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PETITIONER: JOINT FAMILY OF UDAYAN CHINUBHAI ETC.

       Vs.

RESPONDENT: COMMISSIONER OF INCOME-TAX, GUJARAT

DATE OF JUDGMENT: 14/10/1966

BENCH: SHAH, J.C. BENCH: SHAH, J.C. RAMASWAMI, V. BHARGAVA, VISHISHTHA

CITATION:  1967 AIR  762            1967 SCR  (2) 913  CITATOR INFO :  R          1976 SC1678  (6)  R          1982 SC 760  (13)

ACT: Indian Income-tax Act ( 11 of 1922), s. 25A and s. 34--Order recording  partition  of Hindu  undivided  family--Power  to reassess family as a unit thereafter-Whether exists.

HEADNOTE: C.his  wife, and his three sons were originally  assessed to income-tax in the status of ’a Hindu undivided family.  C filed  a  suit  in  1948 in the High  Court  of  Bombay  for partition and separate possession of his share in the  joint family  estate.  In 1950 the High Court passed a  decree  by consent  declaring that as from October 15, 1947  the  joint family  stood dissolved that all the members of  the  family had  become separate in food, worship and estate  from  that date,  and that each member of the family was entitled to  a fifth   share  in  the  properties  movable  and   immovable belonging to the family subject to the right of  maintenance in favour of C’s mother.  Pursuant to the decree C took  his share  in the properties allotted to him,  separately.   The other properties remained undivided between C’s wife and his three  sons each holding a fourth share as tenant in  common with  the other co-sharers.  In December 1952, C applied  to the Income-tax Officer for an order recording the  partition and requesting that assessment be made of the members of the family separately in accordance with the provisions of s. 23 read  with s. 25A of the Income-tax Act, 1922.  The  Income- tax  Officer  by  an  order  in  January  1953  granted  the application and for the period after the High Court’s decree assessed all the members of the erstwhile family separately. Subsequently however a notice under s. 34 of the Act for the assessment   years  1951-52,  1952-53,  and   1953-54,   for assessing  the  Hindu  undivided  family  of  four  members, namely, C’s wife and his sons, was issued on the ground that the  income  of  the family  had  escaped  assessment.   The assessees’  plea  that  they  did  not,  in  the  years   of assessment,  constitute  a Hindu undivided family  and  that they  could not be so assessed after an order under  s.  25A had  once  been passed was not accepted  by  the  Income-tax

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Officer.  The Appellate Assistant Commissioner reversed ’the Income-tax Officers order but the Appellate Tribunal restored it. The High Court in reference held in favour of the Revenue. The assessee came to this Court in appeal. HELD:(1) The Income-tax Officer has jurisdiction  under s.  25A(1)  to  make an order recording  that  joint  family property  has been partitioned if he is satisfied  that  the property  has been partitioned ’in definite portions’.   The jurisdiction may be exercised by the Income-tax Officer even if  there  be partition between ’groups of members’  of  the family.  A complete partition in definite portions among all the members of the family is not a condition of the exercise of  that  jurisdiction, nor does the  expression  ’group  of members’  refer  only to a group consisting of a head  of  a branch and his sons who remain undivided. [916’G-H] In  the  present  case  there  was  no  doubt  that  C  took possession  of  his  share in the family  estate  which  was allotted  to  him.  The assessees constituted  a  group  and between  them  and C there had been a  partition  indefinite portions.  The conditions for the passing of an order  under s.   25A(1) were thus satisfied. [918 A-B]      914 (ii) After the HighCourt  had  decreed  the  partition  the original undivided family had noexistence  in fact or  in point of law-personal    or income-tax. Section25A(3) did not help the Revenue for it only   requires the Income-taxOfficer to continue to assess a Hindu undivided      family    which has beendivided  under  the personal law as  long,  as  no order  under  s.  25A(1)  has  been    recorded.   Once   an order under s. 25A(1)  has been recorded cl. (3) of  s.  25A has no application. [918 D] (iii)  It is true that an assessment year under the  Income- tax Act is a self contained assessment period and a decision in  the assessment year does not ordinarily operate  as  res judicata.   But this rule does not apply in dealing with  an order  under  s. 25A(1).  Income from property  of  a  Hindu undivided  family  ’hitherto’ assessed as undivided  may  be assessed  separately  if an order under s. 25A(1)  had  been passed.  When such an order is made the family ceases to  be a Hindu undivided family.  Thereafter that family cannot  be assessed  in the status of a Hindu undivided  family  unless the order is set aside by a competent authority. [919 F-H] (iv)Section  34  of the Indian Income-tax  Act  confers  no general  power of reviewing an order passed under s.  25A(1) which  is  in its very nature effective for  all  subsequent years.   The only course for the Income-tax Officer,  if  be wants   the  order  to  be  reconsidered  is  to  move   the Commissioner  of Income-tax to take action under s.  33B  of the Act to set aside the order under s. 25A. [920 C-D] Gordhandas  T.  Mangaldas  v.  Commissioner  of  Income-tax, Bombay. 11 I.T.R. 183 and Commissioner of Income-tax,  Delhi and  Rajasthan  v.  Ganeshi Lal Sham  Lal,  61  I.T.R.  408, referred to.

