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PETITIONER: GOVINDDAS & ORS. ETC. ETC.

       Vs.

RESPONDENT: INCOME TAX OFFICER & ANOTHER

DATE OF JUDGMENT18/12/1975

BENCH: BHAGWATI, P.N. BENCH: BHAGWATI, P.N. GUPTA, A.C. FAZALALI, SYED MURTAZA

CITATION:  1977 AIR  552            1976 SCR  (3)  44  1976 SCC  (1) 906  CITATOR INFO :  R          1982 SC 760  (18)  D          1991 SC1654  (35,47)  E          1991 SC2278  (7)

ACT:      Income Tax  Act (11 of  1922) s. 25A and Income Tax Act (43  of   1961  ss   171  and  297(2)(d)-Section  171(6)  if retrospective-General  rule   of  interpretation-  "All  the provisions of this Act shall apply accordingly", scope of.

HEADNOTE:      Under s.  25A, Income  Tax Act, 1922, a Hindu undivided family which  has been  assessed to tax shall be deemed, for the purpose  of that  Act, to  continue  to  be  treated  as undivided and, therefore, liable to be taxed in that status, unless an order is passed in respect of the family recording a partition of its property. Under s. 25A(1), if at the time of making  an assessment,  it is  claimed by or on behalf of the members  of the  family that  the property  of the joint family has  been partitioned  among the members or groups of members in  definite  proportions,  the  Income-Tax  officer shall hold an enquiry and record an order to that effect, if satisfied. Under  s. 25A(2)  when, such  an order  has  been recorded, the  Income Tax  officer shall  apportion the  tax assessed on  the total  income of  the undivided  family and assess each  member or  group of  members in accordance with the provisions  of s.  23 and  add to the tax for which such member or  group of  members may  be separately  liable, tax proportionate  to   the  portion  of  the  undivided  family property allotted to him or to the group, and all members or groups of members, shall be liable jointly and severally for the tax  assessed on  the total  income received  by  or  on behalf of the joint family. Thus a liability, which, so long as an  order is  not recorded  under  s.  25A(I),  would  be restricted to the assets of the Hindu undivided family is by virtue of s. 25A(2) transformed, when the order of partition is recorded,  into the personal liability of the members for the amount  of tax  due by  the Hindu undivided family. But, the  order  could  be  recorded  only  if  there  was  total partition as contra-distinguished from partial partition.                                                  [49 G-50 E]

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    Section 171 of the Income Tax Act, 1961, corresponds to s. 25A  of the  1922 Act.  Sub-sections 2  to 5  of  s.  171 contemplate a  case where  at the  time of making assessment under s.  143 or 144, a claim is made by or on behalf of any member of  a Hindu  family that a total or partial partition has taken place among its members and the Income Tax officer has recorded  a finding.  In such  a case,  all the  members would be  jointly and  severally liable for the tax assessed 17 as  payable by the joint family and for determining their several liability,  the tax  assessed on  the  joint  family would be  apportioned among  the members  according  to  the portion of  the joint  family property  allotted to  each of them. In  s. 171(6)  it is provided that even where no claim of total  or partial partition is made at the time of making the assessment  under s.  143 or  s. 144  and hence no order recording partition  is made  in the course of assessment as contemplated under sub-ss. 2 to 5, if it is found, after the completion of  the assessment,  that the  family has already effected a  partition, total  or partial,  all  the  members shall be  jointly and  severally liable for the tax assessed as payable  by the  joint family and the tax liability shall be apportioned among the members according to the portion of the joint  family property allotted to each of them. Section 171(6), thus,  for the  first time imposes, in cases of this kind, joint and several liability on the members for the tax assessed on  the Hindu undivided family and this is personal liability as  distinct from  liability limited  to the joint family  property   received  on  partition.  Section  171(7) provides that  the several  liability of any member or group of members shall be computed according to the portion of the joint family property allotted to him or it at the partition whether total or partial. [50 G-51 F; 52 C-E]      Section 297(2)(d)(ii)  of the  1961-Act  provides  that when a notice under s. 148 of the 1961-Act is issued for the reopening an  assessment ’all  the provisions  of  this  Act shall apply accordingly’. 45      There was  a partial  partition among  the members of a Hindu undivided  A family  in 1955. For the assessment years 1950-51 to  1956-57,  the  assessment  on  the  family  were reopened after  the 1961-Act  had come into force by issuing notices under  s. 148 and! were completed by orders under s. 147 of  the 1961-Act.  A  much  larger  amount  of  tax  was determined as  payable by  the Hindu  undivided family  than what was  found due  when the original assessments were made for those  assessment  years.  Thereafter,  the  Income  Tax officer determined  the several  liability of the members of the Hindu undivided family under s. 171(7) of the 1961  Act. They filed  petitions in  the  High  Court  challenging  the validity of  the orders,  which had  the effect  of imposing personal liability  on the  members L  of the family, on the ground, inter  alia, that  s. 171(6)  and (7)  do not apply, where the  assessment of  a Hindu  undivided family was made under the  1922-Act, and at the time when the tax was sought to be recovered, it was found that the family had effected a partial partition,  since these  provisions of  the 1961-Act had the  effect of  imposing on  the members of the family a new liability,  (namely a  personal liability) which did not exist before  and they  could not be construed so as to have retrospective  effect.   The  High   Court   dismissed   the petitions.      Allowing the appeals to this Court, ^      HELD: The assessments of the Hindu Undivided Family for the assessment  years 1950-51  to 1956-57, were completed in

