Income Tax Appellate Tribunal - Jaipur
Wealth Tax Officer vs Ramkalyan Pansari. on 10 April, 1995
Equivalent citations: (1996)55TTJ(JP)523
ORDER
M. A. A. KHAN, J. M. :
Both these appeals by Revenue, pertaining to asst. yrs. 1984-85 and 1985-86, involve common issues on common facts. These are, therefore, disposed of by this common order.
2. The assessee respondent is a Hindu undivided family (HUF). It declared its net wealth, as on the relevant valuation dates, at Rs. 2,40,000 for asst. yr. 1984-85 and at Rs. 2,42,862 for asst. yr. 1985-86. The net wealth declared consisted of immovable as well as moveable properties. The immovable property comprised of a house property which was valued at Rs. 60,000 for asst. yr. 1984-85 and at Rs. 50,675 for asst. yr. 1985-86. But the Assessing Officer (AO) valued the same at Rs. 60,000 in each of the two years and such valuation is not in dispute. The movable property consists of capital in the Kirana business and a gold ring. There is also no dispute over the valuation of the moveable property. There is also no dispute over the entire net wealth in the two years being "ancestral property". The assessee was, hitherto, being assessed in the status of Shri Ram Kalyan Jain (Individual).
3. The returns for both the years were filed in status of HUF (non-specified). In the footnotes in the returns it was mentioned that the reason for change of status from individual to HUF (Non-specified) have been filed in the IT returns. The copy of such reasons, as filed before us, shows that Shri Ram Kalyan Jain was being assessed to income-tax in the status of individual for the last so many years for his being the sole surviving member of the HUF. But since he adopted one Sri Pukhraj Jain as his son vide a registered adoption deed dt. 31st Jan., 1980, the status of HUF got revived and the returns were being furnished in the changed status of HUF(NS). The AO, however, noted that Smt. Ram Piyari Devi, the wife of Shri Ram Kalyan, was also a member of the assessee-HUF and since she possessed taxable wealth as on the relevant valuation dates, the correct status of the assessee HUF, should be that of HUF (specified). Though the assessee appears to have contended that Smt. Ram Piyari has severed her status as a member of the HUF long back and was being separately assessed under the WT Act, 1957 (the Act) in her status of individual and hence could not be considered as a member of assessee-HUF for the purposes of the Act, yet the AO did not feel satisfied with such contentions of the assessee and assessed it in the status of HUF (specified). The assessee approached the Dy. Commissioner(A) in appeal.
4. In appeal the learned Dy. Commissioner(A) took note of the fact that Smt. Ram Piyari Devi had been separately assessed for asst. yr. 1986-87 and asst. yr. 1987-88 in her "individual" status and that for asst. yrs. 1985-86, 1986-87 and 1987-88 the status of the assessee-HUF for income-tax purposes was adopted as that of an HUF (NS). He, therefore, directed the AO to adopt the same status of the assessee-HUF for wealth-tax purposes also for the years under consideration. Aggrieved by Dy. Commissioner(A)s such orders Revenue is now in appeals before the Tribunal.
5. The learned Departmental Representative vehemently urged that Smt. Ram Piyari Devi is admittedly the wife of Shri Ram Kalyan, Karta of the assessee-HUF, and by virtue of that position she continues to be the member of assessee-HUF. He further submitted that she cannot cease to be a member of the HUF by a mere declaration and since she was, admittedly, owning taxable wealth, the status of the assessee HUF was rightly adopted as that of an HUF (specified). The learned Departmental Representative further submitted that each year being independent of and separate from the other year - whether earlier or subsequent the treatment given to the status of either Smt. Ram Piyari Devi or the assessee-HUF in the wealth-tax or income-tax assessment would not separate (sic) as res judicata in the present proceedings.
