1. These two appeals are directed against the order of the AAC dated 13-12-1982 passed in WT Appeal Nos. 15 (Nlr) of 1980-81 and 14 (Nlr) of 1981-82. The assessment years involved are 1975-76 and 1978-79. Since the issues involved in these appeals, one filed by the revenue and the other by the assessee, are common, they are taken up together and disposed of by a common, order for the sake of convenience.
2. For the assessment year 1975-76, the assessee filed a return of wealth in the status of HUF on 26-7-1976. In the return of wealth it was claimed by the assessee that the HUF in which status he was assessed till the assessment year 1974-75 ceased to exist from 15-11-1974 and as such a nil return was filed. The family of the assessee till then consisted of the assessee himself and his wife. It is the claim of the assessee that he himself and his wife agreed to live apart by virtue of a mutual agreement dated 15-11-1974 and they were in fact living apart. Therefore, it was stated that his status should be taken correctly as 'individual' as the HUF ceased to exist from the day the assessee and his wife agreed to live apart. However, the WTO refused to accept the contention put forward by the assessee.
According to him, there cannot be any legal separation between the husband and wife except by a decree of the Court. Before completion of assessment on the return filed, the WTO again issued a notice under Section 17B of the Wealth-tax Act, 1957 ('the Act') to which the assessee submitted that proceedings initiated under Section 17B in pursuance of an audit objection cannot be maintainable in view of the judgment of the Supreme Court in the case of Indian & Eastern Newspaper Society v. CIT  119 ITR 996. According to the WTO, since the assessee himself filed return of wealth in the status of HUF declaring taxable wealth as nil and since the department is of the view that the HUF ceased to exist, the assessment for this year was completed in the status of HUF.3. Similarly for the assessment year 1978-79, the WTO proceeded to make the assessment in the status of HUF.4. Aggrieved, the assessee filed appeals before the AAC. Before the AAC the plea of the assessee was that insofar as the assessment year 1975-76 is concerned, the assessment is bad in law partly because there was no HUF and partly because the assets were already subjected to tax in the individual hands of the assessee. Insofar as the assessment year 1978-79 is concerned, the submission of the assessee was that there being no HUF, the assessment should have been finalised in the status of 'individual', and not in the status of HUF. On hearing the parties and considering the facts, the AAC was of the view that the notice issued under Section 17B is a mere procedural irregularity. However, since the same amount has already been taxed in the hands of the individual, he considered that the amount cannot be taxed again in the hands of the HUF. Accordingly, he held that so far as the assessment year 1975-76 is concerned, the status of the assessee was HUF only, yet the assessment made for this year was bad in law in view of taxing the same assets twice. Accordingly, he cancelled the assessment for the assessment year 1975-76. However, so far as the assessment year 1978-79 is concerned, he confirmed the order passed by the WTO.5. Not satisfied with the orders passed by the A AC, the assessee as well as the department filed the present appeals before the Tribunal.
In the departmental appeal for the assessment year 1975-76, it was submitted that the AAC ought not to have cancelled the order on the ground that the assessee was already assessed in the status of an 'individual'. It was further submitted that the AAC having come to the conclusion that the correct status of the assessee is HUF should have upheld the ITO's order.
6. In the appeal filed by the assessee for the assessment year 1978-79, it was submitted that the AAC erred in law and on facts in concluding the correct status of the assessee as HUF even though he has accepted the status of the assessee as individual for the assessment year 1975-76 and has cancelled the assessment made in the status of HUF as not correct. It was further submitted that mere change of opinion cannot change the status of the assessee and the same cannot be made the basis for assessment in a status not hitherto assessed. Yet another submission made by the learned counsel appearing for the assessee was that the department did not consider the fact that at the time of original assessment as individual, the assessing authority has recorded his finding in the assessment year 1975-76 that there was a change in the status and this finding cannot be altered due to a mere change of opinion of a successor officer as assessing authority.
7. On the other hand, the learned departmental representative supported the orders passed by the AAC.8. We have heard the rival submissions made by the parties. The assessee in this case was assessed to wealth-tax till the assessment year 1974-75 in the status of HUF. For the assessment year 1975-76, the assessee filed his return of wealth in the status of HUF wherein the net wealth was declared as nil. According to the assessee, the said HUF ceased to exist from 15-11-1974 inasmuch as the assessee, and his wife who constituted the HUF, by an agreement dated 15-11-1974 agreed to live apart. In the agreement dated 15-11-1974, it was stated as under: I, Kookati Kousalyamma, Gandhinagar, Nellore, do hereby declare that I have agreed to be legally separated from my husband (Shri Kookati Kodandarami Reddy, sole surviving coparcener of HUF, Gandhinagar, Nellore) and also to surrender my right to maintenance from my husband's family property in consideration of my having been paid a consolidated sum of Rs. 50,658 by way of transfer of pronote in my favour." The department was of the view that there was no legal separation between the karta and his wife and in the absence of any legal separation, the erstwhile HUF continued to exist and no cognizance can be given to the so-called mutual agreement entered into between the karta and his wife which was reflected by the agreement dated 15-11-1974. Similarly for the assessment year 1978-79, the assessee filed a return in the status of an individual in view of the agreement dated 15-11-1974.
