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(i) 302, T.H. Road, and 303 T.H. Road of A.T. Balakrishnan.

(ii) 301, T.H. Road, of Bose and Sivaprakash".

4. On 25th July, 1970, an instrument of declaration was executed by A.T. Balakrishnan declaring that the property situate in No. 303 T.H. Road was his absolute property vested with him by a deed of partition dt. 23rd July, 1959 between himself and his brother Audimuthu and he threw the said properties to the family hotchpotch consisting of his sons Bose and Sivaprakash, his wife, Bagyalakshmi and his unmarried daughter, Kumari B. Chandra. Similarly, his son Sivaprakash executed a separate deed of declaration whereunder certain properties were thrown to the family hotchpotch. So also, his another son Bose also executed a separate deed of declaration and in the said deed of declaration, the property situate at No. 303, T.H. Road and a portion of the property in No. 301 T.H. Road were thrown to the joint family. In other words, the properties which were allotted to Bose and Sivaprakash in the partial partition dt. 24th March, 1967 were thrown back to the family. On 27th July, 1970 a deed of partition was entered into between Balakrishnan, his sons Bose and Sivaprakash and other family members, his wife Bagyalakshmi and his unmarried daughter Kumari Chandra, whereunder the properties in 301 and 303, T.H. Road were divided and certain properties were allotted to the wife of Balakrishnan to be enjoyed by her during her life time and certain other properties were allotted to his daughter Chandra to be enjoyed by her during her life time. The properties described in Schedules A and G were allotted to the share of Sivaprakash and the properties described in Schedule E.F.G., a portion of the property situate in Schedule-A and a portion of the property bearing No. 301, T.H. Road were allotted to the share of Bose. Bose got married in the year 1970 and Bose claimed that the income from the property No. 301 T.H. Road allotted to Chandra should not be included in his hands and he claimed that he and his wife constituted an HUF and the income from the property, No. 301, T.H. Road should be considered as the income of his joint family and should not be included in his assessment.

11. Mr. Janarthana Raja, learned counsel for the assessee, on the other hand, submitted that the assessee had filed the return on 4th Nov., 1971 and he had not shown the entire income in the return filed on 4th Nov., 1971. He submitted that the assessee has a right to throw his individual properties to the joint family hotchpot as a member of the joint family. He submitted that the assessee had thrown his properties to the joint family hotchpot and his intention is manifest from the deed of declaration. He also submitted that there were transactions relating to the family members right from the year 1959 and the deed of declaration as well as the deed of partial partition cannot be looked into in isolation, but has to be seen in the light of the events that happened to the family from the year 1959 and since there were a number of transactions in the family, it was not uncommon for the members to resort to this transaction. He also submitted that since the deed of declaration as well as the deed of partial partition took place in the same year, it was not necessary for the joint family to file an application for recognition of the partial partition effected on 27th July, 1970. He, therefore, submitted that it is not an isolated transaction and therefore, the income, in any event, cannot be included in the individual assessment of the assessee.

13. A careful perusal of the deed of declaration clearly shows that the assessee had abandoned all the interests in the properties mentioned in the Schedule to the deed of declaration and impressed the properties with the character of the joint family properties. A perusal of the deed shows the intention of the parties was to treat the separate properties as joint family properties and when the intention is manifestly clear from the deed of declaration, we are of the opinion that the deed has to be given full effect to. Mr. J. Jayaraman, learned senior counsel for the Department, submitted that when the joint family filed the return on 4th Nov., 1971 for the asst. yr. 1971-72, it did not make any mention about the declaration and the subsequent partial partition and it was only after the enquiry was made, the documents were produced by the assessee. It is true that when the joint family filed the return on 4th Nov., 1971, the family did not claim that the properties were thrown into the hotchpot of the joint family and also about the partial partition. But, the assessee in his individual capacity filed a return on 4th Nov., 1971 for the same asst. yr. 1971-72 and a revised return was filed on 27th March, 1972. The revised return was filed to consider the income of lease under the head 'business' as against the head, 'other sources' as admitted in the original return. It shows that the assessee had admitted the lesser income under the head, 'properties' in the original return filed on 4th Nov., 1971. Though the enquiry was initiated against the assessee in his individual capacity, it is clear that right from the beginning, the assessee had not shown the income of the properties as his own and it can only be on the basis that the properties were joint family properties. Secondly, it is also not clear whether the joint family had admitted the income from the properties which were thrown into the joint family as part of its income. Naturally, it could not have filed the return admitting the income in view of the subsequent partial partition. Therefore, we are of the view that mere fact that after the enquiry was initiated, the assessee had produced the deed of declaration would not be sufficient to doubt the deed of declaration.

14. The ITO has not gone into the question whether the subsequent conduct of the parties in any way contradicted their stand as to the execution of the deed of declaration as well as the deed of partial partition. The ITO has not examined the surrounding circumstances, subsequent dealings of the properties, conduct of the parties, how the properties were used and other relevant factors to consider whether the deed of declaration was genuine or not and in the absence of any such enquiry by the ITO to the effect that the assessee was subsequently dealing with the properties of his own, it is not permissible for the ITO to hold that the deed of declaration was not genuine. No doubt, as held by the Supreme Court in Kalwa Devadattam vs. Union of India (supra), mere execution of the declaration is not decisive on the question whether it was intended to be effective. But, there must be a clear evidence to show that the properties were under the enjoyment of the assessee even after the deed of declaration or he had any interest or, has exercised control over the properties even after the deed of declaration. There must be a clinching evidence to show that the deed of declaration was a sham transaction. In the absence of any evidence and merely on the basis of the failure of the joint family to prefer a claim for partial partition under s. 171 of the Act, it is not open to the ITO to hold that the deed was not a genuine one and it was a sham document. We are, therefore, of the view that the Tribunal was correct in holding that the assessee on the execution of the declaration, had ceased to be the owner of the properties mentioned in the deed of declaration.