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accordance  with   the  provisions  of  the  1922-Act  which included s.  25A, and the Income Tax officer was, therefore, not entitled  to avail  himself of the provisions enacted in s. 171(6)  and (7)  of the  1961-Act,  for  the  purpose  of recovering the  tax or  any part thereof personally from any members of the joint family. [53 B-D]      (1) It  is a  well-settled rule  of interpretation that unless the  terms of  a  statute  expressly  so  provide  or necessarily require  it, retrospective  operation should not be given  to a  statute so  as to  take away  or  impair  an existing right  or create  a new  obligation or impose a new liability otherwise  than as  regards matters  of procedure, the general  rule being "all statutes other than those which are merely  declaratory or  which related only to matters of procedure or  of evidence  are prima  facie prospective  and retrospective operation  should not be given to a statute so as to affect, alter or destroy an existing right or create a new liability  or obligation  unless that  effect cannot  be avoided without  doing  violence  to  the  language  of  the enactment. If  the enactment  is expressed in language which is fairly  capable of  either interpretation, it ought to be construed as prospective only. [52 E-G]      (2) On  this principle,  s. 171(6)  applies only  to  a situation where  the assessment  of a Hindu Undivided Family is completed  under s. 143 or s. 144 of the 1961-Act. It can have no  application where the assessment of Hindu Undivided Family was  completed under  the corresponding provisions of the old  Act. Such  a case  would be  governed by  s. 25A of 1922-Act which does not impose any personal liability on the members in  case of partial partition. Since, in the present case, there  was only  a partial partition, tho liability of the undivided  family to  tax for the various years could be recovered only  out of the assets of the joint family are it could not  be apportioned  among the  members nor  could the members be  held jointly and severally liable for payment of such tax  liability under  s. 25A.  To construe s. 171(6) of the  1961-Act   as  applicable  in  such  a  case  with  the consequential effect  of casting  on  the  members  personal liability which did not exist under s. 25A, would be to give retrospective operation  to the  sub-section  which  is  not warranted either  by the  express language of that provision or by  necessary implication.  Section 171(6)  can be  given full effect  by interpreting it as applicable only in a case where the  assessment of  a Hindu  Undivided Family  is made under s. 143 or s. 144 of the 1961-Act. [52 G-53 B]      (3) The  words "all  the provisions  of this  Act shall apply accordingly  in S.  297(2)(d)(ii), merely refer to the machinery provided  in the  1961-Act for  the assessment  of escaped  income.   They  do   not  import   any  substantive provisions  of   the  1961-Act   which  create   rights   or liabilities. The  word "accordingly", in ’the context, means nothing more  than "for  the purpose  of assessment"  and it clearly suggests  that the  provisions of the 1961-Act which are made  applicable arc  those relating to the machinery of assessment. Though sub-sections (1) to 46 (5) of  s. 171  merely lay down the machinery for assessment of a  Hindu undivided  family after  partition, s. 171(6) is clearly a  substantive provision imposing a new liability on the members  for the  tax determined as payable by the joint family. The  words "all  the provisions  of this  Act  shall apply  accordingly"   cannot,  therefore,  be  construed  as incorporating, by  reference, s.  171(6), so  as to  make it applicable for  the recovery of tax re-assessed on the Hindu Undivided Family  in cases  falling within s. 297(2)(d)(ii).

