TaxTMI 
TaxTMI 
TaxTMI 
2019 (1) TMI 934
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....f Shri. E. Ramesh Upadhyaya and group cases. During the course of search, fixed deposit receipts in benami names and also in the names of the family members were found in the residential premises and also in the business premises of M/s. Aditya Enterprises wherein family members are partners and the same were seized. During the course of search from 29.07.2004 to 30.07.2004, a statement of Shri. E. Krishna Murthy, elder son of Shri. E. Ramesh Upadhyay was recorded and during the course of statement, he admitted that he made these deposits using unaccounted income earned which were not disclosed to the Income Tax Department. He also admitted that he has made these deposits in the name of persons who are fictitious and non-existent. In order to avoid TDS, he made the deposits in smaller denominations of amount of Rs. 15,000/- each. During the course of assessment proceedings, statement of Shri. E. Krishna Murthy on behalf of all the searched persons were recorded. It was stated that the deposits were made by the bigger HUF i.e., Shri. Ramesh Upadhyay, HUF and later on the bigger HUF was dissolved and minor HUFs were created. The source of term deposits of Rs. 2,57,87,858/- in the na....
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....adhyay, of the erstwhile hindu undivided family consisting of following co-parcener, some of whom are the other appellant before the Tribunal and his wife Smt. Yashodhara who was a member of the joint hindu family: E. Krishna Murthy, Eldest Son E. Vidyaranya E. Thrivikrama E. Manohara E. Sudharshan 4. A search was conducted on 29.07.2004 at the residential premises of Shri. Ramesh Upadhyay and his family members and in the course of search, certain FDs in the names of the various family members of Ramesh Upadhyay as well as various pseudo names were found from the residence and the business premises of the assessee. The investment in FDR was computed as under: In the names of family members - Rs.72,11,428/- In the name of Pseudo names - Rs. 1,85,76,430/- Total - Rs.2,57,87,858 5. Shri. E. Krishna Murthy being the eldest son of Ramesh Upadhyay appeared before the Revenue authorities and his statement was recorded. During the course of statement, E. Krishna Murthy admitted that the entire FDs under benami names belongs to him and his family members. He has also admitted that he was in a joint family and his father had distributed properties including the properties ....
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....quest you to kindly give telescoping view towards this declaration if at all any differences are found in respect of M/s. Lakshmi Prasanna Enterprises, M/s. Lakshmi Crushing Industry, my construction activity, land development, JCBs, M/s. Lakshmi Concrete Blocks, etc. I would like to specifically mention here that the seized materials seized form various premises may throw some light regarding the activities of JCBs Poline and also Trucks, which would have resulted in profits which are not at all accounted. If anything found, I request for telescoping the same towards the benami deposits offered for taxation." 6. With regard to the investment in these FDRs, it was categorically stated by E. Krishna Murthy that FDRs were acquired out of business income and the agricultural income of the family. But later on, he has retracted from his statement within a short period. It was further contended that during the course of assessment proceedings and thereafter it was specifically asserted by the learned Counsel for the assessee that these FDRs belongs to the family members of the assessee. Therefore, it can only be examined in the hands of the HUF and not the individuals. 7. With regard ....
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....r giving a proper adjustment of the agricultural income earned by the smaller HUFs. 9. The learned DR on the other hand has contended that investment in FDRs was neither disclosed by the individuals nor the HUFs in the return of income. It was surfaced during the course of search upon Ramesh Upadhyay and his family members. It was further contended that there should be a proper dissolution of the larger HUF as per provisions of section 171 of the Act and in dissolution of larger HUF, the smaller HUF may be created as it is a creation of law, not an Act. But in the instant case, there is no proper order under section 171 of the Act. Therefore, the larger HUF cannot be called to have been dissolved by virtue of memorandum of partition dated 22.03.2002 which was claimed to have been registered on 26.04.2002. Since the larger HUF has not been dissolved, the AO has rightly assessed the entire investment in FDRs in the hands of Ramesh Upadhyay, HUF and also in the hands of E. Krishna Murthy who has admitted during the course of statement recorded by the Revenue authorities that the FDRs belongs to him. It was further contended that AO has made the protective assessment on the said inves....
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....07-08 and 2008-09 vide ITA Nos. 1031 to 1034/Bang/2012 respectively, against the order of CIT(A) confirming the additions made on account of unexplained investments in FDRs. The last set of appeal is preferred by E. Manohara, HUF for the assessment years 2003-04, 2006-07, 2007-08, 2008-09 vide ITA Nos. 1024, 1025, 1026, 1027/Bang/2012. Though various grounds are raised in the aforesaid appeals i.e., of smaller HUF, but they all relate to the additions made by the CIT(A) on account of unexplained investments in FDRs. 14. Undisputedly, during the course of search conducted under section 132 of the Act in the premises of Ramesh Upadhyay and his family members on 29.07.2004, certain FDs in the name of various family members as well as pseudo names were found and seized. The AO issued notice under section 153A of the Act for the assessment years 1999-2000 to 2006-07 upon the larger HUF Ramesh Upadhyay for completing the assessment. Besides regular assessment was also framed for the assessment year 2007-08 and 2008-09 upon the larger HUF Ramesh Upadhyay. Though the assessee took a stand before the AO that Ramesh Upadhyay, HUF, was no longer in existence since it was partitioned on 23.0....
