TMI Blog2020 (2) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act of 1961. No business assets were left in the HUF and business of HUF came to an end after the said partition. Since wife of Harnarayan Bhagat was also allotted her equal share in the above partial partition, so far as the HUF of Harnarayan Bhagat is concerned, Harnarayan was left as the sole surviving coparcener in said HUF and his status was converted into an individual in respect of assets allotted to him in the above partial partition, however, despite the said position, Shri Harnarayan wrongly filed the returns in the status of HUF. Similarly the three sons of Harnarayan who were married having wife and children also wrongly filed their respective returns as individuals although their correct status on receipt of the property in partial partition was that of their respective HUFs. Assessments of Harnarayan Bhagat for various assessments years were completed in the wrong status of HUF by Assessing Officer on the basis of returns filed without examining his correct status post partition. Similarly assessments of his sons were completed in status as Individuals of his sons were completed in status as Individuals as against correct status of their respective HUFs whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome Tax Appellate Tribunal, Indore (hereinafter referred as ITAT ). 03-The facts of the case reveal that a search operation was carried out under Section 132 against the assessee on 24/09/1993 and during the course of search the assessee stated that he was initial partner of firm M/s. Radhakishan Balkishan carrying on the business of grocery (Kirana) along with sons. Later on, on account of his retirement from the partnership firm, his three sons namely Shri Gauri Shankar, Shri Shesh Narayan and Shri Ganesh Narayan continued with the business activities under the name and style of M/s. Gauri Shankar Brothers. It was also stated by him that M/s. Shree Traders was the proprietary concern of of Shri Shesh Narayan engaged in teh business of money lending, cotton trading, etc., however, funds were supplied by the assessee M/s. Radhakishan Balkishan. 04-The facts of the case also reveals that M/s. Shree Traders was shown as branch of M/s. Gauri Shankar Brothers since Assessment Year 1986-87 and the aforesaid fact was brought on record in the partnership deed on 06/04/1992 for the first time. The firm M/s. Gauri Shankar Brothers was dissolved w.e.f. 01/04/199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -, however, later on retracted the same during post search period and during assessment proceedings. 08-The Assessing Officer has made addition of ₹ 16,779/- on protective basis on account of unexplained investment in money lending business (Girvi business) and interest income therefrom, which included income of ₹ 6,000/- disclosed by the assessee under this head. Thus, made an addition of ₹ 10,779/-. The Commissioner of Income Tax has deleted this addition in full stating that there is no concrete basis for estimation of income from money lending business. 09-The matter has finally reached the ITAT. The appeals were also filed by the Department and the ITA relying upon the decision of Hon'ble Supreme Court in the case of K.M. Sharma Vs. ITO reported in 254 ITR 772 has directed the Assessing Officer to apply Sub Section (1) (2) of Section 150 of the Income Tax Act, 1961, which intends to lift the embargo of the period of limitation under Section 149 enabling the authorities to reopen the assessment not only on the basis of the order passed in the proceedings under the Act of 1961 but also on the basis of an order of a Court in any proceedings u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by assessees restored the cross- objections and has admitted the same on substantial questions of law formulated by this Court. 13-The following substantial question of law arises in the present appeal:- Whether, the learned ITAT was justified in not treating the Harnarayan Bhagat as a separate HUF for making the assessment in the status of HUF or erred in issuing the direction in making the fresh assessment in a new status when the said assessment is barred by limitation. 14-The controversy in the present cases is therefore, about validity of directions made by ITAT to make assessments Harnarayan Bhagat and his three sons in the new status of Individuals / HUFs after holding that the earlier assessments made in the status of HUF / Individuals were not correct. 15-Shri Harnarayan Bhagat was assessed in the status of HUF as Karta in respect of the business carried on in the name of Shri Radhakishan Balkishan. A partial partition of HUF business took place on 13/11/1974 in which Smt. Bansibai W/o Harnarayan, Shri Harnarayan and their three sons were given equal shares. The said partial partition was accepted by ITO under Section 171 of the Act of 1961. N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since Harnarayan and his wife were given equal shares, independent of each other in partial partition, Harnarayan Bhagat did not retain the status of HUF. Similarly so far as the sons are concerned since on the date of partial partition they were married and having children they from their respective HUF with their wife and children. Accordingly, ITAT held that the income earned by Harnarayan Bhagat should have been assessed in his individual capacity, whereas income earned by his sons with the assistance of their shares received under partial partition should have been assessed in their HUF status, in case of each son consisting of himself, his wife and children. The issue was accordingly decided by ITAT in favour of assessees. 19-The respondents have further submitted that after coming to above conclusion that the assessment were made in wrong status, the ITAT has then in paragraph No.21 of its order, further directed the Assessing Officer to make assessment in case of Harnarayan Bhagat in his individual capacity and in case of three sons in the status of their HUF consisting in case of each son, of himself, has wife and their children, although period of limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpreted by the apex Court. Reliance has been placed upon a judgment delivered by the apex Court in the case of ITO Vs. Murlidhar Bhagwandas reported in (1964) 52 ITR 335, wherein the apex Court has held that the expressions findings and directions in second proviso to Section 34(3) (the provisions of which were similar to the above provisions), means, a finding necessary for giving relief in respect of the assessment for year in question, and the direction which the appellate or revisional authority, as the case may be, was empowered to give under the sections mentioned in the proviso. A finding therefore, could only be that finding which was necessary for disposal of appeal with respect of assessment of a particular year. It was further held that the AAC might hold, on the evidence that the income shown by the assessee was not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The findings in that context were that the income did not belong to the relevant year. He might incidentally find that the income belonged to another year, but that was not a finding necessary for disposal of appeal in respect of year o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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