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[54 C-F]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeals Nos.  702 and 840-843 of 1975.      Appeals by  special leave  from the  judgment and order dated the  18-3-1975 of the Bombay High Court (Nagpur Bench) Nagpur in  special civil  applications Nos. 1668, 1893, 1895 to 1897 of 1974.      S. T.  Desai, S.  C. Mandia  and Shri  Narain  for  the appellants ’in C.A. 702/75.      S. P.  Mehta, S.  C. Mandia  and Shri  Narain  for  the appellants in C.A. 840-843/75.      V. S.  Desai and  J. Ramamurthi and S. P. Nayar for the respondents in all the appeals.      The Judgment of the Court was delivered by      BHAGWATI, J.-These  five appeals by special leave raise a short  but interesting  question of  law relating  to  the applicability of  s. 171,  sub-s. (6) of the Income Tax Act, 1961 (hereinafter  referred to  as the  new Act).  The facts giving rise  to these  appeals are  few and  may be  briefly stated as follows:      There was  at all  material  times  a  Hindu  Undivided Family consisting  of one  Gulabdas, his wife and five sons. The  Hindu   Undivided  Family   had  considerable   movable properties consisting  of shares  in limited  companies  and jewellery and  it was also a partner through its manager and Karta in  two firms which may for the sake of convenience be referred to  as the  ’Export Firm’ and the ’Mining Firm’. lt appears that  besides these  movable properties,  the  Hindu Undivided Family  also owned some irremovable properties. On 15th November,  1955 there was a partial partition among the members of  the  Hindu  Undivided  Family  and  the  movable properties were  divided including the credit balances after taking into  account the  debit balances  on the Export Firm and the  Mining Firm.  These movable properties which formed the subject-matter  of partial  partition, were of the value of Rs.  4,87,054/- and they were divided amongst the members of the Hindu Undivided Family in such a manner that Gulabdas got properties  worth Rs.  53,442/-, his wife got properties worth  Rs.  50,000/-,  while  each  of  the  five  sons  got properties worth  Rs.  76,722/-.  The  consequence  of  this partial partition was that the Hindu Undivided Family ceased to be  a partner  in the Export Firm and the Mining Firm and thereafter Gulabdas  and  his  son  Govinddas  continued  as partners in these two firms in their individual capacity.      When the  Hindu  Undivided  Family  was  sought  to  be assessed for  the assessment  year 1957-58,  for  which  the relevant previous  year was Samvat Year commencing from 16th November, 1955 a claim was 47 made on  behalf of the members of the Hindu Undivided Family that they  had effected a partial partition of their movable properties on  15th November,  1955. This claim was accepted by the  Income Tax  officer after  due inquiry and a finding was recorded  by him  in the  order of assessment that there was a  partial partition  of the  movable properties  of the Hindu Undivided  Family on  15th November,  1955. The result was that  from and after the assessment year 1957-58 no part of the  income of  the Export  Firm or  the Mining  Firm was included in the assessment of the Hindu Undivided Family.      Now it  appears that the assessments of the Export Firm and the Mining Firm relating to the assessment years 1950-51

