Income Tax Appellate Tribunal - Delhi
Babu Ram Ram Nath (Huf) vs Income-Tax Officer on 26 July, 1991
Equivalent citations: [1991]39ITD439(DELHI)
ORDER
J. Kathuria, Accountant Member
1. These two appeals by the assessee are directed against the orders passed by the Appellate Assistant Commissioner of Income-tax, Ghaziabad, for assessment year 1982-83. As common issues are involved, these appeals were heard together and are being disposed of by a common order, for the sake of convenience.
2. We shall first take up the assessee's appeal in ITA No. 1811 (Delhi) of 1988. Brief facts of the case are that the assessee-HUF consisted of the following members :-
(1) Shri Ram Nath, father of the karta. (2) Shri Vinod Kumar, son of karta. (3) Shri Vijay Kumar, son of karta. (4) Shri Raj Kumar, son of karta. (5) Smt. Ashrafi Devi, wife of karta.
During the scrutiny of accounts of the assessee-HUF for assessment year 1982-83 the Income-tax Officer noticed that the assessee had claimed total partition of joint family property which consisted of the following :-
(A) Immovable properties :
(i) House property No. 216, Kishan Ganj, Pilakhuwa;
(ii) 5 shops at U.S. Gate, Pilakhuwa;
(iii) 1 shop at Gandhi Bazar, Pilakhuwa. (B) Movable properties :
Capital standing in the name of the assessee-HUF- Rs. 40,000.
3. During the course of the enquiries conducted by the assessing officer for determining whether total partition had taken place on 7-1-1982 as claimed by the assessee or not, he was informed that the house property No. 216, Kishan Ganj had gone to the share of Shri Vinod Kumar, that 5 shops at Pilakhuwa had gone equally to the shares of Shri Raj Kumar and Smt. Ashrafi Devi and that the shop at Gandhi Bazar at Pilakhuwa had gone equally to the shares of Shri Ram Nath and Shri Vijay Kumar. It was also claimed that the sum of Rs. 40,000 standing in the capital account of the assessee-HUF had been equally partitioned in 5 equal shares of Rs. 8,000 each.
4. The assessing officer noted that the house property No. 216, Kishan Ganj, consisted of 6 rooms, 2 store rooms and 2 kitchens and that the total area of the property was 280 sq. yds. The assessing officer recorded the statements of the coparceners and Shri Vinod Kumar, who had allegedly received the aforesaid property could not even give the number of the house property. The other coparceners admitted before the assessing officer that they continued to live in the aforesaid house property at Kishan Ganj even after the alleged partition and that they were paying rent to Shri Vinod Kumar. The assessing officer, however, noted that no evidence had been produced to show that they were in fact paying rent to Shri Vinod Kumar. In his statement Shri Ram Nath, the karta submitted that he was in sole possession of the shop at Gandhi Bazar, where he still carried on Kiryana business in the name of Babu Ram Nath. Though the properties in question had been mutated in the names of the different coparceners in the records of the Municipal authorities, the assessing officer invoked Explanation to Section 171 and held that there had been no physical division of the properties, but a mere severance of status. He accordingly rejected the claim of total partition by holding that the claim was not genuine.
5. The learned Appellate Assistant Commissioner of Income-tax confirmed the order of the assessing officer in this regard.
6. Before us, Shri Ashok Kumar Gupta, the learned counsel for the assessee, submitted that the house properly No. 216, Kishan Ganj, did not admit of any physical partition because it was an old property. He further submitted that all the 6 shops which were partitioned also could not be partitioned by metes and bounds because these shops were tenanted. Strong reliance was placed on the compromise decree passed by the Civil Judge, Ghaziabad, dated 7-4-1982 recognising the factum of total partition. It was submitted that Shri Vinod Kumar, one of the coparceners had filed the suit and later on a consent decree was passed by the court. The main thrust of his argument was that as the total partition of the assessee-HUF had been recognised by the Civil Court the assessing officer could not sit in judgment over the decision of the Civil Court and decide the matter contrary to what the court had decided. It was, therefore, submitted that the claim of the total partition of the assessee-HUF as on 7-1-1982 may be accepted and taken to logical conclusion.
7. Smt. S. Bhattacharya, the learned Departmental Representative, on the other hand, submitted that the alleged total partition appeared to be only for avoiding the taxes and had not in reality taken place. It was submitted that the very nature of the properties was such that these should have been partitioned by metes and bounds. According to her the very fact that the members of the HUF had continued to reside in the house property at Kishan Ganj without proving the payment of rent by the coparceners to Shri Vinod Kumar, clearly showed that there was a mere severance of status and not a total partition. According to her the statement of Shri Vinod Kumar in which he could not even give the number of the property which allegedly fell to his share clearly showed that the partition was made-up affair. Relying on the Supreme Court decision in Kalloomal Tapeswari Prasad (HUF) v. CUT [1982] 133 ITR 690 it was submitted that the partition under the Hindu Law and the partition under the Income-tax Law were two different concepts and that a transaction can be recognised as a partition under Section 171 of the Act only if, where the property admits of a physical position, a physical division of the property has taken place.