JUDGMENT: CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 946 to 948 of 1965. Appeals from the judgment and order dated September 15, 1964 of the Gujarat High Court in Income-tax Reference No. 19  of 1963. A.   K.  Sen,  O.  P.  Malhotra,  O.  C.  Mathur,  for   the appellants.

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S.   T.  Desai,  S.  K. Aiyar and R. N.  Sachthey,  for  the respondent. The Judgment of the Court was delivered by Shah, J. Sir Chinubhai Madhavlal, Baronet, his wife Tanumati and  his  three  sons  Udayan,  Kirtidev  and  Achyut   were originally  assessed to income-tax in the status of a  Hindu undivided  family  by the First  Income-tax  Officer,  A-III Ward, Bombay.  Sir Chinubhai filed suit No. 2176 of 1948  in the  High  Court of Judicature at Bombay for  partition  and separate possession of his share in the joint family estate. On  March 8, 1950, the High Court of Bombay passed a  decree by consent declaring that as from October 15, 1947 the joint family  stood  dissolved  and that all the  members  of  the family had become separate in food, worship and estate  from that date and that each member of the family was entitled to a  fifth  share  in the  properties  movable  and  immovable belonging to the family, subject to the right of maintenance in favour of the mother of Sir Chinubhai.  In Sch.  A Part I properties which 915 were  allotted to Sir Chinubhai were set out; in Parts 11  & III  of Sch.  A properties which were collectively  allotted to  the share of Udayan, Kirtidev, Achyut and Lady  Tanumati were  set  out.   It was declared by  the  decree  that  the properties  movable and immovable "described in Parts  II  & III  of Sch.  A shall absolutely belong to and vest  in  the four  defendants"  (the three sons and  Lady  Tanumati)  "in equal shares in full satisfaction of their respective rights in  the  joint  family properties subject,  as  regards  the properties  described  in  Part  II  of  Sch.   A,  to   the provisions  of the Baronetcy Act".  Schedules B, C &  D  set out the debts and liabilities of the joint family.  Pursuant to  the  decree,  Sir  Chinubhai  took  his  share  in   the properties   allotted   to  him,  separately.    The   other properties  remained  undivided  between  Udayan,  Kirtidev, Achyut  and  Lady Tanumati-each holding a  fourth  share  as tenantin-common with the other co-sharers. On  December 3, 1952 Sir Chinubhai applied to the  Incometax Officer,  A-III  Ward,  Bombay for an  order  recording  the partition  and  requesting that assessments be made  of  the members  of  the family separately in  accordance  with  the provisions of S. 23 read with s. 25A of the Income-tax  Act. The  Income-tax  Officer  by order dated  January  6,  1953, granted  the application.  He observed that pursuant to  the decree of the High Court for partition the properties of the "Hindu undivided family were distributed between two groups- one consisting of Sir Chinubhai and the other consisting  of his  wife and his three sons", and since all the  conditions of  s. 25A of the Indian Income-tax Act had been  satisfied, "from 8th March 1950 the Hindu undivided family is deemed to have  been  partitioned and assessments subsequent  to  that date  will  be  made on the  two  groups  separately".   The Income-tax  Officer,  Ahmedabad,  thereafter  assessed  Lady Tanumati and the sons of Sir Chinubhai separately. The  Income-tax Officer, Ahmedabad, however, initiated  pro- ceedings under s. 34 of the Indian income-tax Act, 1922, for the  assessment  years  1951-52,  1952-53  and  1953-54  for assessing  the, Hindu undivided family of the  four  members "Udayan,  Kirtidev,  Achyut  and  Lady  Tanumati"--who  will hereinafter  collectively be called "the assessees"  on  the plea  that the income of the family had escaped  assessment. The  assessees contended that they did. not in the years  of assessment  referred  to in the notice  constitute  a  Hindu undivided  family and the Income-tax Officer had no  power,. after the order passed on January 6, 1953, to assess them in