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to 1956-57  were reopened  after the new Act came into force and reassessments  were made enhancing the assessable income of the  two firms  in accordance with the procedure provided in the  new Act.  Consequent upon  the reassessments  of the income of  the two firms for the assessment years 1950-Sl to 1956-57, notices  were issued  to the Hindu Undivided Family for reassessments  of its  income for those years, since the Hindu Undivided  Family was  a partner  in these  two  firms during those  years. The Income Tax officer, after following the requisite  procedure. passed  an order  of  reassessment dated 26th  March, 1970  for each  of the  assessment  years 1950-Sl to  1956-57 enhancing  the assessable  income of the Hindu Undivided  Family. The  appeals filed by the two firms against the  orders of  reassessment made  on them partially succeeded before  the Appellate  Assistant Cornmissioner and consequently, orders  were passed  by the Income Tax officer on 25th  March, 1971  rectifying the  orders of reassessment dated 26th  March, 1970  made against  the  Hindu  Undivided Family. The  two firms  obtained some  further relief  as  a result of  appeals filed  by them before the Tribunal and in consequence,  further   rectification   orders   dated   3rd September, 1974  were  passed  by  the  Income  Tax  officer rectifying the  reassessments of the Hindu Undivided Family. The net  effect of  these orders  of rectification passed by the Income  Tax officer  was that  ultimately a  much larger amount of  tax  was  determined  as  payable  by  the  Hindu Undivided Family  than what  was found due when the original assessments were  made for  the assessment  years 1950-51 to 1956-57.      So far the members of the Hindu Undivided Family had no grievance because  what was  done by  the Income Tax officer was merely  to carry  out reassessment  or rectification  of assessment of  the income  of  the  Hindu  Undivided  Family consequent upon  enhancement of the assessable income of the two firms  in which the Hindu Undivided Family was a partner during the  assessment years 1950-Sl to 1956-57. But on 25th January, 1974, the Income Tax officer made certain orders in respect of the assessment years 1950-Sl to 1954-55 and 1956- 57  which   prejudicially  affected   the  interest  of  the petitioners.  The  Income  Tax  officer,  by  these  orders, determined the several liability of the members of the Hindu Undivided Family  under s. 171, sub-s. (7) of the new Act by apportioning the  assessed on the Hindu Undivided Family for the assessment  years 1950-51 to 1954-55 and 1956-57 amongst the members  in the  proportion of  2/7th share to Gulabdas- this perhaps  also included  the share of his wife-and l/7th share  to   each  of   the  five  sons.  These  orders  were subsequently rectified by 48 orders dated  3rd September, 1974 revising the allocation of the   liability, consequent  upon the  rectification made in the orders  of assessment against the Hindu Undivided Family as a  result of  the relief  granted to the two firms by the Tribunal.  The   orders  dated   3rd  September,  1974  also proceeded on  the same lines and allocated the tax liability of the  Hindu Undivided  Family amongst  the members  in the same shares  as the  earlier orders.  The Income Tax officer also passed  an order dated 13th August, 1974 allocating the tax  liability   of  the  Hindu  Undivided  Family  for  the assessment year 1955-56 among the members in the same shares under s. 171, sub-s. (7) of the new Act.      This led  to the  filing of  a petition  by each of the five  sons  of  Gulab  das  in  the  High  Court  of  Bombay challenging the validity of the orders dated 13th August and 3rd  September,  1974  which  had  the  effect  of  imposing

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personal liability  on each  of the  members  of  the  Hindu Undivided Family for the tax liability allocated to him. The petitioners  in  these  petitions  did  not  object  to  the recovery of  the tax liability of the Hindu Undivided Family from out  of the joint Family properties come to their hands on partial  partition, but their argument was that they were not jointly  and severally  liable for the tax liability nor was  the  Income Tax  officer entitled  to proceed  against them personally or  recovery of  any share  of the tax liability. That raised  the question  as to the applicability of sub-s. (6) read  with sub-s. (7) of s. 171 of the. new Act, for, it was under this provision that the Income Tax officer claimed to allocate  the tax  liability amongst  the members  of the Hindu Undivided  Family and  to recover from the petitioners personally the share of the tax liability allocated to them. The principal  contention. of  the petitioners  was that the provision in s. 171, sub-s. (63 and (7). had no application, where the  assessment of  a Hindu  Undivided Family was made under the  provisions of  the Indian  Income Tax  Act,  1922 (hereinafter referred  to as,  the old  Act) and at the time when the  tax was  sought to be recovered, it was found that the family  had effected  a partial  partition,  since  this provision had  the effect of imposing one the members of the Hindu Undivided  Family a  new liability which did not exist before  and  it  could  not  be  construed  so  as  to  have retrospective  operation.   This  contention  was,  however, rejected by  the High  Court and it was held that sub-s. (6) read with sub-s. (7) of s. 171 was applicable in the present case and since the Income Tax Officer found at the time when he sought to recover the tax liability assessed on the Hindu Undivided Family,  that the  family had  already effected  a partial partition on 15th November, 1955, he was entitled to recover the  tax from  every member  of the  Hindu Undivided Family and each member was severally liable for his share of the tax  computed; according  to the  portion of  the  joint family property  allotted to  him at  the partial partition. The High  Court also rejected the other contentions advanced on behalf  of the  petitioners and  dismissed  each  of  the petitions with  costs. The  petitioners thereupon  preferred the present  appeals with  special leave  obtained from this Court.      Though several contentions were raised in the petitions and also  argued before  the High  Court, the petitioners at the hearing  of the  appeals before us confined their attack against the validity of the 49 orders dated  13th August,  1974 and  3rd September, 1974 to only one contention and that related to the applicability of sub-s. (6)  read with  sub-s. (7)  of s. 171 of the new Act. The petitioners  sought to repel the applicability of sub-s. (6) of  s. 171 of the new Act by a two fold argument. In the first place,  the petitioners  contended that  s. 25A of the old Act did not impose any personal liability on the members for the  tax assessed  on the Hindu Undivided Family in case of partial  partition. This  liability was  created for  the first time  by sub-s.  (6) of s. 171 of the new Act and this sub-section could  not,  therefore,  be  construed  to  have retrospective effect  so as  to apply to assessments made on the Hindu  Undivided Family for any assessment year prior to 1st April,  1962 when  the new  Act  came  into  force.  The present L- case, which related to the assessment years 1950- 51 to  1956-5 /, was in the circumstances governed by s. 25A of the  old Act  in so  far  as  the  question  of  personal liability of  the members was concerned and sub-s. (6) of s.

