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Balchand Malaiya and ors. Vs. Income-tax Officer, A-ward and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Petition No. 15 of 1975
Judge
Reported in[1983]144ITR795(MP)
ActsIncome Tax Act, 1922 - Sections 25A
AppellantBalchand Malaiya and ors.
Respondentincome-tax Officer, A-ward and anr.
Excerpt:
- .....the tax assessed for the year 1953-54 to 1955-56 was nil. in pursuance of the assessment orders passed for the years 1956-57 and 1958-59, demand notices were issued against all the petitioners. the petitioners then filed this petition for quashing of the assessment orders passed by the ito on 8th july, 1974, and the demand notices which are issued in pursuance to these orders. during the pendency of this petition, petitioner no. 1 filed appeals against the assessment orders passed on 8th july, 1974. by order dated 17th january, 1979, passed by the aac, the appeals for the assessment years 1953-54 to 1955-56 and 1956-57 were allowed. by another order passed on 21st march, 1979, the appeal was partly allowed in respect of the assessment year 1958-59. curiously enough the appeal.....
Judgment:

G.P. SINGH, C.J.

1. The petitioners in this petition were members of an HUF and assessed to income-tax under the Indian Income-tax Act, 1922, for the assessment years 1953-54 to 1958-59, There was a partition in the petitioners' family by a registered document dated 10th November, 1958. The ITO by his order passed on the 10th March, 1964, refused to recognise this partition under Section 25A(1) of the 1922 Act. There was an appeal filed against this order which was allowed on 11th January, 1967, by the AAC. After this order of the AAC by which the partition was recognised under Section 25(1) of the 1922 Act, proceedings for rectification of the earlier assessments were taken by the ITO. In these proceedings notice was issued only to petitioner No. 1, Balchand Malaiya, who before the partition was karta of the family. The other petitioners were not noticed in these proceedings. By orders dated 8th July, 1974, assessment orders earlier passed were revised and the tax liability of the petitioners was apportioned in accordance with the shares in the joint family property which they had received under the partition. The tax assessed for the year 1953-54 to 1955-56 was nil. In pursuance of the assessment orders passed for the years 1956-57 and 1958-59, demand notices were issued against all the petitioners. The petitioners then filed this petition for quashing of the assessment orders passed by the ITO on 8th July, 1974, and the demand notices which are issued in pursuance to these orders. During the pendency of this petition, petitioner No. 1 filed appeals against the assessment orders passed on 8th July, 1974. By order dated 17th January, 1979, passed by the AAC, the appeals for the assessment years 1953-54 to 1955-56 and 1956-57 were allowed. By another order passed on 21st March, 1979, the appeal was partly allowed in respect of the assessment year 1958-59. Curiously enough the appeal against the assessment order for the year 1957-58 was dismissed on 8th February, 1979, as not maintainable. The Department has gone in appeal to the Tribunal against the order of the AAC dated 17th January, 1979, and 21st March, 1979, allowing the appeals for the years 1953-54, 1955-56, 1956-57 and 1958-59. Petitioner No. 1, Balchand Malaiya, has gone in revision against the order dated 8th February, 1979, dismissing the appeal for the assessment year 195-7-58.

2. In view of the facts stated above, the relief claimed in the petition for quashing of the assessment orders dated 8th July, 1974, passed by the ITO for the years 1953-54, 1955-56, 1956-57 and 1958-59, does not survive because these orders have already been set aside by the AAC in appeal. As a consequence of the setting aside of these assessment orders by the AAC, the demand notices issued for the years 1956-57 and 1958-59 became invalid and cannot be enforced by the Department. These notices have, therefore, to be quashed.

3. As regards the assessment order passed by the ITO on 8th July, 1974, for the assessment year 1957-58, the argument of the learned counsel for the petitioners is that in the rectification proceedings in which this assessment order was passed, only petitioner No. 1 was noticed and that as no notice was issued to petitioners Nos. 2 to 7, this assessment order cannot be enforced against them and the demand notices passed upon the assessment order cannot be held to be valid. The question which arises in this connection is whether, when the ITO started rectification proceedings under Section 154 of the 1961 Act for giving effect to the partition recognised in appeal by the order of the AAC, dated 11 the January, 1964, was it necessary to give notice to all the members. The ITO had to pass orders under Section 25A(2) to give effect to the partition. At the stage when the rectification proceedings were taken there was no HUF and consequently no karta. Notice to petitioner No. 1, Balchand Malaiya, who was the karta of the family when the undivided family existed, was insufficient because he, after the partition, was not competent to represent the other members of the family. A perusal of Section 25A(2) would show that tax assessed on the HUF is to be apportioned according to the portion of the joint family property allotted to each member and thereafter the various members are to be assessed separately under Section 23. In our opinion, it stands to reason that it is necessary to notice the individual members who are to be separately assessed under Section 25A(2). As no notice was issued to petitioners Nos. 2 to 7, the assessment order, passed on 8th July, 1974, for the assessment year 1957-58, cannot be enforced against them. For the same reason no demand notice upon this assessment order could be issued against them.

4. The petition is partly allowed. The demand notices dated 8th July, 1974, issued by the ITO, A-Ward, Sagar, against all the petitioners for the years 1956-57 and 1958-59 are quashed. Further, the demand notices issued against petitioners Nos. 2 to 7, on the same date for the assessment year 1957-58 are also quashed. There will be no order as to costs. The security amount shall be refunded to the petitioners.


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