TaxTMI 
TaxTMI 
2011 (9) TMI 242
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....The appellant, therefore, prays that the ld. A.O is not at all justified in treating the amount of Rs. 19,19,996/- received on partition of H. Venkateshwaran (HUF) as gift and taxing the same under the head Income from Other Sources. (3) Without prejudice to the above, the ld. CIT(A) failed to appreciate that the amount received on partition of HUF, even if treated as gift, shall not be taxable under provision of Sec. 56(2). (4) The ld. CIT(A) erred in not appreciating the fact that the partition takes place from the date mentioned in the order passed under Sec. 171 and not from the date of the order passed under Sec.171 of the Income Tax Act,1961. The appellant, therefore, prpays that the ld. A.O is not justified in treating the amount of Rs. 19,19,996/- received on partition of H. Venkateshwaran (HUF) as gift and taxing the same under the head Income from Other Sources. (5) The Appellant denies any liability to pay the interest under section 234B and 234C of the Income Tax Act, 1961. Hence the same are not leviable." 2. The assessee is an individual. She filed a return of income for A.Y 2006-07 on 18/9/06 declaring total income of Rs. 1,41,369/-. The return was accept....
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.... was a partition of the HUF because of the absence of an order under section 171 of the Act. He was of the view that on the death of the Kartha the HUF need not necessarily come to an end and that the HUF still continues. Thereafter the AO considered a sum of Rs. 19,99,996/- as an amount received for consideration from HUF and brought the said sum to tax under section 56(2)(v) of the Act. The relevant observation of the AO in this regard were as follows: "14. The assessee has received an amount of Rs. 19,99,996/- from M/s. H. Venkateshwaran HUF without any consideration. The said HUF was not partitioned as already established above. Therefore. The amount which was received without consideration and credited to the capital account for the year is taxable in the hands of the assessee as 'gift' received from M/s. H. Venkateshwaran HUF during the year. The scope of non-taxable gifts/receipts of sums of money has been defined by the Finance Act, 2004 w.e.f. 1//4/2005 vide insertion of section 56(v) in the Act. The said section of the IT Act defines the scope of persons who can give a sum of money exceeding twenty five thousand rupees without consideration to another set of persons/do....
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....HUF was credited in the capital account of the assessee. The HUF was partitioned w.e.f. 14/10/2008 only. It is also worth mentioning that the assessee applied for partition only after enquiries were made during the assessment proceedings. Therefore, since the HUF was in existence as on 31/3/2006, the amount received by the assessee from such HUF without any consideration is taxable in her hands in the year in which such sum was received. Even if the partition deed was made and filed before the AO, no partition can be said to have been effected until the AO had passed an order u/s. 171(1) of the Act which was not the case as on 31/3/2006. There are several case laws reiterating the above position of law and the same have been already discussed in the assessment order." 6. After considering the objections of the AO the CIT(A) held as follows: "7. I have carefully gone through the assessment order, the remand report of the AO., the submissions of the appellant on the remand report and various case laws quoted by the AO. In this case, the moot issue is whether there was partition on the date of assessment or not. I find the following facts from the records:- (i) That M/s. H. V....
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....follows: "It is hereby informed under Sec. 171 of the Income Tax act, that the HUF was fully partitioned on 31st March, 2005 between the members. A copy of the personal account is enclosed." 9. Questionnaire u/s. 171 of the Act was also filed. The AO of the HUF viz., The ITO, Ward 1(4), Tirunelveli passed an order 14.10.2008 recognising partition as per the partition deed dated 1.4.2005. In view of the above order u/s. 171 of the Act the HUF stands dissolved with effect from 31.3.2005 and has been recognised by the Department as required by the provisions of Sec. 171 of the Act. It was his contention that the credit entry in the capital account of the Assessee of her share in the properties of the HUF which she obtained on partition cannot therefore be said to be sum or other assets received without consideration attracting the provisions of Sec. 56(2)(v) of the Act. Since the basis on which the AO made the impugned addition was the absence of an order u/s. 171 of the Act and in view of the order u/s. 171 of the Act, the addition made by the AO is without any basis and the same should be deleted. It was also submitted that the CIT(A) erred in holding that the date of the orde....
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...., on a Hindu undivided family which got disrupted on October 31, 1957. (i) For imposing penalty for concealment of income or improper distribution of profits of a Hindu undivided family, proceedings will have to be taken only under section 28 and section 25A does not provide for imposition of any such penalty. (ii) In order to impose penalty under section 28, the "person", which expression includes Hindu undivided family, must be in existence on the date of such imposition. (iii) When an order under section 25A(1) is passed recording a partition of a Hindu undivided family, that family ceases to be a Hindu undivided family and a "person" for the purposes of section 28 with effect from the date of actual partition as recorded by the said order. In such cases the date of such an order is not material and sub-section (3) of section 25A has no application. It is only the date of actual partition as recorded in the order made under sub-section (1) of section 25A that is material and determines the actual date of cessation of the Hindu undivided family within the meaning of section 28. 10. The learned counsel for the Assessee submitted that the receipt by a co-parcener on par....
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....d as if no partition had taken place; and the provisions of clause (b) of sub-section (4) shall, so far as may be, apply to the case. (9) Notwithstanding anything contained in the foregoing provisions of this section, where a partial partition has taken place after the 31st day of December, 1978, among the members of a Hindu undivided family hitherto assessed as undivided,-- (a) no claim that such partial partition has taken place shall be inquired into under sub-section (2) and no finding shall be recorded under sub-section (3) that such partial partition had taken place and any finding recorded under sub-section (3) to that effect whether before or after the 18th date of June, 1980, being the date of introduction of the Finance (No. 2) Bill, 1980, shall be null and void ; (b) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place ; (c) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, wh....
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....when an order under section 25A(1) is passed recording a partition of a Hindu undivided family, that family ceases to be a Hindu undivided family and a "person" for the purposes of section 28 with effect from the date of actual partition as recorded by the said order. In such cases the date of such an order is not material and sub-section (3) of section 25A has no application. It is only the date of actual partition as recorded in the order made under subsection (1) of section 25A that is material and determines the actual date of cessation of the Hindu undivided family within the meaning of section 28. In our view the action of the revenue authorities in bringing to tax the sum received by the Assessee from the HUF as co-parcener of the HUF, on partition of the HUF cannot be brought to tax as income and the addition made by the AO in this regard is directed to be deleted. 15. The learned counsel for the Assessee also raised arguments that the sum received without consideration by a member of the HUF from the HUF cannot be taxed u/s. 56(2)(v) of the Act, by placing reliance on the decision of the Hon'ble Rajkot Bench of ITAT in the case of Vineetkumar Raghavjibhai Bhalodia v. IT....