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171 of  the new  Act had  no application to it. Secondly, it was urged  on behalf of the petitioners that even if s. 171, sub-s. (6) of the new Act were applicable in a case like the present,  the   conditions  of  this  sub-section  were  not satisfied, as  there was  no finding  of  partial  partition recorded by  the Income Tax officer after making due inquiry as contemplated  in sub-s.  (3) of s. 171 of the new Act. Of these two  arguments, the  first is,  in our  opinion,  well founded and  hence it  is  not  necessary  to  consider  the second.      We may  first look  at s.  25A  of  the  old  Act.  The position which  obtained before  this section was introduced in the  old Act was that though a Hindu Undivided Family was a unit of assessment, there was no machinery provided in the Act for  levying tax and enforcing liability to tax in cases where a  Hindu Undivided  Family had  received income in the year of  ac‘count but  was no longer in existence as such at the time  of assessment.  This difficulty was the more acute by reason  of the provision contained in s. 14(1) which said that tax  shall not  be payable by an assessee in respect of any sum  which he  received as a member of a Hindu Undivided Family. ‘  The  result  was  that  the  income  of  a  Hindu Undivided Family could not be assessed and the tax could not be collected  from the members of the family, if at the time of making  the assessment  the family  was divided. This was obviously  a   lacuna  and   the   legislature,   therefore, introduced s.  25A in  the old  Act for  assessment  of  the income of  a Hindu  Undivided Family  and enforcement of the liability to  tax, where  the Hindu  Undivided Family was no longer in  existence at  the date  of  assessment.  But,  as pointed out  by this  Court in Additional Income-Tax Officer v. Thimmayya(1)  this section went very much beyond what was required for  rectifying the defect. It made two substantive provisions, namely,  (1) a  Hindu undivided family which has been assessed  to tax  shall be deem ed, for the purposes of the  Act,  to  continue  to  be  treated  as  undivided  and therefore liable to be taxed in that status, unless an order is passed  in respect  of that family recording partition of its property  as contemplated  by sub-ss.  (1) and (2) if at the time  of making  an assessment,  it is  claimed by or on behalf of the members of the family that      (1) 55 I.T.R. 66. 50 the property  of the joint family has been partitioned among the members or groups of members in definite portions, i.e., a complete  partition of  the  entire  estate  is  made,  as distinct from  a partial  partition, the  Income Tax Officer shall hold  an inquiry  and if  he  is  satisfied  that  the partition has  taken place, he shall record an order to that effect. Where  such order  has been  passed, the  Income Tax officer would be entitled to make an assessment of the total income received  by or  on behalf  of  the  Hindu  Undivided Family as  if no  partition had taken place. Now, ordinarily when tax  is assessed  on a Hindu undivided family, it would be payable  out of  the properties of the joint family, even after they are partitioned amongst the members and no member would be  personally liable for discharging the liability to tax. But  J sub-s. (2) made a radical departure and provided that when  upon a   total  partition, an order under. sub-s. (1)  has   been  recorded,  the  Income  Tax  officer  shall apportion the  tax assessed on the total income of the Hindu undivided family  and assess each member or group of members in accordance  with the provisions of s. 23 by adding to the tax for  which such  member  of  group  of  members  may  be separately liable,  tax proportionate  to the portion of the

