Binding effect of partition order under tax law prevents collateral reopening under a separate estate duty assessment

A quasi-judicial order under section 171(3) recognising a Hindu family partial partition remains operative and binding in proceedings under other direct tax laws until it is set aside by a competent authority. On that basis, reopening the estate duty assessment under section 59(b) could not lawfully proceed by ignoring the subsisting partition order. The attempted fresh assessment was therefore not sustainable because it rested on a collateral disregard of a valid and effective order.

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Issues: Whether an order under section 171(3) recognising a partial partition is binding in proceedings under the Estate Duty Act, and whether the reopening of the estate duty assessment under section 59(b) could validly proceed by disregarding that order.

Analysis: The inquiry under section 171 of the Income-tax Act is a quasi-judicial inquiry, and once the Income-tax Officer records a finding under section 171(3) as to the existence and date of a total or partial partition, that order has operative force unless it is upset, vacated, cancelled, or reversed by a competent authority in accordance with law. The record disclosed no such setting aside of the order recognising the partial partition. The Tribunal held that such an order cannot be ignored by another authority merely because a different view is taken in proceedings under a separate direct tax enactment. The reopening made under section 59(b) of the Estate Duty Act was therefore founded on an impermissible disregard of a valid and subsisting partition order.

Conclusion: The order under section 171(3) remained binding and effective, and the reopening and fresh assessment under the Estate Duty Act were not sustainable.

Ratio Decidendi: A quasi-judicial order under section 171(3) recognising a Hindu family partition is binding in proceedings under other direct tax laws until it is fully set aside by a competent authority, and it cannot be ignored collaterally for reopening assessment.

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