6. Mr. PK Kasliwal, the learned counsel for the assessee, not only supported the orders under appeals but also vehemently urged that upto asst. yr. 1953-54 the assessee-HUF was assessed to income-tax in the status of HUF but thereafter Smt. Ram Piyari Devi relinquished her rights in the HUF and, therefore, M/s Hazari Mal Ram Kalyan was started to be assessed in the status of "individual" as Sri Ram Kalyan Jain was the only surviving member of the HUF. Mr. Kasliwal further submitted that after adoption of Sri Pukhraj Jain by Shri Ram Kalyan Jain as his son w.e.f. 31st Jan., 1980 the status of the assessee again stood revived to HUF and it was accordingly assessed to income-tax for asst. yrs. 1984-85 to 1987-88. Mr. Kasliwal further submitted that the long established position of the assessee vis-a-vis the Department was not to be disturbed irrespective of the fact whether the orders passed in earlier or subsequent assessment proceeding operate as res judicata or not. In support of his contentions Mr. Kasliwal has relied upon the relevant assessment orders passed in the case of the assessee under the Act as also under IT Act, 1961, the computation of taxable incomes in those years and the declaration by Smt. Ram Piyari Devi.
7. After having given our thoughtful consideration to the arguments advanced before us and on study of the material brought on our record we are of the opinion that the orders under appeals are justified in the facts and circumstances of the case and call for no interference by us.
8. The concept of "joint Hindu family" or undivided Hindu family, (henceforth called HUF) is quite different from the concept of "Hindu coparcenery" under the Hindu Law. An HUF consists of all persons lineally descended from a common ancestor and includes their wives and the unmarried daughters. The HUF is the normal condition of Hindu family. Such a family is ordinarily joint not only in estate but also in food and worship. But the existence of joint estate is not an essential requisite to constitute a joint family. However, where there is joint estate and the members of the family become separate in estate, the family cease to be joint. In any case, possession of joint family property is not a necessary requisite for the constitution of the HUF. A Hindu gets a joint family status by birth and the joint family property is simply an adjunct of the joint family. Since the normal state of every Hindu family is joint, the legal presumption is that the family continues to be joint, until the contrary is proved.
9. It needs at least two members to constitute an HUF. It may consist of a male Hindu and his wife, a son, or an unmarried daughter. It is not necessary that there must be at least two male members to constitute it. Since ownership of joint family property is not a necessary requisite for the constitution of HUF, it may well consist of one male and one female property does not cease to be such simply because of the "temporary reduction of the coparcenary unit to a single individual", the character of the property remains the same. A husband and his wife may thus constitute a joint Hindu family or HUF. Even two females may also constitute an HUF.
10. A Hindu coparcenary, on the other hand, is a much narrow body than the HUF. It includes only those persons who acquire by birth an interest in the joint or coparcenary property. Generally speaking, it commences with a common male ancestor and extends upto four degrees (inclusive of the common ancestor) of his lineal descendants. But that does not mean that coparcenary is limited to four degrees from the common ancestor. A member of a coparcenary may be removed by more than four degrees from the common ancestor i.e., the original holder of the coparcenary, yet he may be a coparcener. The test of ones being a coparcener or not is whether he can demand a partition of the coparcenary property. If he can, he is a coparcener, otherwise not. Therefore, the correct rule is that partition can be demanded by any member of a joint family who is not removed by more than four degrees from the last holder, howsoever remote he may be from the common ancestor or original holder of the property.
11. In order to understand the true concept of coparcenary under Hindu Law it is necessary to keep in mind the distinction between ancestral property and separate property. Property inherited by a Hindu from his father, fathers father or fathers fathers father is ancestral property. Property inherited by him from other relations is his separate property. The essential feature of ancestral property is that if the person inheriting it has sons, grandsons or great grandsons, they become joint owners with him. They become entitled to it by reason of their birth. Here it is to be kept in mind that the Mitakshra School of Hindu Law, which generally governs the parties in this State, divides property into two classes, namely, unobstructed heritage and obstructed heritage. Property in which a person acquires an interest by birth is called unobstructed heritage because the accrual of right to it is not obstructed by the existence of the owner. Property the right to which accrues not by birth but on death of the last owner without leaving a male issue is known as obstructed heritage because the accrual of the right to it is obstructed by the existence of the owner. Another distinction between the two is that whereas unobstructed heritage devolves by survivorship, obstructed heritage devolves by succession.