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....ntention that no addition can be made solely on the admission of the assessee. The judgments relied on by the assessee are as under: "I. PULLANGODE RUBBER PRODUCE CO. LTD., reported in 91 ITR 18 [SC] GREENVIEW RESTAURANT reported in 263 ITR 169 [Gaul; 3. CIT V. ASHOK KUMAR SONI reported in 291 ITR 172 [Raj]; 4. MA YNAK PODDAR [11U11 reported in 262 ITR 633 [Cal]; 5. NIRMALA L.M1'.717A V. CIT reported in 269 ITR I [Born] 6. BlIANDARI METALS AND ALLOYS P. LTD., reported in 136 STC 292 [Karl 7. CIT V. MR.P.FIRM.MUAR reported in 56 ITR 67 [SC] 8. S.R.KOSHTI V. CIT reported in 276 ITR 167 [Gull 9. KAILASHBEN MANHARLAL CHOKSHI reported in 174 Taxman 466 [Karl" 15. Undisputedly, except the oral admission of E. Krishna Murthy during the course of search that no other evidence was found through which it can be demonstrated that the entire FDRs belongs to E. Krishna Murthy. Undisputedly, E. Krishna Murthy was pursuing all tax litigations before lower authorities and he was authorised to make the statement on behalf of his family members. In his statement he has reposed at a number of places that the FDRs belonged to the family members of the assessee and the investment was made ....
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....mily members. Therefore, the genuineness of this oral partition and registered partition deed cannot be doubted. Now once the larger HUF is partitioned among the smaller HUF through partition deed, can the assessment be framed upon the larger HUF which has already been disrupted for those years in which it was seized to exist and also in the year in which it exists. Our attention was invited to provisions of section 171 of the Act by the learned Counsel for the assessee with the submission that provisions of 171 of the Act can only be invoked where the HUF has been assessed to tax. If it is not assessed to tax, the provisions of section 171 cannot be invoked for partition of the HUF. In this regard, our attention was invited to judgment of the Apex Court in the case of Kalloomal Tapeswari Prasad vs Commissioner Of Income Tax 133 ITR 690 (SC) in which it has been held that Hindu law does not require that this property must in every case be partitioned by metes and bounds or physically into different portions to complete the partition. Disruption of status can be brought about by any mode and it is open to the parties to enjoy their share of property and in any manner known to law ac....
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.... case of Pushpa Devi V.CIT reported in 109 ITR 730 but, she can always make a gift of her property in favour of the joint family. In the instant case, assuming the property is a separate property of Smt. Yashoda, her act of making available the property to the joint family for the members to treat it as joint family and subsequent consent for the partition amounts to transfer of her property in favour of the joint family especially, such property is subject matter of partition to which she has consented. This would amount to a gift. On that count, the subsequent partition will not become invalid. In this connection, I observe that the mere inclusion of the property belonging to Smt. Yashoda does not mean that there was no total partition of the joint family. This is because a partition of the joint family basically means the severance of status amongst the co-parceners of the joint family. What is important to be seen in a case where a claim of partition is made is whether there is a complete severance of status. From a perusal of the Translation of the Kutumbadalagina Vivadagalonu Rajinda Muqusi Madide Teermanagala mattu palugala Vivara (Memorandum] dated 22.03.2002, it is seen th....
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....O. The next objection of the learned A.O. is that the properties belonging to Sri Ramesh Upadhaya and his wife Smt. Yashoda were allotted to their sons as two distinct groups. The A.O. held that some of the properties were allotted to Sri E.Krishnamurthy, E.Vidyaranya, E.Thrivikrama and E.Manohara, as one group and the remaining properties were allotted to Sri E.Sudharshan separately. According to the A.O. there .is no full partition by virtue of such an allotment of properties. Even this objection of the A.O. is devoid of merit. This is because the allotment of property on a partition of a joint family can be done in several ways and there is no requirement that the allotment of properties should be done with regard to each co-parcener separately. Infact, if there is a severance of status amongst the members of the joint family in such a way that the bonds of coparcenery stand dissolved that would be sufficient for inferring a partition in the joint family. Hence, nothing turns much on this observation of the A.O. The next objection of the A.O. is that the deed of partition does not reflect the names of all the co-parceners especially, the minor children of Sri E.Vidyaranya, E.T....
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....uage his feelings and with a view to prevent litigation, the parties wouid be resorted to settling of disputes it does not follow that the settlement of the disputes amounts to a family arrangement. Even if it was a family arrangement, a complete partition took place under the family arrangement. Had the Joint family continue to exist upon settlement of the disputes perhaps, the document would have been considered as a family arrangement. Hence, it is not correct to say that the Memorandum is only a family arrangement and not a total partition. 2.3.7 In light of the aforesaid discussion, I am of the view that there has been a complete and total partition in the joint family of Sri Ramesh Upadhaya in terms of the Memorandum dated 22.03.2+002,' which is followed by a registered partition deed for immovable properties dated 26.04.2002. There is also some dispute about whether the Memorandum dated 22.03.2002 was seized at the time of search or not. It is claimed by the t appellant that the said documents have been seized. But, however, the A.O. denies the seizure of the said document. This aspect of the matter however, is not very material. This is because, the Memorandum dated 1.....