Section 171 Inapplicable: Non-Existent HUF Cannot Be Assessed Under Income Tax Act Due to Lack of Prior Assessment.

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....Assessment in the hands of the non exisiting HUF - The words 'hitherto assessed as undivided' [u/s 171(1)] are very important while considering the section. If the family has already been assessed as a Hindu family, then, under the above provision, it shall be deemed to continue to be undivided family. In the instant case, prior to the assessment year 2002-03, the assessee-family was not assessed as a HUF. Hence, on 30.11.2006, when the assessment was made, the HUF was not in existence. In such a case, the procedure prescribed under Section 171 will have no application as the assessee was not hitherto assessed as HUF and so, the fiction created under that section to deem it as HUF will not arise. - AT....