9. The contention of the assessee before us was that in view of the agreement dated 15-11-1974, the wife has separated herself from her husband and has started living apart by capitalising her right to maintenance from her husband's family by receiving a consolidated sum of Rs. 50,658 in lieu of maintenance and, hence, she cannot be treated as a member of HUF. Our attention was also drawn to a judgment of the Andhra Pradesh High Court in R.C. No. 72 of 1978 in the case of CIT v.Smt. G. Anjaneyulu, dated 1-4-1983 wherein the Andhra Pradesh High Court held that an agreement to live apart entered into by the husband and his wife is perfectly valid. It was further submitted that in Hindu Mitakshara law, a division in the status can be effected by a declaration to become divided from or separated from the other member or members and that intention can be expressed by an affidavit as in the case of the assessee.
10. The TTO relied upon a decision of the Andhra Pradesh High Court in M. Narasimha Reddy v. M. Boosamma AIR 1976 AP 77. This judgment deals with the interpretation of Sections 10 and 13 of the Hindu Marriage Act, 1955. According to the said judgment, if no divorce or dissolution is obtained, a widow can exercise her right as widow for a share in the husband's estate. It is also well settled that a legally valid marriage can only be dissolved either on the death or divorce as contemplated under the Hindu Marriage Act.
11. Further, it is significant to note that 'HUF' is a legal expression which has been employed in taxation laws. It is a definite connotation and embodies the meaning ascribed to the expression of Hindu joint family. Hindu joint family consists of persons lineally descended from an ancestor and includes their wives and unmarried daughters. The question that arises for consideration in these appeals is whether a division in status can be effected by declaration to become divided or separated from other member or members. Hindu joint family is a creature of law and cannot be created by an act of parties except insofar as that by adoption or marriage a stranger may become a member/coparcener of the joint family. Owning of joint family property is not a sine qua non for the existence of a joint Hindu family.
According to the facts appearing in the present case, Smt. Kousalyamma has relinquished all her rights and interest in the joint family property by executing a deed dated 15-11-1974. At the same time it could be seen from the document that all that she relinquished was only her right to maintenance from her husband's family property. Simply because the wife is living separately from her husband, that does not mean that her marital status was put to an end. The fact also remains that she has not relinquished her right to have a share-in her husband's property. What was surrendered by her was her right to maintenance during the lifetime of her husband. However, it also remains to be seen that under the concept of Hindu law, a wife is entitled to relinquish her interest in the joint family property. At this juncture our attention was drawn to a Third Member decision of the Tribunal in the case of M.A.R. Rajukumar v. WTO  6 ITD 396 (Hyd.) wherein the Tribunal was of the view that the mere fact that the husband and wife are living separately does not in any way put an end to her marital status since a wife cannot relinquish her status as a member of the joint family. Accordingly, by respectfully following the above said Third Member decision of the Tribunal, we are of the opinion that in the present case, even though the wife can relinquish her interest in the joint family property, she cannot relinquish her status as member of the joint family. Accordingly, we hold that the authorities below were correct in assessing the assessee in the status of HUF.12. In the appeal relating to the assessment year 1975-76, the department submitted that the AAC ought not to have cancelled the assessment made by the WTO on the ground that the assessee was already assessed in the status of individual. According to the learned counsel appearing for the assessee, inasmuch as in the original assessment for the year 1975-76, the assessing authority has recorded his rinding that the assessee was an individual for the assessment year in question, thereafter the assessing authority cannot alter the status on a mere change of opinion. In this connection it was pointed out that proceedings initiated under Section 17B as a consequence to certain audit objection is ab initio void in view of the Supreme Court's decision in the case of Indian & Eastern Newspaper Society (supra).