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the  status  of a Hindu undivided  family.   The  Income-tax Officer rejected the contention. In appeal to the Appellate Assistant Commissioner the  order of  assessment  under  s. 34 was set  aside,  The  Appellate Assistant  Commissioner held that the decree passed  by  the High Court of" 916 Bombay brought about a complete disruption and severance  of the joint status of the original family, and merely  because the assessees after severance had lived and traded together, they could not be assessed as a Hindu undivided family.   He also held that after an order under s. 25A was passed by one Income-tax Officer, another Income-tax Officer had no  power to modify it or to circumvent the same by seeking to  assess the assessees as a Hindu undivided family. In   appeal  by  the  Income-tax  Officer,  Ahmedabad,   the Appellate Tribunal restored the order passed by the  Income- tax Officer.  In the view of the Tribunal, by the decree  of the  High  Court  there was severance of  the  joint  status between  the  members  of the joint Hindu  family,  but  the partition  was  partial,  and "it did  not  follow  that  as regards  the remaining persons or the  remaining  properties which  had not gone out of the fold of the  Hindu  undivided family  the assessment in respect thereof could not be  made in  the  status of a Hindu undivided family."  The  Tribunal rejected  the  view that once an order under  s.  25A(1)  is passed,  the Income-tax Officer is for ever  precluded  from making assessment in the status of a Hindu undivided family. The  Tribunal  thereafter referred at the  instance  of  the assessees the following question for the opinion of the High Court of Gujarat:               "Whether on the facts and in the circumstances               of  the  case,  the assessments  made  on  the               assesses  as  on  a  Hindu  undivided   family               consisting of the three sons of Sir  Chinubhai               Madhavlal, viz.,               "Udayan,  Kirtidev and Achyut and the wife  of               Sir Chinubhai Madhavlal, viz.  Lady  Tanumati,               were correctly so made?" The  High  Court answered the question in  the  affirmative. Against that order, these appeals have been preferred by the assessees. An application under sub-s. (1) of s. 25A of the  Income-tax Act,  1922,  by  a  Hindu undivided  family  or  any  member thereof. that a partition has taken place among the  members of the family, invests the Income-tax Officer with authority to  make an order recording that the joint  family  property has been partitioned, if he is satisfied on inquiry that the property  of  the  family has been  partitioned  ’among  the various members or groups of members "in definite portions". The jurisdiction may be exercised by the Income-tax Officer, even if there be partition between groups, of members of the family.  A complete partition in definite portions among all the members of the family is not a condition of the exercise of that jurisdiction.  We do not agree with the plea  raised by counsel for the Department that by the expression  "group of members" it is intended to refer to a group consisting of a head of a branch and his sons who remain undivided.  Section  25A(1) applies  to  families governed by the  Dayabhaga  school  of Hindu law as well as the Mitakshra school of law: and if the interpretation  suggested  by  counsel for  the  Revenue  be correct,   the  expression  "group  of  members"   will   be meaningless  in relation to a Hindu family governed  by  the Dayabhaga school of Hindu law.

