Income Tax Appellate Tribunal - Hyderabad
Archaka Venkobacharya vs Assistant Controller Of Estate Duty on 22 July, 1992
Equivalent citations: [1992]43ITD199(HYD)
ORDER
Abdul Razack, Judicial Member
1. The present appeal has been filed by the accountable person against the order of the Appellate Controller of Estate Duty dated 13-1-1992 confirming the re-opened assessment made under Section 58(3) r.w.s. 59(b) of the Estate Duty Act, 1953.
2. Briefly stated the facts giving rise to this appeal are that the assessment was originally completed on 22-3-1983 on a total principal value of Rs. 6,16,810 including LD's share for aggregation of Rs. 3,08,905. The Commissioner of Wealth-tax (Appeals) AP-III while acting under Section 25(2) of the Wealth-tax Act vide order dated 30-10-1984 set aside the wealth-tax assessment for the assessment year 1980-81 of the deceased on the ground that the alleged partial partition on 4-5-1974 and the order of the Assessing Officer dated 30-3-1976 under Section 171 was erroneous because under the Hindu Law, the deceased was not competent to take in adoption his uterine brother Sri Venkobacharya. Since the adoption was illegal under the Hindu Law, the alleged partial partition and the consequent order passed on 30-3-1976 under Section 171(3) was null and void. Drawing inspiration from this order dated 30-10-1984, under Section 25(2), the Assistant Controller of Estate Duty reopened the assessment under Section 59(b) and held that the alleged partial partition on 4-5-1974 was invalid and the order passed under Section 171(3) of the IT Act recognising the partial partition was also invalid and of no consequence. Consequently, the Assessing Officer held that the entire properties of the deceased Shri Srinivasacharya owned by him prior to the invalid adoption have to be treated as belonging to the HUF deceased and Master Ramakantha who was subsequently adopted on 28-9-1978 and the interest in these properties has to be made under Section 7, apart from the share falling to Master Ramakantha being added under Section34(1 )(c) for rate purposes. The order of the Commissioner of Wealth-tax, AP-III dated 30-10-1984 passed under Section 25(2) was subject matter of appeal before the A-Bench of this Tribunal in WTA No. 319/ Hyd/1984 and it has been held by this Tribunal as per order dated 21-6-1991 that the order passed on 30-3-1976 under Section 171(3) of the IT Act was a valid order until the same was set aside or upset by competent authority under law. The appeal was therefore allowed and the order passed by the CWT under Section 25(2) was quashed. Not being satisfied with the order passed by the Assessing Officer on 8-5-1986, first appeal was preferred before the Appellate Controller of Estate Duty. It was contended before the first appellate authority that the order passed under Section 171(3) on 30-3-1976 was a valid operative order not having been upset or reversed by competent authorities in accordance with law recognising partial partition made on 4-5-1974 between the deceased and his adopted son Shri A. Venkobacharya. The appellate authority was also informed about the order dated 21 -5-1991 of this Tribunal passed in WTA Number cited supra, but the appellate authority distinguished the same and did not follow it. The first appellate authority held that under the Hindu law, the uterine brother cannot be taken in adoption and therefore the adoption by the deceased Shri Venkobacharya was illegal and therefore null and void. The order recognising the partial partition under Section 171(3) passed on 30-3-1976 was therefore invalid and of no consequence and cannot be acted upon. He therefore agreed with the Assessing Officer and confirmed his action. Being aggrieved with the finding of the first appellate authority, the present appeal lies before us.
3. Shri D. Manmohan, learned counsel who appeared for the accountable person submitted that an order passed under Section171(3) is passed after due enquiry by the Income-tax Officer if he is satisfied that there has been a joint family and a partition either partial or full was effected. The Assessing Officer cannot pass any order under Section 171(3) until he makes an enquiry after giving notice of the said enquiry to all the members of the family. The said order therefore cannot be said to be an invalid order merely on the ground that subsequently some other officer or authority takes a different view of the matter. The order passed under Section 171(3) has not been set aside, upset or reversed by any of the authorities under thelTAct, 1961. According to Shri D. Manmohan, any order passed Under Section 171 (3) has to be given full legal effect in relation to the proceedings under all the Direct tax Laws viz., the Wealth-tax Act, Gift-tax Act and Estate Duty Act. The appellant's counsel further strengthens his case by stating that this Tribunal as per its order dated 21-6-1991 arising under the Wealth -tax Act in the case of the deceased for the assessment year 1980-81 has held and given a categorical finding that the order under Section 171 (3) recognising partial partition is valid and binding even for the proceedings under the Wealth-tax Act until the same has been upset or reversed by competent authority in accordance with law. This order of the Tribunal, Shri Manmohan submits should be equally applied in the present appeal as the facts are identical and the Estate Duty assessment of the deceased has been reopened on the strength of the order dated 30-10-1984 of the Commissioner of Wealth-tax passed under Section 25(2) of the Wealth-tax Act. Regarding validity of adoption, Shri Manmohan submits that under the old customary common Hindu Law there was no bar or prohibition for any Hindu to adopt his own uterine brother. The lower authorities have not proved that the adoption in the year 1942 by the deceased by taking his own brother Sri Venkobacharya as a son was illegal, invalid or null and void according to the customary common Hindu law as prevailing in 1942. To support this argument, the appellant's counsel Sri Manmohan has taken us to paras 185 to 189 at pages 386 to 391 in Mayne's Hindu Law, 13th Edition. Our attention was also drawn to para 480 at pages 596 to 598 on the commentary on Hindu Law by Mulla, 15th Edition. The assessee's counsel has also relied on the decision of the Hon'ble Supreme Court in Abhiraj Kuer v. Dehendra Singh AIR 1962 SC 351 at page 353. It is therefore strongly urged by the assessee's counsel that the Appellate Controller went wrong in confirming the reopening action under Section 59(b) of the Estate Duty Act.
