TMI Blog1997 (7) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Tribunal was legally correct in holding that the partial partition between the two groups effected on January 1, 1971, was valid under the Hindu law ?" The facts recorded in the statement of facts by the Appellate Tribunal are that the assessee is a Hindu undivided family, headed by Shri Shrawan Kumar Swarup as its karta. Smt. Asha Kumari Swarup is the wife of the karta and they had two minor children, namely, Harish Kumar Swarup and Nandita Swarup, The karta by virtue of powers and rights vested in him, voluntarily and with the consent of other members of the family, effected a partial partition in respect of the share capital and rights in the profits and in the reserve of the firm, Sharwan Cold Storage General Mills in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee by dividing the interest of the Hindu undivided family in the firm of Sharwan Cold Storage and General Mills and the capital invested therein was not according to law. Not that the Hindu undivided family was not entitled to make a partial partition, but the partial partition should have been made defining the share of each and every person entitled to get the share. Instead of doing that, the share in the firm has been divided in two groups, viz., one consisting of Sharwan Kumar Swarup and his minor daughter, Kumari Nandita Swarup, and the second group consisting of Smt. Asha Kumari Swarup and her minor son, Harish Kumar Swarup. The shares of the members in each group were never defined and as such the partial partition coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore initiating proceedings under section 263(1) of the Act of 1961. Therefore,... we hold that the order of the Commissioner of Income-tax under appeal is bad in law and is without jurisdiction, as no notice was served on the other members of the family." On the merits, the Tribunal held that after partition, members of each group held the property as tenants-in-common. "The shares were obviously 1/4th each and no further defining thereof was necessary... In the present case, the partial partition was both in respect of persons constituting the Hindu undivided family and the properties belonging to the Hindu undivided family... it is absolutely clear from the above that each group inter se had equal shares and thus, the share of each memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tunity of being heard is given to the persons affected by cancellation. The order under section 171 was passed by the Assessing Officer qua the members of the family as well. Cancellation of that order will affect such members of the family and, therefore, service of notice on each such member of the family was essential. After disruption of the Hindu undivided family, though partially, each member of the family was entitled to notice before the order passed under section 171, is interfered with by the Commissioner of Income-tax. A similar view was taken by the Andhra Pradesh High Court in the case of T. G. Sulakhe v. CIT [1960] 39 ITR 394, while considering the provisions relating to partition under the Indian Income-tax Act, 1922. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... standing counsel. When partial partition qua the persons is permissible under the law, the members of the Hindu undivided family can divide themselves groupwise and it is not necessary to define the share of each member of each group. When a property is held by two groups and if the share of each group is well defined, the requirement of partial partition will stand fulfilled. From the memorandum of partition, it is manifest that the share of each group of the two is well defined and thus the legal requirement is fully satisfied. For the above reasons, the view taken by the Commissioner in his order under section 263(1) of the Act does not commend to be accepted. We agree with the Appellate Tribunal that a valid partial partition had been ..... X X X X Extracts X X X X X X X X Extracts X X X X
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