1991 (10) TMI 108 - AT - Wealth-tax

Tribunal Validates Wealth-tax Officer's Assessments on HUF Status; Deputy Commissioner's Orders Set Aside

The Tribunal upheld the validity and sustainability of assessments made by the Wealth-tax Officer in the status of Hindu undivided family (HUF), ... HUF Property Issues:1. Challenge to jurisdiction for making assessments by the Wealth-tax Officer based on the existence of Hindu undivided family.2. Dispute over the valuation of plots and application of provisions of section 7(4) of the Wealth-tax Act for valuing a residential house.3. Validity of assessments made by the Assessing Officer in the status of Hindu undivided family (HUF) and its sustainability.4. Plea against the initiation of penalty proceedings under section 18(1)(c) of the Wealth-tax Act.Detailed Analysis:1. The assessee challenged the jurisdiction for assessments by the Wealth-tax Officer, arguing that the Hindu undivided family (HUF) was not in existence due to a partition suit. The Tribunal directed the valuation of the residential house under section 7(4) of the Wealth-tax Act. The validity of assessments in the status of HUF was questioned, with reference to disruption of HUF status due to partition proceedings initiated by a family member.2. The legal representative contended that disruption of HUF status occurred, making assessments in the status of HUF invalid. The Tribunal considered the Supreme Court's judgment in ITO v. Smt. N.K. Sarada Thampatty, emphasizing the continuity of HUF status for assessment purposes. The Tribunal disagreed with the interpretation that disruption under the Income-tax Act did not apply to the Wealth-tax Act, citing provisions of section 20(2) of the Wealth-tax Act.3. The legal representative cited various judgments supporting the disruption of HUF status upon partition suits, including decisions from the Calcutta High Court and the Supreme Court. However, the Tribunal emphasized the Supreme Court's authority in determining the continuity of HUF status for assessment purposes under the Wealth-tax Act. The Tribunal rejected arguments based on Hindu law cases and upheld the validity of assessments made by the Wealth-tax Officer.4. The Tribunal concluded that assessments in the status of HUF were valid and sustainable, dismissing the cross objections and appeals. Orders of the Deputy Commissioner of Wealth-tax (Appeals) were set aside, remitting the matters for fresh consideration under section 18(1)(a) and 18(1)(c) of the Wealth-tax Act. The Tribunal allowed the revenue's appeals for statistical purposes, emphasizing compliance with mandatory provisions for valuation by the Departmental Valuation Officer.