12. Hindu Law divides property into two classes, namely, (i) joint family property and (ii) separate property. Joint family property may further be sub-divided into (a) ancestral property and (b) separate property of coparceners thrown into the common coparcenary stock. The term "joint family property" is synonymous with "coparcenary property". Separate property consists of "obstructed heritage" and "self-acquired property" in which case line of succession may also differ depending upon the source of acquisition of the property.
13. It may thus be appreciated that joint Hindu family or HUF conceptually differs from coparcenary. Though both are creatures of Hindu Law yet their scope and field of operation are different. A coparcener would necessarily be a member of a joint Hindu family or HUF but the converse would not be true. The concept of joint Hindu family or HUF is not related to possession of any property by the family whereas the very genesis of the concept of coparcenary lies in property.
14. At this stage it would be worthwhile to consider the concept of ancestral business which is also relevant to the issue involved in the case before us. In Hindu Law a business is a distinct heritable asset. Where a Hindu, having a running business, dies leaving such business, it descends like other heritable property to his heirs. His male issues inherit it as joint family firm. The joint ownership so created is by the operation of law and not arising out of any contract so as to attract the provisions of the Indian Partnership Act, 1932, exclusively. The general rules of Hindu Law which regulate the transactions of joint families are also applicable to this property.
15. Once the distinction between the two concepts of the HUF and the coparcenary is kept in mind it becomes abundantly clear that under the pure Hindu Law whereas a Hindu female might well be a member of an HUF, she was not a member of the coparcenary. Her membership of the HUF did not create any right to or title in any property owned and possessed by such HUF. Her right was limited to the extent of maintenance only out of such property. Daughters in the HUF lost such right on their marriages, wives in the HUF enjoyed such right during the lifetime of their husbands. Widows in the HUF got the added right of retention of the property inherited by them from their husbands, for their lifetimes. Such added right of retention of the property inherited by them from their husbands, for their lifetimes. Such added right of retention of the property created their interest in the property and the property held by them with such interest therein during their lifetimes was known as "life estate" or "Hindu womans estate". That was the position of the rights or interest of a Hindu female in the HUF property before the changes brought about by certain legislative enactments enacted from time to time.
16. In the present appeal we are concerned with the right of a Hindu wife in the HUF, constituted by herself and her husband, in the HUF property including the joint family business of Kirana merchandise and her alleged relinquishment of her rights in such property. The question arises as to what she could have relinquished. If she had any rights to or interest in the HUF property, she could have relinquished her such rights or interest. But as stated above, her being the member of the HUF did not confer upon her the status of a coparcener. Property is not an essential requisite for the constitution of the HUF though of the coparcenary. Since she was having no share in the coparcenary property, she could not have relinquished any. Assuming that she had a share in such property, could the relinquishment of such share in the coparcenary property affect her marital relationship with her husband as that relationship with her husband as that relationship not only conferred the status of a member of the HUF upon her, but also constituted the HUF itself in this case. Let us examine.