13. The fact remains that the assessee himself has filed a return of wealth in the status of HUF and the said return was pending when a notice under a Section 17 of the Act was issued. Inasmuch as the return was already pending even prior to the issue of notice under Section 17, the AAC came to the conclusion that there is nothing illegal on the part of the WTO to ignore the notice under Section 17 and complete the assessment on the return filed by the assessee. We also consider that when the return was pending, without disposing it of if a notice was issued under Section 17 it will become non est in the eye of law. It also remains to be seen that for the assessment year 1975-76, the assessment was finalised in individual capacity at an earlier point of time and the agreement dated 15-11-1974 was brought to the notice of the assessing authority which finalised the assessment of the assessee in the individual status. It was after issue of this notice that the assessee was assessed in the status of an individual. The AAC was of the view that inasmuch as the same assets were subjected to tax which otherwise were included in the hands of the HUF for the assessment year 1975-76 at a later point of time, there was no justification in subjecting the same assets to wealth-tax twice, both in the hands of individual and HUF. Our attention was also drawn to a judgment of the Supreme Court in the case of CIT v. Murlidhar Jhawar & Puma Ginning & Pressing Factory  60 ITR 95. In that case it was held that the partners of an unregistered firm might be assessed individually or they might be assessed collectively in the status of an unregistered firm, the ITO could not, however, seek to assess the one income twice--once in the hands of the partners and again in the hands of the unregistered firm. In this respect, yet another decision of the Calcutta High Court was brought to our notice in the case of Ramanlal Madanlal v. CIT  116 ITR 657. That was also case dealing with the assessment with regard to the firm and partners. There are also another case of the Supreme Court in ITO v. Bochu Lal Kapoor  60 ITR 74 where the Supreme Court held that-- ... after the assessment proceedings initiated under Section 34 culminated in the assessment of the Hindu undivided family, appropriate adjustments had to be made by the Income-tax Officer in respect of the tax realised by the revenue on that part of the income of the family assessed in the hands of the individuals. To do so was not to re-open the final orders of assessment but in reality to arrive at the correct figure of tax payable by the Hindu undivided family. (p. 75) Further, in the case of Manji Dana v. CIT 60 ITR 582, the Supreme Court held that it is also open to the ITO to come to a conclusion, notwithstanding the terms of Section 25A(3) of the Act that the income sought to be assessed is not the income of the HUF and on that footing to assess such income as that of an individual.
14. Our attention was also drawn to another judgment of the Supreme Court in the case of Joint Family of Udayan Chinubhai v. CIT  63 ITR 416, wherein the Supreme Court was of the view that-- ... It is true that an assessment year under the Income-tax Act is a self-contained assessment period and a decision in the assessment year does not ordinarily operate as res judicata in respect of the matter decided in any subsequent year, for the assessing officer is not a Court and he is not precluded from arriving at a conclusion inconsistent with his conclusion in another year. It is open to the ITO, therefore, to depart from his decision in subsequent years, since the assessment is final and conclusive between the parties only in relation to the assessment for the particular year for which it is made. A decision reached in one year would be a cogent factor in the determination of a similar question in a following year, but ordinarily there is no bar against the investigation by the Income-tax Officer of the same facts on which a decision in respect of an earlier year was arrived at. But this rule, in our judgment, does not apply in dealing with an order under Section 25A(1). Income from property of a Hindu undivided family 'hitherto' assessed as undivided, may be assessed separately if an order under Section 25A (1) had been passed. When such an order is made, the family ceases to be assessed as a Hindu undivided family. Thereafter, that family cannot be assessed in the status of a Hindu undivided family unless the order is set aside by a competent authority. Under Clause (3) of Section 25A if no order has been made notwithstanding the severance of the joint family status, the family continues to be liable to be assessed in the status of a HUF, but once an order has been passed, the recognition of severance is granted by the Income-tax Department, and Clause (3) of Section 25A will have no application.
(p. 423) In the facts of the case, we consider that the ITO was justified in arriving at the conclusion that the correct status of the assessee is HUF. The question of option as assumed by the first appellate authority does not arise as the ITO has no option to assess family income in the hands of individual or vice versa. No doubt, the AAC's approach that it is not open to the ITO to assess the same asset in the hands of both is certainly correct. But the remedy lies in cancelling the wrong assessment and not the right one. Since the individual assessment has not yet been cancelled the proper course is to make appropriate adjustments in reckoning the tax payable even as directed by the Supreme Court in Bachu Lal Kapoor's case (supra). Insofar as the assessment year 1978-79 is concerned, for the reasons given by us hereinabove, we uphold the order passed by the authorities below in coming to the conclusion that the status of the assessee is that of HUF. In that view of the matter, the order passed by the AAC for the assessment year 1975-76 is modified so as to restore the order of the WTO subject to adjustment of tax paid in individual hands. For the assessment year 1978-79, the appeal by the assessee is dismissed.