Subsisting partition order under income-tax law cannot be ignored in assessment; HUF clubbing fails unless the order is set aside.

A subsisting order recognising a partial partition under section 171 of the Income-tax Act, 1961 cannot be ignored in later assessment proceedings. Where such an order has been accepted after enquiry and remains unrevoked, the Income-tax Officer must give it legal effect and cannot collaterally assess the spouses' income in the status of HUF. If the department considers the partition order to be incorrect, the proper course is to invoke the statutory revisional mechanism or otherwise set the order aside in law, not to disregard it while framing assessments. On that footing, clubbing the income in the hands of the HUF was not justified.

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Issues: Whether the Income-tax Officer could ignore a subsisting order recognising partial partition under section 171 of the Income-tax Act, 1961 and club the income of the spouses in the status of HUF.

Analysis: The partial partition had already been accepted after enquiry under section 171 of the Income-tax Act, 1961 and the order had not been set aside. Once such an order remained in force, the Income-tax Officer could not proceed on the footing that it did not exist and make assessments contrary to its legal effect. If the department considered the order to have been wrongly obtained, the proper course was to proceed under the revisional mechanism available in law, not to disregard the order collaterally while framing assessments. The assessments made ignoring the operative partition order were therefore inconsistent with the governing legal position.

Conclusion: The clubbing of the income in the hands of the HUF was not justified and the assessee succeeded.

Final Conclusion: The Revenue's appeals failed because the assessment orders could not stand once they were framed in disregard of the unrevoked partition order under the Act.

Ratio Decidendi: A subsisting order recognising partition under section 171 of the Income-tax Act, 1961 cannot be ignored in subsequent assessment proceedings unless it is first set aside or lawfully displaced in the manner provided by the statute.

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