Assessment status must match the taxable unit; individual assessments failed and fresh assessment as HUF was required.

Assessments made in the assessee's individual status were unsustainable because the gifts were made by him as karta of a Hindu undivided family, not in his personal capacity. The appellate Tribunal had power to correct the assessed status and to set aside the assessments so the proper taxable unit could be assessed in accordance with law. While the finding that the individual assessments could not stand was accepted, cancelling the assessments outright was held to be the wrong course. The proper course was to set aside the assessments and direct fresh assessment in the status of a Hindu undivided family.

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Issues: Whether the assessments made in the status of an individual were untenable in law and, if so, whether the Tribunal ought to have cancelled the assessments or instead directed fresh assessments in the status of a Hindu undivided family.

Analysis: The gifts were held to have been made by the assessee as karta of a Hindu undivided family and not in his individual capacity. The legal authorities considered showed that the appellate Tribunal had wide powers to correct the status of assessment and to set aside an assessment so that the proper unit of taxation could be assessed according to law. The Tribunal's view that the individual assessments could not stand was accepted, but its further step of cancelling the assessments was held to be erroneous because the proper course was to direct assessment in the correct status.

Conclusion: The individual assessments were not sustainable, but the Tribunal should have set them aside and directed assessment of the assessee in the status of a Hindu undivided family.

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