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But  an  order recording partition can be made only  if  the properties of the joint family are partitioned in  "definite portions", that is, the properties are physically divided if they  admit of such division, otherwise in such division  as they  admit of.  In Gordhandas T. Mangaldas v.  Commissioner of Income-tax, Bombay(1) the High Court of Bombay held  that s. 25A contemplates a physical division of the joint  family property:  a mere division of interest in such  property  is not enough.  Beaumont, C. J., in delivering the judgment  of the Court observed at p. 195:               "I   think  that  the   expression   "definite               portions"  indicates  a physical  division  in               which  a  member takes a particular  house  in               which  he can go and live, or a piece of  land               which  he can cultivate, or which he can  sell               or  mortgage,  or takes  particular  ornaments               which he can wear or dispose of, and that  the               expression  "definite portions" is not  appro-               priate  to  describe  an  undivided  share  in               property  where  all a particular  member  can               claim  is  a proportion of the income,  and  a               division  of the corpus, but where  he  cannot               claim    any   definite   portion    of    the               property.  .  .  .  No  doubt  the  expression               ’,’division in definite portions" will have to               be construed with regard to the nature of  the               property  concerned.   A  business  cannot  be               divided  into  parts in the same manner  as  a               piece  of land; division may only be  possible               in  the books.  Special cases will have to  be               dealt with by the Income-tax Officer when they               arise.   If he comes to the conclusion,  that,               having  regard to the nature of the  property,               what  has been done amounts to a  division  in               definite portions, he will record his  finding               under  sub-section  (1); If he  comes  to  the               conclusion that it does not, then he will have               to  go  on  assessing the  family  under  sub-               section (3)." There is no doubt that Sir Chinubhai took possession of  his share  in  the  family estate which  was  allotted  to  him. Between Sir Chinubhai and the assessees there was  therefore partition of the joint family property in definite portions. The  shares  allotted  to the  assessees  were  however  not divided in definite portions inter se.  It is true that Part 11 of Sch.  A of the decree described the settled properties under the Baronetcy Act 8 of 1924 (1)11 I.T.R. 183. 918 and those properties were not capable of physical  division. How.   ever  Part  III  described  properties  movable   and immovable  which  were  not subject to  any  such  statutory restrictions and those Properties were not divided among the assessees.   But  the  assessees  constituted  a  group  and between  them and Sir Chinubhai there had been partition  in definite  portions-the portion of the property  allotted  to Sir  Chinubhai being completely separated from the  property allotted to the assessees. Under  the decree of the High Court of Bombay the  assessees did  not  continue to remain members of an  undivided  Hindu family.  it  was expressly provided by the decree  that  the assessees  were  divided  inter se  and  held  the  property allotted  to  them as tenantsin-common.  The affect  of  the order recording a partition was to recognize for purposes of income-tax  administration that the joint family status  was

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severed,  and the property was divided in definite  portions between  groups of members of the family.  After  the  order was  recorded  the original Hindu undivided  family  had  no existence in fact or in point of law-personal or income-tax. Section  25A(3)  on  which strong  reliance  was  placed  by counsel for the Revenue only requires the Income-tax Officer to  continue  to assess a Hindu undivided family  which  has been  divided  under the personal law so long  as  no  order under  S. 25A(1) has been recorded. Once an order  under  S. 25A(1)  has  been  recorded,  cl.  (3)  of  S.  25A  has  no application.  If the members of the family who constituted a group  between  whom and the other group there  has  been  a partition in definite portions constitute a Hindu  undivided family,  that group may undoubtedly be assessed as  a  Hindu undivided  family: they may be so assessed because of  their relation inter se and not by virtue of S. 25A(3) The  order  passed by the Income-tax  Officer,  Bombay,  was apparently  a  valid order which he was competent  to  make. When  as a result of that order, the property of the  family was  deemed for purposes of the Income-tax Act  partitioned, it  was  not open to the Income-tax Officer,  Ahmedabad,  to ignore the order either for the year in which the  partition of  the  joint  family property was  recorded,  or  for  any subsequent  year, and to assess the income in the  hands  of the  assessees  as if the original  Hindu  undivided  family continued  to  exist.  An order assessing the  assessees  as members  of a Hindu undivided family could be made after  an order under S. 25A had been recorded only it was proved that under the personal law they formed a joint Hindu family; and of that there was no evidence. The  contention  raised on behalf of  the  Department  which appealed to the Income-tax Officer and the Tribunal that the original  Hindu undivided family of Sir Chunubhai  Madhavlal con- 919 tinned  to  exist, notwithstanding the  order  of  partition recorded  under  s.  25A(1),  in  our  judgment,  cannot  be sustained.  When the Income-tax Officer, Bombay, recorded an order  that  the property had been partitioned  in  definite portions, the family ceased to exist.  It is true that among the assessees the property had not been divided by metes and bounds, but they could still not be assessed as members of a Hindu undivided family because such a relation did not exist between  them after severance of the joint family status  of the  family  in  which Sir Chunubhai  was  the  karta.   The Income-tax Officer, Ahmedabad, in substance sought to revise the previous order passed by the Income-tax Officer, Bombay, recording partition under s. 25A, and to revive the original family so as to make the income of the assessees as well  as of  Sir Chinubhai liable to be assessed as if  no  partition had  taken  place  and  no partition  of  the  joint  family properties  had  been  recorded under  the  Income-tax  Act. That, the Income-tax Officer was plainly incompetent to do. Counsel  for the Revenue sought to support the order  passed by  the Income-tax Officer, Ahmedabad, and confirmed by  the Tribunal,  on the ground that it was open to the  Income-tax Officer, notwithstanding the order passed under s. 25A(1) in a  previous  year to ignore that order  in  proceedings  for assessment  relating to a subsequent year, and to hold  that there  was no severance in fact between the members  of  the family and to assess them as a Hindu undivided family, as if no  partition  had  taken  place.  It  was  said  that  each assessment  year is a self-contained unit and whatever  view may  have  been taken in proceedings for  assessment  of  an earlier year, it is open to the Income-tax Officer to arrive