17. The institution of marriage is the landmark of social organisation and the foundation of important legal rights or obligations. Marriage and sonship constitute some of the unique chapters in the literalages of ancient Hindu Law. In Hindu Law, unlike the Muslim and Christian Laws, marriage had been considered and treated as a Samskar or sacrament sanction by religion and recognition by society heightened the character and importance of this institution which enabled a person to discharge his religious and secular obligations property. Its being a sacrament was its religious aspect. Its secular aspect lay in making the gift of the bride to the bridegroom. Having both these elements - religious and secular - this institution was the source and foundation of the status of the parties giving them right to associate in religious observances and also to exercise their rights and discharge their duties in temporal matters. Monogamy, which is essentially the voluntary union for life of a man with a woman to the exclusion of all others, was the approved rule. Therefore, the concept of divorce, in its strict sense, was alien to the pure Hindu Law. But Hindu Law was never static or stoid, as was, condemnable, wrongly considered by certain English commentators, but was empiric and progressive and a living system. While marriage for life is the most natural form of marriage and best adopted to a civilised society there can be little justification for legally insisting upon the union as indissoluble, even under circumstances of exceptional hardships or cases of exceptional deprivity on the part of either of the spouses. The sacramental aspect of Hindu marriage was not likely to give rise to any controversy but its secular aspect was bound to give rise to some controversies regarding determination of some legal consequences of marriage. The legal aspect of marriage, therefore, permitted the entry of the principle of civil contract into the concept of marriage under the Hindu Law. The admixture of religion and ethics with legal precepts, however thin it might be, ultimately led to the consideration of the Hindu Law and original concepts of marriage, inheritance, adoption, etc. stood materially and substantially altered under the Hindu Marriage Act, 1956, the Hindu Succession Act, 1956, Hindu Adoption and Maintenance Act.
18. The sacramental aspect of the Hindu marriage conferred upon the woman the status of a member of the HUF, constituted with the man she married. But the secular aspect did not confer upon her the status of a "co-parcener". The rule propounded by Medhatithi that "a girl should be married after giving her raiments (sic) and ornaments and she should also be given a portion" enabled her to form her "Stridhan" which could be fattened by inheritance, purchase, partition, seizure finding. But in relation to the "coparcenary" the share obtained by her as a widow on partition of the joint family property or acquired by inheritance on death of her husband did not go to make her "stridhan". Though a member of the HUF yet not a coparcener she could not blend her "Stridhana" with the common stock and the doctrine of blending did not apply in her case. Sub-s. (2) of s. 3 of the Hindu Womens Right to Property Act, 1937, gave her an interest in the Hindu joint family property in respect to the share of her deceased husband but sub-s. (3) restricted her such interest to Hindu womans estate only as the term is generally known in Hindu Law. That Act too did not give her the status of a "coparcener" in the HUF though it gave her a personal right to claim partition of the HUF property. Sec. 14 of the Hindu Succession Act, 1956, made her the absolute owner of her womans estate and s. 30 entitled her even to bequeath her property but her becoming a coparcener in the HUF does not appear to have been recognised. It may, however, be kept in mind that both those enactments deal inter alia, with the right of a Hindu woman in obstructed heritage rather in unobstructed heritage which is ordinarily the basic feature of a coparcenary.
19. In so far as the position of a Hindu wife in the "HUF" in contradistinction to HUF property is concerned, (which is the issue in the present case) she had no interest in the HUF property which may be consisting of a family business also. Her being a member of the HUF, consisting of herself and her husband, gave her a right of maintenance only against her husband. Sec. 2 of Hindu Married Womens Right to Separate Maintenance and Residence Act, 1946, and s. 18 of the Hindu Adoption and Maintenance Act, 1956, gave statutory recognition to such rights of her. But the exercise of such rights did not affect her status of a wife. That status of her can be taken away by s. 13 of the Hindu Marriage Act, 1956 only, until that status is taken away from her she continues to be the wife of her husband and as such the member of the HUF, constituted by herself and her husband.
20. In the instant case since Smt. Ram Piyari was not a coparcener and hence had no interest in the HUF property she could not have relinquished or surrendered her non-existent rights. Since her status of being the wife of Shri Ram Kalyan was never, admittedly, taken away from her she continued to constitute an HUF with Shri Ram Kalyan. She, therefore, was and still is, a member of the assessee-HUF. That is her position under the general Hindu Law.
