TaxTMI 
TaxTMI 
2021 (9) TMI 987
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....2-03 belonged to his erstwhile joint family vide page 2 of written explanation dated 25.2.2005 addressed to the then AO. However the assessee has not filed the Return of income in the status of HUF for the assessment year 2002-03. Since the income chargeable to tax in the hands of the HUF has escaped assessment, the proceeding u/s 147 of the IT Act were initiated in the status of HUF by recording the reasons. Notice u/s 148 of the IT Act was issued by the then AO, Bangalore on 15.04.2005. However the assessee did not file the Return of income in the status of HUF in response to the said notice. 3. By an order dated 30.11.2006, passed u/s.143(3) read with Sec.147 of the Act, wherein the AO recorded the fact that in a reply dated 18.2.2005, K.Ramesh Reddy (Individual) has stated that except income derived from Renuka complex, the rest of the properties belong to his HUF. The portionof the reply reads as under: " ....All the income which is accruing to me or received by me are from out of the properties which are ancestral and they do not constitute my separate properties. Therefore, income except rent derived from a complex called Renuka complex, which was received by me by way of....
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....erefore, the income therefrom were not assessable in the hands of the in the status, of "Individual" and such income required to be excluded and thus, the stand of the appellant that they were joint family properties and therefore the income therefrom was not assessable on that count in their individual hands was been upheld. 8. In the proceedings before the CIT(A) against the order of assessment dated 30.11.2006 in the case of K.Ramesh (HUF) which is the subject matter of this appeal, the Assessee contended that K.Ramesh (HUF) was Partitioned on 14.1.2005 and the partition deed was registered on 12.2.2005. The further contention of the Assessee before CIT(A), was that the joint family ceased to exist the HUF as on the date of order of assessment and HUF was never assessed to tax in such status in the past and therefore the HUF was not a "hitherto assessed HUF" u/s. 171 of the Act and therefore assessment order in the status of a HUF was invalid, void in law and had to be annulled. The Assessee relied on the decision of the Hon'ble jurisdictional High Court in the case of CIT V. LAKANNA in ITA No.57/1994 DATED 26/04/2005 wherein the Hon'ble Court dealt in extenso of making an ....
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....Act. The result of these provisions was that a joint family which had become divided at the time of the assessment escaped tax altogether. To remove this defect, s. 25A enacted that until an order is made under that section, the family should be deemed to continue as an undivided family." 13. From the aforesaid observation it is clear that the assessee is an undivided family no assessment can be made thereon if at the time of assessment it has become divided, because at that point of time there was no undivided family in existence which could be taxed, though when the income was received in the year of accounts the family was joined. In other words under the Income Tax Act, the definition of 'person' includes a HUF though it is not a legal entity or a juristic person. Section 4 of the Act is a charging section. The tax shall be assessed in respect of the total income of the previous year of every person. In the scheme of the Act, every person whose total income exceeds the maximum amount which is not chargeable to Income Tax shall furnish the return of his income before the date as provided under Section 139 of the Act When such return is filed, the assessment is done in ....
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....t, impugned incomes were assessable in the individual hands. The purpose therefore for the protective assessment was to safeguard the interest of the revenue and await the finalization of the issue by the jurisdictional Hon'ble High Court of Karnataka. in these facts and circumstances there is no legal infirmity in the AO's action. * It is seen that the Hon'ble Karnataka High Court in the case of the same family in its order in ITA No. 96, 97 and 98 of 2009 dated 08/12/2014 has finally held that, the impugned assessments were to be made in the hands of HUF and not individual. Therefore the earlier findings of the Hon'ble ITAT were set-aside. The relevant portion of the Hon'ble Karnataka High Court order (Cited supra) are extracted as under: "These three appeals are preferred by three brothers who belonging to the joint family, challenging the order passed by the Tribunal which has held the property in dispute is an individual property of these appellants and accordingly assessment orders are framed. The tribunal came to that conclusion on the basis of the order passed by the Tribunal for the earlier years. The orders passed by the Tribunal for the earlier ye....
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....consideration. 14. The learned Counsel for the assessee brought to our notice decision of the ITAT Bengaluru Bench in assessee's own case for Assessment Year 2003-04 in ITA No.1163/Bang/2013 order dated 7.6.2017. The learned DR on the other hand apart from relying on the order of the CIT(A) made a submission that Chapter XV Section G containing Sec.171, deals with liability in special cases and it is not a general provision. He relied on the following judicial pronouncements: 91 taxman 20 ACIT Vs. Maharani Laxmi Devi (SC); 55 ITR 666 Additional CIT Vs. Thimmaiah (Karn.) 105 ITR 109 Narendra Kumar J Modi 15. We have considered the rival submissions. The question that arises for our consideration is as to whether assessment can be made in the case of disrupted HUF when the HUF ceased to exist on the date when the order of assessment is made. The further question would be as to whether an HUF which was not hitherto assessed in the status of a HUF, can be assessed by taking recourse to Sec.171 of the Act. In this regard, it is undisputed that the assessee HUF was dissolved by a partition amongst its members on 14.01.2005 much prior to the passing of the order of assessment. It is als....
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....1, and perhaps to a certain extent, Sub-section (4) of Section 170 of the Income-tax Act, 1961, there is no machinery to assess a Hindu undivided family which had disrupted and the said machinery provides only in the case of 'families hitherto assessed as undivided', it is difficult to find any machinery to assess a Hindu undivided family which had never been assessed before, after it had disrupted. A Hindu undivided family is a taxable entity and is a juristic person. It can only be proceeded against in the manner provided in the Act or under the general principles of the Hindu law after the disruption of the family. The general law does not provide for any machinery to determine the liability of the individual members of the undivided family before disruption. Unfortunately, the machinery provisions of Section 171 and the corresponding provisions in Section 25A are limited in scope to tax only the Hindu undivided family, which has been 'hitherto assessed'. Undoubtedly, after Hindu undivided family had disrupted and in the view of the fact that assessment were completed after the HUF got disrupted, it must be held, therefore, that the proceedings were irregular and....
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....estion of law considered by the Hon'ble Supreme Court was as to as to whether 1/6th income from computation of income of assessee - Hindu Undivided Family - could be excluded pertaining to the miner son as Maharaja? The facts were that Maharaja P.P. Singh of Balrampur was being assessed as an individual up to and including the assessment year 1964- 65, He had no issue of his own. On December 28, 1963, he adapted Maharaja Dharmendra Pratap Singh, who was a minor, as his son. After the said adoption the status of Maharaja P.P. Singh was taken as that of the Hindu Undivided Family (for short 'HUF'). Maharaja P.P. Singh died on June 20, 1964. Thereafter his wife, Maharani Raj Laxmi Devi, became the karta of the HUF consisting of herself and the afresaid minor son, Maharaja Dharmendra Pratap Singh. For the assessment year 1966-67 the assessee filed. For the assessment year 1966-67 the assesses filed a return declaring the total income of the Huf as Rs. 28935/- Subsequently she filed another return showing the total income as Rs. 25,288/- The difference between the original and revised returns was explained on the basis that the revised return had been filed by the HUF after excl....