TaxTMI 
TaxTMI 
TaxTMI 
1993 (6) TMI 129
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....sp; Shri Chunnilal Agarwal | Smt. Pratibha Devi Agarwal (wife) | -------------------------------------------------------------------------------------- |  ....
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....sp; (son) (2) Master Amit Agarwal (2) Baby Abha (son) (daughter) (3) Baby Anuradha (daughter) Each of the four heads of the respective branches constitutes a H. U. F., the head acting as its manager. Thus there are 4 HUFs within the bigger H. U. F., namely, (1) Shri Chunnilal Agarwal,....
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....bsp; 8-2-1988 1982-83 143(1) 14-4-1987 1983-84 to 1986-87 143(1) 27-4-1987 and returned incomes were accepted in all the above assessment years. 4. Assessments thus completed came under scrutiny of the learned Commissioner of Income-tax who felt that assessment orders were erroneous and were completed without making proper enquiries regarding the source of initial capital and the status adopted was wrong and it was determined without any legal basis. The learned Commissioner of Income-tax was of the strong opinion that a H. U. F. can be created only by operation of law and not by Act of individual. By mere receipt of the gift from a third party, two or more individuals ....
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....e order of assessment is liable for revision not only in cases where it is found that the assessment orders are erroneous and prejudicial to the interests of the Revenue but also where it is found that the ITO had passed a stereo-typed order by simply accepting the assessee's stand made in his return without making any enquiries which were called for in order to substantiate the assessee's contention made in the return. According to the Calcutta High Court's decision in Dawjee Dadabhoy & Co. v. S.P. Jain [1957] 31 ITR 872, the words "prejudicial to the interests of Revenue" mean that the assessment orders are such as are not in accordance with law, in consequence whereof the lawful revenue due to the State has not been realised or cannot be realised. Following the aforesaid decisions, the learned Commissioner of Income-tax found ample justification for holding that the impugned assessment order made under section 143(1) were erroneous insofar as they are prejudicial to the interests of the revenue. The learned Commissioner of Income-tax had rejected the arguments of the assessee that because the income-tax returns filed by the assessee were under Amnesty Scheme, the assessing offic....
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....he status adopted by the Income-tax Officer as H.U.F. in the assessment order passed by him is cancelled and the status should be adopted as A. O. P. and additional tax demand, if any, is to be raised as per each of these assessments. (b) Since the shares of different members of the assessee A.O.P are specific and unambiguous, being equal for each of them, the respective share incomes from the A.O.P as computed in the A.O.P's assessment for each of the assessment years under consideration should be included for rate purposes in the individual assessments of each of the members under section 110 read with section 86(v) of the I.T. Act. In other words, the total income of each member should be assessed at the tax rate applicable to the aggregate income including the share income from A.O.P. In case one or more of the members of the A.O.P. is/are assessed by some other assessing officer, the information regarding the respective share income/incomes of these persons in the concerned H.U.Fs., should be communicated to the concerned assessing officer, for necessary action at his end. 8. Aggrieved against the above orders passed by the Commissioner of Income-tax, A.P.II, Hyderabad dated....
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....n into the common hotchpotch of a smaller H.U.F. of himself, his wife and children and whether such a smaller H.U.F. can be an assessable unit while larger unit still continued undivided. The Bombay High Court held that there was no legal obligation whatsoever in the way of the assessee giving away his self-acquired property not to the entire main family but to the smaller family consisting of himself, his wife and children. It further held that the smaller family was an assessable unit capable of holding property, as belong to it, and the circumstances that it was also a branch of another larger assessable unit did not in any way affect it from being assessable unit itself. It was not necessary in order that the smaller family could be an assessable unit that the larger family should have been completely disrupted by a partition. Therefore in that case, the property thrown into the common hotchpotch of the smaller family could not be assessed as income of the bigger H.U.F. (the assessee in that case). Shri K. V. S. Bhaskara Rao, learned counsel for the assessee argued that in the Bombay case a member of the bigger H.U.F. throwing the self-acquired property into the common hotchpot....
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....nch alone and in which the other branches or the main Hindu family as such have no right or interest. That such is the position under the Hindu law is clearly pointed out in Sudarsanam Maistri v. Narasimhulu Maistri [1901] ILR 25 (Mad.) 149." He pointed out that the Bombay High Court had relied upon the decision of the Madras High Court in Sudarsanam Maistri v. Narasimhulu Maistri [1901] ILR 25 (Mad.) 149 for its conclusion. This decision provides a complete answer against the notion entertained by the Commissioner of Income-tax holding that a Hindu undivided family is a creature of law and cannot be created by act of parties. Shri Bhaskara Rao contended that there is no question of any creation of H.U.F. in this case. Shri Chunnilal and his sons are already heading their respective branches. A combination of one or two such branches can by themselves hold the property and with regard to the income of that property, the interested branches can constitute smaller HUFs and can be assessed as such. The following other authorities were cited in support of this proposition: (1) A. Hanumantha Rao's case, (2) CIT v. Shantikumar Jagabhai [1976] 105 ITR 795 (Guj.), (3) CIT v. Budhalal Amu....
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.... the said decision, the Madras High Court specifically held the following as per the headnote of the decision: "It is well settled that under the Mitakshara law there can be a gift or settlement of property for the benefit of a joint family as such and it does not matter whether the donor is a male or a female or whether he or she is a member of the family or an outsider but what matters is the intention of the donor that the property given is for the benefit of the family as a whole." 12. In Radhambal Ammal's case a will was executed bequeathing certain properties in favour of the assessee. The income arising out of those properties were being assessed in the individual hands of the assessee up to assessment year 1966-67. However, in assessment proceedings for 1967-68, the assessee claimed the status as that of H.U.F. with regard to the income arising out of the said properties bequeathed to him. Justifying the refusal of reference by the Tribunal, the High Court held that the intention of the testator was clear especially, when he had stated that in respect of the properties given to the wife, she should take them absolutely with full powers of alienation but in respect of bequ....
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....ars cannot be upheld. 15. As against the argument of Shri K.V.S. Bhaskara Rao, learned Advocate for the assessee, Shri V. Raghavendra Rao, learned Departmental Representative contended that the main question involved in these appeals is to consider whether all the members of two branches of major H.U.F. can constitute a H.U.F. and can be recipients of the gift or settlements. One branch of a bigger H. U. F. can by itself constitute a bigger H. U. F., no matter whether it has nucleus of its own or not. But the learned Departmental Representative contended strongly that two branches of a bigger H.U.F. cannot constitute a H.U.F. or H.U.F. cannot be formed by mere averments made in document by an outsider, since there is no volition on the part of the members, comprised in the two branches, constituting a H. U. F. and in support of this proposition, he brought to our attention para 228A of Mulla's Hindu Law (15th Edition) which is as follows: "228A. Joint acquisition by some members.---So long as a family remains an undivided family, two or more members of it, whether they are members of different branches or of one and the same branch of the family can have no legal existence as a s....