts and circumstances of the case, when the Assessing Officer himself after rejecting the status of the assessee as HUF assessed the assessee in the status of an AOP, on second appeal, finding that the status claimed as HUF is not proved, was there any error in accepting the status of the assessee as an AOP? (2) Whether, in view of the facts and circumstances of the case and also in view of the finding recorded in para 5 of the order in respect of the sources of the funds invested in FDRs the income in question can be held to be the individual income of Shri K.K. Barkataky and Shri Ajit Barkataky? As per Judicial Member-- Whether, on the facts and in the circumstances of the case, is it in order to confirm the returned income as AOP on substantive basis when the said issue is not a ground of appeal filed before us? 3. In my considered view, the question framed by the learned Judicial Member brings out the real difference of opinion between the Members insofar as the Members have agreed that there was no HUF in existence, as held by the Assessi....
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....ssing Officer that the first return was filed by the said HUF for the assessment year 1979-80 on 21-8-1982 i.e. 35 years after the formation of the so-called HUF. The return for the assessment year 1979-80 had been accepted in the status of HUF without making any enquiry and without going into details. However, the Assessing Officer had made enquiries in the assessment year 1983-84 onwards and asked the assessee to establish the claim of status as HUF. It was found by the Assessing Officer that the returns of income for the assessment years 1980-81, 1981-82 and 1982-83 were purportedly verified by Biswakanta Barkataky, as Karta, but the signature was that of Krishnakanta Barkataky. For the assessment years 1983-84, 1984-85 and 1985-86 the returns of income had been verified and signed in the name of Biswakanta Barkataky. When asked to furnish evidence regarding formation of HUF after the death of Gaurikanta Barkataky the assessee referred to the consistent conduct which, according to them, established the existence of HUF. The Assessing Officer pointed out that Biswakanta Barkataky had always stayed at village Jammuguri, Naogaon District, and was basically a cultivator. Two of his....
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....mpleted as a protective measure in the status of AOP. The FDRs in the balance sheet and the income assessed on a protective basis will be considered in the hands of Krishnakanta Barkataky & Ajit Barkataky on a substantive basis." 7. For the assessment years 1984-85 and 1985-86 also the Assessing Officer did not accept the status of the assessee as HUF. The assessment orders for the assessment years 1983-84, 1984-85 and 1985-86 have been made on 31-3-86. The assessments were completed on protective basis in the status of AOP for the assessment years 1983-84 and 1984-85. For the assessment year 1985-86 the assessment was made on protective basis in the status of HUF. The assessment for the assessment year 1988-89 was made on similar lines vide order dated 6-3-92. It is not disputed that assessments have also been made in respect of investment made in FDRs and interest derived therefrom in the hands of individuals for which there is no controversy involved in these appeals. 8. The assessee appealed to the CIT(A) against the orders of the Assessing Officer, and CIT(A), vide consolidated order for the assessment years 1983-84, 1984-85 & 1985-86 dated 18-11-88, dismissed the appeals of....
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....t year 1988-89. 11. Aggrieved by the order of the CIT(A), the revenue filed appeals before the Tribunal. 12. The controversy arising in these appeals essentially is as to whether the Assessing Officer was justified in not accepting the status of the assessee as that of HUF. The learned Accountant Member as well as learned Judicial Member have concurred in regard to the said issue, insofar as they have agreed that the Assessing Officer was justified in not accepting the existence of an HUF. Thus, as a result of concurring opinion of the learned Members of the Division Bench, the action of the Assessing Officer in denying the status of HUF to the respondents stands confirmed. As far as the said issue is concerned, it is unnecessary for me to record a finding one way or the other as there is no difference of opinion in regard to this issue. The difference of opinion has arisen only on account of consequences of not recognizing the respondents' status as that of HUF. The Assessing Officer, after recording a finding that no HUF existed, held that the returns of income filed in the name of Gaurikanta Barkataky & others, the assessments are completed, as protective measures, in the stat....
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....ve been separately assessed to tax. Therefore, the action required to be taken as a result of non-recognition of HUF by the Assessing Officer stands as already taken by the Assessing Officer. It is neither the case of the assessee nor that of the Revenue that there was an AOP in existence and that the investments as also the income therefrom related to such AOP. Even before the Tribunal, the assessee did not claim that any AOP existed. In such circumstances, recording a finding that the income disclosed by the assessee in the status of HUF should be assessed in the status of AOP, on substantive basis, on the basis of returns filed by the assessee in the status of HUF, is, in my considered view, not in order. 14. As already pointed out, substantive assessments having been made in the hands of the individuals, in separate proceedings, there is no scope for recording a finding that the income should be assessed in the hands of the AOP on substantive basis. As far as the present assessments are concerned, the Tribunal having recorded a finding that HUF was not in existence at all, the returns filed in the status of HUF have got to be cancelled on assessments in the cases of actual own....