21. Here it would be pertinent to examine the issue with reference to the provisions of the Income-tax Law. The normal rule is that even when an HUF has ceased to be such in law, it may still be deemed to be an HUF for the purposes of s. 25A of the Act of 1922 and s. 171 of the present Act. The reason is obvious, s. 171 of the Act obliges the AO to give a finding after proper enquiry regarding the partition of the HUF. If no such finding is recorded under s. 171, an HUF, hitherto assessed as undivided, shall be deemed for the purposes of the Act to continue to be an HUF despite partition total or partial. The deeming provision of s. 171, however, do not adversely affect the status of the members of the partitioned family in other areas of liability of the members of HUF under other laws.
22. In the instant case it is not disputed that upto asst. yr. 1953-54 the assessee was being assessed to income-tax as an HUF. The assessment order for asst. yr. 1950-51 dt. 13th Jan., 1954 corroborates this position. But, thereafter, the assessee was, undisputedly, assessed to income tax in its status of individual. That is found to be the position of the assessee at the time of coming into force of the present Act and appears to have continued upto the present assessment year. Even after the adoption of Shri Pukhraj Jain by Shri Ram Kalyan and Smt. Ram Piyari Devi in 1980, the assessee was assessed to income-tax in the status of HUF (Non-specified) for asst. yrs. 1984-85, 1985-86 and 1987-88. It is thus found that not only at the time of the coming into force of the IT Act in 1960-61 but also thereafter the assessee, though an HUF, has not been "hitherto assessed as undivided" family for the purpose of the Act. Once it is found that the assessee HUF was not "hitherto assessed as undivided" for the purposes of the Act, it did not continue or cannot be deemed to continue to be an HUF. The provisions of s. 171, IT Act, would, therefore, not be applicable for or against the assessee.
23. In so far as the question of the applicability of res judicata to the present case is concerned, we may observe that the doctrine of res judicata, as embodied in s. 11 of the CPC, does not apply to the proceedings under the Act. But the principle underlying that provision may be applied in suitable cases. If the decision on an issue, which is relevant and material to determine the tax liability of a taxpayer, has been recorded in an earlier year and the same issue having the same legal consequences, arises in subsequent year, such issue may be considered as covered by the decision recorded on it in earlier year. This shall have to be done to avoid wastage of time and energy and the abuse of the process of Court. But to apply the doctrine of res judicata to the subsequent proceedings, the issue must have been agitated, considered and adjudicated upon in the earlier proceedings. That does not appear to have been done in the present case. We, therefore, hold that res judicata, including constructive res judicata, does not apply to the present case.
24. However, we find force in the argument advanced by Mr. Kasliwal that the long standing position of the assessee vis-a-vis the Department should not be disturbed. It is well settled by now that where the Department has treated the assessee in a particular way for long time that position of the parties should not be lightly disturbed. In the instant case though the assessee-HUF, with the constitution of Sri Ram Kalyan and his wife Smt. Ram Piyari, has all along existed after 1952-53 and Smt. Ram Piyari enjoyed taxable income/wealth during this long period but the assessee was always assessed in the status of Shri Ram Kalyan "Individual". Even after adoption of Shri Pukhraj in 1980 by the two members of assessee-HUF, the assessee-HUF was assessed to income-tax as HUF(NS). That being the treatment given to the assessee-HUF by the Department itself over the years, it was for the AO to have pointed out and brought some material on record to show that the position in the year under consideration was dissimilar to that in earlier or subsequent years. Unfortunately no attempt in that direction was made by him. Therefore, he was not fully justified to have disturbed the long settled position between the parties. The learned Dy. Commissioner (A) has restored the settled position of the assessee vis-a-vis the Department and in view of the facts and circumstances of the case we do not feel inclined to unsettle the position between the parties once again.
25. In the result, both the appeals fail and are hereby dismissed.