TaxTMI 
TaxTMI 
TaxTMI 
2004 (8) TMI 94
X X X X Extracts X X X X
X X X X Extracts X X X X
....79-80?" Briefly stated the facts giving rise to the present reference are as follows: The respondent-assessee is a Hindu undivided family. According to it, it had effected partial partition of the Hindu undivided family property on January 25, 1979, effective from January 1, 1979. At the time of filing of the return for the assessment year 1979-80, the respondent-assessee excluded the properties partitioned in the said partial partition dated January 25,1979. The Wealth-tax Officer, however, ignored the claim of the assessee on the ground that according to the provisions of section 171(9) of the Income-tax Act, 1961, the immovable property belonging to the Hindu undivided family will be assessed as it was in the wealth-tax assessment of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... into consideration. He relied upon the Constitution Bench decision of the hon'ble Supreme Court in the case of Union of India v. M.V. Valliappan [1999] 238 ITR 1027. Section 20A of the Act which was inserted by the Finance (No. 2) Act of 1980, with effect from April 1, 1980, reads as follows: "20A. 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) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place; (b) 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, pena....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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, whether before or after such partial partition; (d) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition, and the provisions of this Act shall apply accordingly. Explanation. -In this section, - (a) 'partition' means- (i) where the property admits of a physical division, a physical division of the property, but a physical division of the income without a physical division of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... CIT [1967] 63 ITR 416 (SC) was that under section 25A of the 1922 Act a Hindu undivided family which had been assessed to tax could be treated as undivided and subjected to tax under the Act in that status unless and until an order was made under section 25A(1); if in the course of the assessment proceedings it is claimed by any of the members of the Hindu undivided family that there has been total partition of the family property resulting in physical division thereof as it was capable of, the assessing authority should hold an inquiry and decide whether there had been such a partition or not; if he held that such a partition had taken place, he should proceed to make an assessment of the total income of the family as if no partition had ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessment, it is not permissible to ignore the special meaning assigned to "partition" under the Explanation to section 171 even if the partition is to be effected by a decree of the court. The Legislature has assigned a special meaning to the word "partition" under the Explanation which is different from the general principles of Hindu law and it contains the deeming provision under which partition of the property of the Hindu undivided family could be accepted. In the case of Union of India v. Valliappan (M.V.) [1999] 238 ITR 1027, the apex court has held that: "Prior to the Income-tax Act, 1961, there was no question of recognising partial partition. Even with regard to total partition, it was required to satisfy all the conditions pr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....cut-off date no inquiry as contemplated under sub-section (2) by the Income-tax Officer shall be held. Even if the inquiry is completed and the finding is given, it would be treated as null and void. In this view of the matter, the contention raised in some of the petitions by learned counsel for the respondents that partial partition took place on April 13,1979, and that in the assessment year it was recognised and benefit was given to the assessee, has no significance in view of the crystal clear language used in the sub-section that partial partition taking place after the cut-off date is not to be inquired into and if inquired the findings would be null and void. Such a family is to be assessed under the Act as if no partial partition h....