TMI Blog1987 (12) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... on on 25-10-1973. Thereafter, on 12-7-1974 there was a partial partition as a result of which the assessee received a sum of Rs. 5,000 and separated from the HUF. According to the provisions of section 64(2) (c) as amended by the Taxation Laws (Amendment) Act, 1975, it is quite clear that where a converted property has been the subject-matter of partition amongst the members of the family, the income derived from such converted property as is received by the spouse or minor child from assets transferred indirectly by the individual to the spouse or minor child and the provisions of section 64(1) shall apply. Accordingly, income from the converted house property has to be assessed in the assessee's hands. The assessee's representative's contention that the provisions of section 64(2) are not applicable to the assessee as he is no longer member of the HUF has no merit and cannot be accepted. Similar inclusion of property income was made in the assessee's income for assessment year 1976-77 also. Therefore, income form house property which was taken in assessment year 1976-77 at Rs. 4,043 is included in the assessee's total income." 4. Consequent to the addition in respect of the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntire past assessment records or connected records of the assessee under any other Act before making the assessment. In this view of the matter, I agree with the ITO that he had jurisdiction to reopen the assessment under section 147(a)'." As regards the addition/inclusion of property income, the learned CIT (A)'s findings are as under : "The plain reading of section 64(2)(a) (2)(b) clearly indicates that the any conversion of individual's own property to the HUF has to be ignored and the income has to be taxed in the hands of the individual who impressed it with the character of HUF property. Here, the assessee was a member of the HUF after 31st December, 1969, at the time of impressing the property with the HUF character which was on 25-10-1973, individual was a member of the HUF, as such section 64(2) will have full impact in the present case. Thus, the ITO's action is taxable in the hands of the assessee under section 64(2)(c) by the same is taxable in view of the section 64(2)(a) and (2)(b). In this view of the matter, the appeals are dismissed." From the above findings, it is unequivocally clear that, the assessee had firm liability and obligation to show the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment would have been irretrievable. The facts and circumstances not only call for levy and recovery of tax which was rightly due to the Govt., but also to levy penalty under section 271(1)(c) so that the assessee is deterred from obtaining wrongful advantage in his assessment by not disclosing income which is assessable in his hands. 7. Lastly, inthe course of personal hearing on 31-8-1984, the assessee's representative has placed reliance on the following decisions : 1. CIT v. P. A. Patel [1981] 127 ITR 390 (Pat.). 2. Harak Chand Phoolchand Jain v. CIT [1984] 146 ITR 25 (MP). 3. Navinchandra Kantilal (HUF) v. ITO [1984] 16 Taxman 82 (Ahd.-Trib.). Perusal of these decisions shows that all the three decisions are clearly distinguishable on facts as will be seen hereunder : 1. the first decision refers to non-inclusion of income of his wife under section 64(1) for A. Ys. 1962-63 1963-64 before amendment of section 271(1)(c). 2. The second decision relates to an assessee who filed two returns of income before the same ITO for the same assessment year for two different sources of income on account of ignorance. 3. In the third decision, the assessee had shown const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y consisted of the assessee, his wife and his major son. It was on 25th October, 1973 that the assessee, threw his self-occupied residential property into the hotchpotch of his HUF. It was further submitted that vide partition deed dated 12th November, 1974 the assessee opted out from the HUF which thereafter consisted of his wife, and his major son. According to the learned counsel these facts had been regularly indicated by the assessee both in his income-tax as well as wealth-tax returns all along from assessment year 1974-75 up to assessment year 1976-77. It was submitted that nothing in law required the assessee to continuously go on repeating these 'notes' in his returns for years to come. It was further stated that the assessee in compliance to the notices u/s. 148 for both the years under consideration, filed the returns of income once again indicating by way of a 'note' that no income was liable to be added u/s. 64(2) of the Income-tax Act, 1961 since the assessee has relinguished his interest in the HUF on 12th November, 1974. 13. At this stage the assessee's counsel drew our attention to the provisions of section 64(2) of the Act. According to him, as long as the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om a comparison of the documents filed in both the appeals as follows : In the case of Hasmukhlal C. Shah : (1) Order u/s. 271(1)(c) for A.Y. 1977-78 (2) Order u/s. 271(1)(c) for A.Y. 1978-79 (3) Order u/s. 271(1)(c) for A.Y. 1979-80 (4) Order of CIT (A) for A.Ys. 1977-78 and 1978-79 under section 271(1)(c). (5) Order of CIT (A) for A.Y. 1979-80 u/s. 271(1)(c). (6) Assessment orders for 1977-78 and 1978-79 u/s. 143(3)/147(a). In the case of Deshratlal C. Shah (the appellant) : (1) Statement of facts and grounds of appeal before CIT (A). (2) Statement of income of A.Ys. 1974-75 to 1977-78. (3) Assessment order for A.Y. 1977-78 dt. 28-3-1980. (4) Notice u/s. 148 dated 19-2-1982. (5) Return filed in response to notice u/s. 148. (6) Assessment order u/s. 143(3) r.w.s. 147(a) dated 19-6-1982. (7) Statement of income for A.Y. 1978-79. (8) Assessment order A.Y. 1978-79 dated 28-2-1981. (9) Notice u/s. 148 for A.Y. 1978-79. (10) Return filed in response to notice u/s. 148. (11) Assessment order for A.Y. 1978-79 u/s. 143(3) r.w.s. 147(a). (12) CIT (A) order for A.Ys. 1977-78 and 1978-79 dated 1-3-1984. (13) Statement of income of D. C. Shah (HUF) fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er partial or total) amongst the members of the family, the income derived from such converted property as is received by the spouse or minor child on partition shall be deemed to arise to the spouse or minor child from assets transferred indirectly by the individual to the spouse or minor child and the provisions of sub-section (1) shall, so far as may be, apply accordingly." 19. It is apparent straightaway that sub-sections (a) and (b) would not be attracted since we are dealing with the period after a partial partition has been effected (recognised by the ITO vide order dated 15-2-1978) and the assessee has opted out of the HUF which now consists of his wife and major son. The only other sub-section is (c) which again would not be attracted since the income is not received by the spouse or the minor child (in the present case it is the case of a major son) but by the HUF. We find force in the submission of the assessee's counsel that the income from property was in fact not taxable at all in the assessee's hands and the ITO's action had been accepted only on account of the "smallness" of the amount involved. 20. We are also of the view that no mala fide intention can be attr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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