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undivided family  property allotted  to him or’ to the group and all  members or  groups   of members  shall  be  "liable jointly and  severally for  the tax  assessed on  the  total income received  by or  on behalf  of the joint family". The liability which,  so long  as an order is not recorded under sub-s. (1),  would be  restricted to the assets of the Hindu undivided  family,  was  thus,  by  virtue  of  sub-s.  (2), transformed, when  the  order  is  recorded,  into  personal liability of  the members  for the  amount of tax due by the Hindu undivided family. But the order could be recorded only if   there was total partition, as contra-distinguished from partial partition,  and on  a claim  made by or on behalf of the members  of the  family, the  Income Tax  officer, after holding an  inquiry, was satisfied that such total partition had taken  place. Now,  in the  present case,  the partition which took  place between the members of 15th November, 1955 was partial  as regards  the properties  of the joint family and there  was  no  total  partition  effected  amongst  the members at  any time.  Hence  the  liability  of  the  Hindu Undivided Family  to tax for the assessment years 1950-51 to 1956-57 could  be recovered  only out  of the  assets of the joint family  and it  could not  be apportioned  amongst the members nor  could the members be held jointly and severally liable for payment of such tax liability under s. 25A of the old Act.  The question  is whether  the enactment of sub-ss. (6) and (7) of s. 171 of the new Act has made any difference in this position.      Section 171 of the new Act corresponds to s. 25A of the old Act  and provides  for assessment  of a  Hindu undivided family after  partition. But  it has made various changes in the law.  The principal  change  is  that  the  new  section applies not  only to  cases of  total partition, but also to cases of  Partial Partition.  Sub-s.  (1)  of  this  section reproduces the  same fiction  as in s. 25A and deems a Hindu family to  continue to  be a  Hindu undivided family "except where and in so far as a finding of partition has been given in respect  of  the  Hindu  undivided  family".  Sub-s.  (2) provides that where, at the time of making 51 an assessment under s. 143 or s. 144, it is claimed by or on behalf of  any member  of a  Hindu family  that a partition, whether total  or partial, has taken place among the members of such family, the Income Tax officer shall make an inquiry after giving  notice to  all the  members of  the family and sub-s. (3)  proceeds to  say 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 family property  and if there has been such a partition, the date on  which it  has taken  place. Where an order has been made recording  the partition,  the assessment  of the total income received  by or on behalf of the joint family as such is required to be made in accordance with the procedure laid down in sub-s. 4(a) and (S), which is the same as that under s. 25A,  although the  relevant provisions  are  differently cast. The  procedure is  to compute  the total income of the joint family  upto  the  date  of  the  partition  and  also determine the  tax payable by the joint family as such as if no partition  had taken place and as if the joint family was still in  existence. Sub-s.  4(b) makes each member or group of members jointly and severally liable for the whole amount of the  tax determined  as payable by the joint family. Then follows sub-s. (6) which is material and reads as follows:-           "notwithstanding  anything   contained   in   this      section,  if   the  Income-tax   officer  finds   after      completion of  the  assessment  of  a  Hindu  undivided

