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TMI Blog2022 (3) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to be cancelled. 3. That the issuance of notice u/s 148 is illegal, invalid and void abinitio and the same is liable to be cancelled as this case has been reopened on the basis of borrowed^ satisfaction and without going into the facts and merits of the case. As such the proceedings thereof are illegal, invalid and void abinitio as there is no application of mind at the time of reopening the case. As such the assessment completed accordingly is bad in law and is liable to be cancelled. As such, the order of the worthy CIT(A) thereby confirming the order of the AO is bad in law and is liable to be cancelled. 4. That the AO did not appreciate that mistake cannot be corrected by invoking the provisions of section 292B of the IT Act, 1961. 5. That the authorities below failed to appreciate that this property belongs to HUF as it was ancestral property belonging to great grandfathers. The said property was not acquired by the assessee out of his own assets. It was only inherited property. Thus there was no justification in treating the property belonging to Individual. As such the assessment order is bad in law and is liable to be cancelled. As such, the order of the wort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 34,36, 175/- had escaped assessment. Therefore, for this reason the case was reopened u/s 147 of the Act in his individual capacity and assessed thereof. 5. The Ld. CIT(A) confirmed the reopening of the case u/s 147 of the act by observing that it is not the case of borrowed satisfaction or lack of application of mind of the AO in reopening the assessment. Although, he has mentioned that earlier also this case was reopened u/s 148 of the Act in the status of "HUF and the assessment was completed u/s 147/148 on 27-02-2015 in the status of "individual" at an income of Rs. 35, 80,540/- Since the assessment was reopened in the status of HUF but the assessment completed in the status of individual, the assessment was cancelled by the CIT (A). 5.1 Subsequently the AO again chose to issue notice to the assessee u/s 148 in the 'individual" status of the appellant on the same facts and material before the AO. Since the income on account of long term capital gain for A Y 2009-10 had exceeded the maximum amount which is chargeable to tax, the assessee was liable to file his return of income for AY 2009-10 u/s 139(1) of the Act but as per office record the assessee had not filed his re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Singh [HUF]. [Refer Page No.79 of the paper-book] 2. The copy of reasons recorded in the case of Shri Kewal Singh [HUF] were available at Page No.80 of the paper-book for the same amount of Long Term Capital Gain amounting to Rs. 34,36,175/-. 3. The assessment in the case of Shri Kewal Singh was completed on 27/02/2015 and addition of Rs. 35,80,540/- was made under the head Long Term Capital Gain. [Refer Page No.71 to 78 of the paper-book] 4. Against the said order of ITO, Ward 4(2) Amritsar dated 27/02/2015, the assessee went in appeal before Ld. CIT(A) who vide his order dated 29/03/2016 in Appeal No.30/2014-15 has allowed the appeal of the assessee by observing as under: [Refer Page No.81 to 88 of the paperbook] "The AO always intended to initiate proceedings in the case of Shri Kewal Singh in the status of "HUF" as is apparent from the reasons recorded for initiating proceedings u/s 147. It has further been found that notice u/s 148 and other notices issued u/s 143(2) & 142(1) were also issued to the appellant by presuming his status as "HUF" with PAN - ABTPS3245H. Therefore once a notice u/s 148 & other sections were issued by treating the assessee as "HUF" then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the case cannot be reopened on the basis of change of opinion. This view finds support from the copies of judgments enclosed herewith. 7. Per Contra, the learned DR stands by the impugned order. 8. we have heard the rival contentions, perused the material on record and written submissions filed before us. Admittedly, the land owned by the appellant was ancestral land. The AO observed in the assessment order that the assessee has not filed any evidence or pedigree or any will with regards to such inheritance of the ancestral property. The learned AR argued that the AO was silent as to how many legal hairs of first-degree was there in respect of Maj Singh, Sardool Singh, Inder Singh and how the land was divided amongst legal years in absence of any will and what manner the assessee as you the status of HUF or individual. He further argued that the AO can't be allowed to changes you on the similar facts and circumstances of the case, once the proceedings have been cancelled by the landed CIT appeal. 9. We have observed that on the similar facts and circumstances, earlier the notice u/s 148 dated 21/03/2014 was issued in the case of Shri Kewal Singh (HUF). [APB, Pg. 79] with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t years. Under Section 171 a Hindu family assessed as HUF, is deemed for the purposes of the Act to continue as HUF except where partition is proved to have been effected in accordance with the section. The section further provides that if any person at the time of making of assessment claims that partition total or partial has taken place among the members of the HUF, the Incometax Officer is required to make an inquiry after giving notice to all the members of the family, and to record findings on the question of partition. If on inquiry he comes to the finding that there has been partition, individual liability of members is to be computed according to the portion of the joint family property allotted to them. What would amount to partition for the purposes of the section is contained in the Explanation to the section which defines partition as under: "Explanation.- In this section,- 'partition' means- where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition; or where the property does not admit o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty was physically divided in accordance with the agreement or decree of the Court. 13. In the case of "A.P. Oree v Income-tax Officer, Non-Corporate Ward 1(1), Chennai [2021] 127 taxmann.com 740, the Hon'ble HIGH COURT OF MADRAS following while following the Hon'ble Apex Court (Supra) has held as under: 38B. The above definition of the partition in Explanation to Section 171 of the Income-tax Act, 1961 does not recognise a partition even if it is effected by a decree of court unless there is a physical division of the property or if the property is not capable of being physically divided then such a division of the property to the extent admits shall be partition However, mere severance of status will not amount to partition. In considering the factum of partition for the purposes of assessment it is not permissible to ignore the special meaning assigned to partition under the explanation, even if the partition is effected through a decree of the court. Ordinarily decree of a civil court in a partition suit is good evidence in proof of partition but under section 171 a legal fiction has been introduced according to which a preliminary decree of partition is not enough. Instea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Singh, the family was not assessed as a Hindu Undivided Family (HUF) as he has never filed return of Income being an Agriculturist. Further, the AO always intended to initiate proceedings in the case of Shri Kewal Singh in the status of "HUF" as evident from the earlier reasons recorded for initiating proceedings u/s 147. It has further been found by then CIT(A) that notice u/s 148 and other notices issued u/s 143(2) & 142(1) were also issued to the appellant by presuming his status as "HUF" with PAN - ABTPS3245H. However, the AO had framed the assessment by treating the same income in the hands of Individual with PAN - DEYPS5701H which was held invalid by the CIT(A) by placing reliance on the decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Rohtas Singh (APB, pg.87). 15. The Ld. AR contended that once the proceedings have been cancelled by CIT(A), there was no justification on the part of the AO to restart the proceedings without ascertaining the station of the appellant assessee by enquiries and bringing material on record. Thus, the department failed to apply its mind and have blow hot & cold in the same breath. 16. From the above, it is evident that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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