8. It was vehemently argued that the shops and the house property were capable of being physically divided and that such a division had not taken place in this case. It was also submitted that the Income-tax authorities were entitled to take their own view under the Income-tax Laws and were not bound by the decision of the Civil Court. She strongly supported the orders of the Departmental authorities.
9. We have carefully considered the rival submissions as also the facts on record. The learned counsel for the assessee has not produced before us any evidence to show that the immovable properties in question did not admit of physical division or that any physical division of such properties would have destroyed their utility. The submission that the properties were old and that the shops were tenanted and hence could not be physically partitioned is preposterous, to say the least. The learned counsel for the assessee has not filed before us any opinion of an expert certifying that the allegedly partitioned properties could not be divided by metes and bounds. On the face of it, these properties were capable of physical division. The house property at Kishan Ganj was a substantial property consisting of 6 rooms, 2 kitchens and 2 stores. The 6 shops could have easily been partitioned. We are, therefore, satisfied that the immovable properties which were capable of being physically partitioned were not so partitioned and the Explanation to Section 171 is clearly attracted. The Supreme Court in the case of Kalloomal Tapeswari Prasad (HUF) (supra) has also held that where immovable properties admit of partition, but are not partitioned by metes and bounds, no finding of partition can be recorded under Section 171 of the Act. This argument of the learned counsel for the assessee, therefore, fails and is rejected.
10. As regards the submission of the learned counsel that the partition was recognised by Court decree, we accept the contention of the learned Departmental Representative that in Income-tax matters the Income-lax authorities are entitled to take an independent view.
11. In the case of Narendrakumar. Modi v. CIT [1976] 105 ITR 109 the Supreme Court had an occasion to deal with this very issue. In that case the assessee claimed before the first appellate authority that a suit for partition had been filed and the city civil Court had passed a decree for partition. The Supreme Court discussed the matter and observed that notice of enquiry had been given to all the members of the HUF and all other formalities required of the Income-tax Officer had been gone into. The Supreme Court held that the Income-tax authorities had their own view to take and that they were not bound by the Court's decree.
12. The Gujarat High Court in CIT v. Thobhandas Jiyanlal Gajjar [1977] 109 ITR 296 held at page 312 of the report that the judgments of the Civil Courts cannot operate as res judicata or as estoppel for bearing the Income-tax Officer from enquiring into as to who was the real owner of the income in the facts and circumstances of the case.
13. In Keshavlal Punjaram v. CIT [1983] 141 ITR 466, the Gujarat High Court again held that the decision rendered by the Civil Court could not preclude the statutory jurisdiction of the Income-tax Officer to form his own opinion in this matter.
14. In view of the authorities cited above we hold that the court decree recognising the total partition of the assessee-HUF was not binding on the assessing officer.
15. The assessing officer has made necessary enquiries from the members of the HUF with regard to the alleged partition. The statements of the coparceners had been recorded. The Departmental authorities have succinctly pointed out the deficiencies and shortcomings in the assessee's claim of total partition. There has been no physical division of the immovable properties and the learned counsel for the assessee has not brought on record any evidence to show that such physical partition was neither feasible nor practicable nor possible. The whole transaction appears to have been done with a view to avoiding tax liabilities by the assessee-HUF. The obtaining of Court's decree by the consent of the parties also appears to be a part of the same chain and is designed to create a veneer of genuineness of the alleged partition. We are clear in our mind that for the reasons mentioned by the Departmental authorities and for the reasons given above, there was no total partition of the assessee-HUF and the claim of total partition had been rightly rejected.
16. In the result, the assessee's appeal is rejected.
17. We now come to WTA No. 561 (Delhi) of 1988. Brief facts of this case are that up to assessment year 1981-82 the assessee-HUF was filing its returns of wealth. For assessment year 1981-82 the assessee-HUF filed return showing wealth of Rs. 2,30,400. For assessment year 1982-83 the assessee did not file any return of wealth. The assessing officer issued a notice under Section 16(4) of the Wealth-tax Act. The assessee filed a return on 29-7-1986 showing nil wealth. The assessee's claim was that since there had been total partition of all the assets of the HUF as on 7-1-1982, there were no assets of the HUF on the valuation date which fell on 31-3-1982. The assessing officer made assessment on net wealth of Rs, 2,50,000 on the footing that total partition had not been recognised in this case. The learned Appellate Assistant Commissioner confirmed the order of the assessing officer. The assessee has come up in further appeal. The issue of assessability or otherwise of wealth for assessment year 1982-83 is linked with the issue of total partition of the assessee-HUF. We have already held above that the claim of total partition of the assessee-HUF had rightly been rejected by the Departmental authorities. In that view of the matter, the assessing officer was right in making assessment of Wealth-tax in the hands of the assessee for assessment year 1982-83.
18. This appeal also fails and is dismissed.