4. Shri K.T.V. Charyulu, learned DR on the other hand submitted that the order passed Under Section 171(3) on 30-3-1976 was wholly erroneous. Under the common and customary Hindu Law, a Hindu cannot adopt his own brother as a son. For the simple reason that the order passed under Section 171(3) has not been upset or reversed, the authorities acting under the Estate Duty Act are not precluded from taking a different view than what was taken by the Income-tax Officer under the provisions of Section 171(3) of the Income-tax Act when the adoption itself is in doubt and questionable in accordance with the common Hindu Law. The accountable person cannot take the aid of the order passed under Section 171(3) for all times to come in proceedings arising under a separate enactment. The learned DR therefore submitted that the first appellate authority was correct in ignoring the order passed by the Income-tax Officer under Section 171(3) of the Income-tax Act in proceedings under the Estate Duty Act which are independent and unconnected with any proceedings under the Incorne-taxAct or Wealth-tax Act. To prove the case of the department that the adoption by the deceased of his uterine brother Shri Venkobacharya as a son was illegal as per common customary Hindu Law, he has taken us to Paras 4 to 7 at pages 2 to 7 on the commentary on Hindu Law by S.V. Gupta, 1970 Edition. The learned DR therefore pleaded that the order of the first appellate authority being in accordance with the law does not require any interference by us in this appeal.
5. We have heard the forceful submissions made before us by the representatives of both the parties and perused the material placed before us to enable us to decide this appeal, including the decision of the Hon'ble Supreme Court relied upon by the assessee's counsel. The provisions of Section 171(2) of the Income-tax Act clearly lay down that where there is a total or partial partition amongst the members of a Hindu undivided family, the Income-tax Officer is mandated to make an inquiry thereinto after giving notice of the enquiry to all the members of the family. The provisions of Sub-section (3) of Section 171 of the Act state that on the completion of the inquiry, the Income-tax Officer shall record a finding as to whether there has been a total or partial partition of the joint family properties and if there has been such a partition, the date on which it has taken place. It is therefore abundantly clear that the inquiry envisaged under Section 171 is quasi-judicial proceeding and any finding arrived at or decision taken by the Income-tax Officer and orders passed in this regard are valid and proper and have to be acted upon and given full effect to in respect of any proceedings arising under the IT Act or under the other DirectTax Laws viz,, Wealth-tax Act, Gift-taxAct and Estate Duty Act. No material or evidence has been placed on record to convince us that the said order passed on 30-3-1976 under Section 171(3) by the Income-tax Officer on the partial partition effected on 4-5-1974 between the deceased and his adopted son Shri Venkobacharya was later upset, vacated, cancelled or reversed in any manner whatsoever as per law by any competent authority in this regard. That being the position, the order passed under Section 171(3) is effective and operative and the same cannot be ignored by us in deciding the controversy now before us. In our view, when an order recognising total or partial partition or disruption of a Hindu family has been passed under Section 171(3), it is not open to any other authority, acting under any law to ignore the said order which is passed by a quasi-judicial authority In quasi-judicial proceedings after conducting an inquiry as laid down under Sub-sections 2 and 3. of Section 171 of the Income-tax Act, 1961. We have taken support of the following decisions in this regard :
1. Joint Family of Udayan Chinubhai v. CIT [1967] 63 ITR 416 (SC)
2. CITv, Ganeshl Lai Sham Lal [1966] 61 ITR 408 (Punj.)
3. DamodarHansrajv. ITO [1971] 82 ITR 83 (Ori.)
4. ITO v. Bachu Lal.Kapoor [1966] 60 ITR 74 (SC).
We also note and agree fully with the reasons and conclusions given by our learned Brothers in order dated 21-6-1991 passed in the case of the deceased assessee for the Wealth-tax assessment year 1980-81 in WTA No. 319/Hyd/1984, holding that the order passed Under Section 171(3) is valid and binding until upset and reversed by competent, authorities under law. It will be highly preposterous and the results perhaps may be disasterous to hold that an order passed under Section 171(3) is valid and binding in relation to the proceedings under the Income-tax Act but the same order is not to be acted upon or rather not binding and invalid for the purposes of any proceeding under the Wealth-tax Act or for that matter under the Estate Duty Act. Unhesitatingly we therefore hold that the Appellate Controller of Estate Duty committed a grave error in confirming the re-opening action of the Asstt. Controller of Estate Duty under Section 59(b) and framing another assessment. We therefore vacate and quash the orders of the lower authorities and allow this appeal of the accountable person.