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at  an independent conclusion contrary to that  decision  in respect of another year, if the circumstances of the case so warrant.   It  is  true that an assessment  year  under  the Income-tax  Act is a self-contained assessment period and  a decision in the assessment year does not ordinarily  operate as  res  judicata in respect of the matter  decided  in  any subsequent  year, for the assessing officer is not  a  court and  he  is  not precluded from  arriving  at  a  conclusion inconsistent  with  his conclusion in another year.   It  is open  to the Income-tax Officer, therefore, to  depart  from his  decision in subsequent years, since the  assessment  is final and conclusive between the parties only in relation to the  assessment  for the particular year for  which  it-  is made.   A  decision reached in one year would  be  a  cogent factor  in  the  determination of a similar  question  in  a following  year, but ordinarily there is no bar against  the investigation by the Income-tax Officer of the same facts on which  a decision in respect of an earlier year was  arrived at.   But  this  rule, in our judgment, does  not  apply  in dealing with an order under s. 25A(1).  Income from property of a Hindu undivided family "hitherto’ assessed as undivided may  be assessed separately if an order under s. 25A(1)  had been passed. 920 When such an order is made, the family ceases to be assessed as a Hindu undivided family.  Thereafter that family  cannot be assessed in the status of a Hindu undivided family unless the order is set aside by a competent authority.  Under  cl. (3) of s. 25A if no order has been made, notwithstanding the severance of the joint family status, the family continue to be liable to be assessed in the status of a Hindu  undivided family,  but once an order has been passed, the  recognition of  severance is granted by the Income-tax  Department,  and cl. (3) of s. 25A will have no application. In Commissioner of Income-tax, Delhi and Rajasthan v. Ganesi Lal Shyam Lal,(1) the High Court of Punjab held that when an order recognising the total disruption of a Hindu family has been passed under s. 25A Indian Income tax Act 1922, and  an order  of assessment is made on the basis of such an  order, it   -is  not  open  to  the  Income-tax  Officer  to   take proceedings for reassessment under s. 34 of the Act ignoring the earlier order under s. 25A of the Act on the ground that he has received information that the order under s. 25A  was obtained  by misrepresentation.  The proper course  for  the Income  tax Officer to adopt in such a case is to  move  the Commissioner  of Income-tax to take action under s.  33B  of the Act to set aside the order under s. 25A We  agree  with the High Court of Punjab that s. 34  of  the Indian Income-tax Act confers no general power of  reviewing an order passed under S. 25A(1), which is in its very nature effective for all subsequent years. The answer to the question referred will be in the negative. The appellants will be entitled to their costs in this Court as well as in the High Court.  One hearing fee. G.C.                                      Appeal allowed. (1) 61 I.T.R. 408. 921