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    family  that   the  family   has  already   effected  a      partition, whether  total or  partial, the  Income  tax      officer shall  proceed to  recover the  tax from  every      person who,  was a  member of  the  family  before  the      partition, and  every such  person shall be jointly and      severally  liable   for  the   tax  on  the  income  so      assessed." Sub-s. (7) provides that "for the purposes of this section", that is,  for the  purposes of  sub-ss. 4(b)  and (6),  "the several liability of any member or group of members shall be computed according  to  the  portion  of  the  joint  family property allotted  to him  or it  at the  partition, whether total or partial".      Now it  is clear on a plain grammatical construction of the language  of sub-s. (2) to (5) of s. 171 that these sub- sections contemplate  a case  where at  the time  of  making assessment under  ss. 143  or 144,  a claim is made by or on behalf of  any member  of a  Hindu family  that a  total  or partial partition  has taken  place among  its members. Then the claim  would be  investigated by the Income tax  officer and if  satisfied, the  Income Tax  Officer would  record  a finding that  there has   been  such partition  of the  pint family property  and the  assessment of  the total income of the joint  family would then be made as if no such partition had taken place. And in such a case all the members would be Jointly and severally liable for the tax assessed as payable by the  joint  family  and  for  determining  their  several liability,  the  assessed  on  the  joint  family  would  be apportioned among  the members  "according to the portion of the joint  family property allotted to" each of them. But it may happen  that at  the time of making assessment under ss. 143 or  144 no  claim of partition, total or partial, is put forward on  behalf of  any member  of a Hindu family, either because 52 no such  partition has taken place or because of inadvertent or deliberate  omission on  the part  of the  members of the Hindu family  and where that happens, the Hindu family would continue to  be assessed as a Hindu undivided family and the tax determined  as payable  by it  would be recoverable only out of  the joint  family properties  and no member would be personally liable  for any  part of  the lax, even though an order recording  partition may  have been  passed after  the assessment, since  sub-s. (4)(b)  of s.  171 would  have  no application in such a case. That was also the position under s. 25A  of the  old Act with this difference that under that section the only partition which could be recorded was total partition and  not partial partition. The legislature, while enacting s 17.1 in the new Act, decided to introduce another radical departure from the old Act by providing in sub-s (6) that even  where no  claim of  total or partial partition is made at the time of making assessment under s. 143 or s. 144 and hence no order recording partition is made in the course of assessment  as contemplated  under sub-ss. (2) to (5), if it is  found? after  the completion  of the assessment, that the family  has already  effected.  a  partition,  total  or partial, all  the members  shall be  jointly  and  severally liable for  the tax  assessed as payable by the joint family and the tax liability shall be apportioned among the members according to  the  portion  of  the  joint  family  property allotted to  each of them. Sub-s. (6) of s. 171 thus for the first time imposed, in cases of this kind, joint and several liability on  the members  for the tax assessed on the Hindu undivided family  and  this  was  a  personal  liability  as distinct from liability limited to the joint family property

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received on partition.      Now  it  is  a  well  settled  rule  of  interpretation hallowed by  time and sanctified by judicial decisions that, unless the  terms of  a  statute  expressly  so  provide  or necessarily require  it, retrospective  operation should not be given  to a  statute so  as to  take  away  or  impair  a existing right  or create  a new  obligation or impose a new liability otherwise  than as  regards matters  of procedure. The general rule as stated by Halsbury in ol. 36 of the Laws of England  (3rd Ed.) and reiterated in several decisions of this Court  as well  as English Courts is that "all statutes other than  those which  are  merely  declaratory  or  which relate only to matters of procedure or of evidence are prima facie prospective" and retrospective operation should not be given to  a statute  so as  to affect,  alter or  destroy an existing right  or create  a  new  liability  or  obligation unless that  effect cannot be avoided without doing violence to the  language of  the  enactment.  If  the  enactment  is expressed in  language which  is fairly  capable  of  either interpretation, it  ought to  be  construed  as  prospective only. If  we apply  this principle  of interpretation, it is clear that  sub s. (6) of s. 171 applies only to a situation where  the   assessment  of  a  Hindu  undivided  family  is completed under s. 143 or s. 144 of the new Act. It can have no application  where the  assessment of  a Hindu  undivided family is  completed under  the corresponding  provisions of the old  Act. Such a case would be governed by s. 25A of the old Act  which does not impose any personal liability on the members in  case of partial partition and to construe sub-s. (6) of s. 171 as applicable in such a case with 53 consequential effect  of casting  on  the  members  personal liability which did not exist under s. 25A, would be to give retrospective operation to sub-s. (6) of s. 171 which is not warranted either  by the  express language of that provision or by  necessary implication.  Sub-s. (6)  of s.  171 can be given full effect by interpreting it as applicable only in a case where  the assessment  of a  Hindu undivided  family is made under  s. 143  or s.  144 of  the new  Act. We  cannot, therefore, consistently  with  the  rule  of  interpretation which denied  retrospective operation to a statute which has the effect  of creating  or imposing  a  new  obligation  or liability, construe sub-s. (6) of s. 171 as embracing a case where assessment  of a  Hindu undivided family is made under the provisions of the old Act. Here in the present case, the assessments of the Hindu Undivided Family for the assessment year 1950-Sl  to 1956-57  were completed  in accordance with the provisions  of the old Act which included s. 25A and the Income tax  officer was, therefore, not entitled to avail of the provision  enacted in sub-s. (6) read with sub-s. (7) of s. 171  of the new Act for the purpose of recovering the tax or any part thereof personally from any members of the joint family including the petitioners.      But the  Revenue Authorities  then fell back on another contention,  namely, that since the assessments of the Hindu Undivided Family for the assessment years 1950-51 to 1956-57 were reopened  by the  Income Tax Officer by issuing notices under s.  148 and the reassessments were completed by orders dated 26th  March, 1970  under  s.  147,  in  virtue  or  s. 297(2)(d) of  the new  Act, sub-s.  (6) of s 171 was, on the plain terms  of s.  297(e)(d), applicable and the Income Tax officer was entitled to recover personally from the members, the tax  reassessed on the Hindu Undivided Family, as it was found by  him that the family had already effected a partial partition. This  contention requires  an examination  of the

