TMI Blog2009 (1) TMI 263X X X X Extracts X X X X X X X X Extracts X X X X ..... 997-98, illegal and not sustainable - 30 of 2006 - - - Dated:- 20-1-2009 - J.S. KHEHAR and NAWAB SINGH, JJ. Akshay Bhan, for the appellant. Ms. Savita Saxena, for the respondents. JUDGMENT The judgment of the court was delivered by J. S. KHEHAR, J. - A notice under Section 148 of the Income Tax Act 1961 (herein after referred to as "the Act") was issued to the appellant on 14.03.2002, the same came to be served on the appellant on 21.03.2002. The claim of the Assessing Officer was that the appellant was assessable as a Hindu Undivided Family. On the contrary, the claim of the appellant-assessee was that a partial partition had taken place on 30.04.1978 whereby immovable as well as movable assets of the Hindu Undivided Family were divided by metes and bounds between the coparceners, and as such, there was no question of assessing the appellant as a Hindu Undivided Family. 2. After 30.04.1978, i.e. after the partial partition had taken place amongst the members of the Hindu Undivided Family, the property in question was sold, and the proceeds thereof were invested as Fixed Deposit Receipts in the name of the appellant-assessee i.e. in the capacity of the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of the Hindu undivided family. (2) Where, at the time of making an assessment under section 143 or section 144, it is claimed by or on behalf of any member of a Hindu family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Assessing Officer shall make an inquiry thereinto after giving notice of the inquiry to all the members of the family. (3) On the completion of the inquiry, the Assessing Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place. (4) Where a finding of total or partial partition has been recorded by the Assessing Officer under this section, and the partition took place during the previous year,- (a) the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and (b) each member or group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partial partition had taken place. (c) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition. (d) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition, and the provisions of this Act shall apply accordingly. Explanation - In this section,- (a) "partition" means-- (i) 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 (ii) where the property does not admit of a physical division, then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition; (b) "partial partition" means a partition which is a partial as regards the persons constituting the Hindu undivided family ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a case of a Hindu family which has never been assessed before as a joint family i.e., as a unit of assessment. In other words, this section has application to a Hindu family which has been assessed before as a joint family and if the Hindu undivided family has never been assessed to tax, this section has no application. The Hindu undivided family of Kantilal Ambalal, admittedly, was never assessed to income-tax in the past. Therefore, section 171 of the Act has no application at all to the facts of the instant case. A similar view has been taken by the Andhra Pradesh High Court in Addl. CIT v. P.Durgamma [1987] 166 ITR 776 (AP)." 8. It would be pertinent to mention that after the passing of the assessment order dated 6.03.2003 the appellant preferred an appeal before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (Appeals) vide his order dated 27.06.2003 accepted the appeal by holding that the appellant could not have been assessed as a Hindu Undivided Family, under Section 171 of the Act. The aforesaid finding rendered by the Commissioner of Income Tax (Appeals) dated 27.06.2003, was assailed by the Revenue before the Income Tax Appellate Tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent based on sub-section(9) of Section 171 of the Act. There can be no doubt that sub-section (9) of Section 171 of the Act, is an exception to sub-Section (1) of Section 171 of the Act, as such, if the Revenue can establish the applicability of sub-section (9) of Section 171 of the Act, that would completely negate the submission advanced by the learned counsel for the appellant. We shall therefore, in the first instance, determine the applicability of sub-section (9) of Section 171 of the Act, to the facts and circumstances of the present case. We are satisfied that for the applicability of sub-section (9) of the Section 171 of the Act, two pre-requisites are essential. Firstly, the partial partition should have taken place after 31.12.19978. And secondly, such partial partition must have taken place in a Hindu Undivided Family which hitherto before was assessed as a Hindu Undivided Family. It is not a matter of dispute, that the appellant-assessee had not been assessed as a Hindu Undivided Family ever before the Assessment Year in question, namely 1997-98. We are, therefore, of the firm view, that the second essential ingredient for the applicability of sub-section (9 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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