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true meaning and effect of s. 297(2) (d) That subsection has two clauses and it reads as follows:      "(d) Where  in respect of any assessment year after the year ending on the 31st day of March, 1940,-           (i)  a notice under section 34 of the repealed Act                had been  issued before  the commencement  of                this Act,  the proceedings  in  pursuance  of                such notice  may be continued and disposed of                as if this Act had not been passed;           (ii) any income  chargeable  to  tax  had  escaped                assessment  within   the  meaning   of   that                expression in  section 147 and no proceedings                under section  34  of  the  repealed  Act  in                respect of any such income are pending at the                commencement of  this  Act,  a  notice  under                section 148  may, subject  to the  provisions                contained in  section 149  or section 150, be                issued with  respect to  that assessment year                and all  the provisions  of  this  Act  shall                apply accordingly. ’ Admittedly, in  the present  case, cl.  (ii) of s. 297(2)(d) applied since  no proceedings  under s. 34 OF the old Act in respect of escaped 54 income of  the Hindu  Undivided Family  were pending  at the time of  the commencement of the new Act and it was for this reason that  notices under  s. 148 were issued by the Income Tax officer  for Reopening  the  assessments  of  the  Hindu Undivided Family  for the  assessment years 1950-51 to 1956- 57. Now  clause (ii)  of s.  297(2) (d) provides that when a notice under  s. 148  is issued  for reopening an assessment "all the  provisions of  this Act  shall apply accordingly". The argument of the Revenue Authorities, therefore, was that when notices  under s.  14 were  issued  for  reopening  the assessments  of   the  Hindu   Undivided  Family,   all  the provisions  of  the  new  Act  became  applicable  and  they included sub-s.  (6) of  s. 171  and, therefore,  that  sub- section was applicable for recovery of the tax reassessed on the Hindu  Undivided Family pursuant to the notices under s. 148. This  argument is  without force.  It  is  based  on  a misconstruction of the words "all the provisions of this Act shall apply  accordingly" in cl. (ii) of s 297(2) (d). These words merely  refer to the machinery provided in the new Act for the assessment of the escaped income. They do not import any substantive  provisions of  the  new  Act  which  create rights or liabilities. The word ’accordingly’ in the context means nothing  more than ’for the purpose of assessment" and it clearly suggests that the provisions of the new Act which are made  applicable are  those relating to the machinery of assessment.  The   substantive  law   to  be   applied   for determining the liability to tax must necessarily be the law under the  old Act, for that is the law which applied during the relevant  assessment years and it is that law which must govern the  liability of  the parties. Though sub-ss. (1) to (S) of  s. 171  merely lay down the machinery for assessment of a  Hindu undivided  family after partition, sub-s. (6) of s. 171  is clearly  a  substantive  provision  imposing  new liability on  the members  for the tax determined as payable by the  joint family.  The words "all the provisions of this Act shall apply accordingly" cannot therefore be consumed as incorporating by reference subs. (6) of s. 171 so as to make it applicable  for recovery  of the  tax reassessed  on  the Hindu Undivided  Family in  cases falling within cl. (ii) of s. 297(2)  (d). This  contention of  the Revenue Authorities must accordingly be rejected.

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    In the circumstances we allow these appeals and issue a writ in  each appeal  quashing and  setting aside the orders dated  13th  August,  1974  and  3rd  September,  1974.  The respondents  will   pay  the   costs  of   the   petitioners throughout. V.P.S.                                       Appeals allowed 55