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Sreepadam Vs. Commissioner of Wealth-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKerala High Court
Decided On
Case NumberOriginal Petition No. 369 of 1982
Judge
Reported in[1985]155ITR318(Ker)
ActsWealth Tax Act, 1957 - Sections 20; Kerala Hindu Joint Family (Abolition) Act, 1975; Income Tax Act, 1961 - Sections 171
AppellantSreepadam
RespondentCommissioner of Wealth-tax and ors.
Appellant Advocate N. Sreenivasan,; P. Krishnamoorthy and; B. Krishnamani
Respondent Advocate P.K. Ravindranatha Menon and; N.R.K. Nair, Advs.
Excerpt:
- - when the matter came up for hearing, counsel appearing for the petitioner as well as counsel appearing for the department agreed that pending this o. 4. counsel for the revenue feebly contended that the effect of the kerala joint family (abolition) act (act 30 of 1975) is only to bring about a division in status and that by itself will not be sufficient to say that there is a partition as contemplated either by section 20 of the w......she is the karnavathy of sreepadam palace, trivandrum, a huf till the assessment year 1976-77. the hindu joint family (abolition) act 1975 (30 of 1975), came into force on december 1, 1976. during the course of the assessment for the year 1977-78, the petitioner pleaded that in view of the kerala act 30 of 1975, the joint family got statutorily disrupted. the ito, c-ward, trivandrum (who is also the wealth-tax officer, c-ward, trivandrum), accepted the plea. in the income-tax assessment, by ext, p-1, order dated february 19, 1979, he assessed the income only up to november 30, 1976. it seems that subsequently, the department took the view that theprovisions of the kerala act aforesaid will have no application to the assessment proceedings of the huf (sreepadam). so, proceedings were.....
Judgment:

Partpoornan, J.

1. The petitioner is an assessee to wealth-tax. She is the Karnavathy of Sreepadam Palace, Trivandrum, a HUF till the assessment year 1976-77. The Hindu Joint Family (Abolition) Act 1975 (30 of 1975), came into force on December 1, 1976. During the course of the assessment for the year 1977-78, the petitioner pleaded that in view of the Kerala Act 30 of 1975, the joint family got statutorily disrupted. The ITO, C-Ward, Trivandrum (who is also the Wealth-tax Officer, C-Ward, Trivandrum), accepted the plea. In the income-tax assessment, by Ext, P-1, order dated February 19, 1979, he assessed the income only up to November 30, 1976. It seems that subsequently, the Department took the view that theprovisions of the Kerala Act aforesaid will have no application to the assessment proceedings of the HUF (Sreepadam). So, proceedings were initiated under Section 148 of the I.T. Act, 1961, for the assessment yeas 1978-79, 1979-80 and 1980-81, by notices dated June 12,1981. Such notices issued under the I.T. Act were successfully challenged by the petitioner in O.P. No. 375 of 1982, Exts. P-3 and P-4 notices in O.P. No. 375 of 1982 for the years 1978-79,1979-80 and 1980-81 were withdrawn by the Revenue. The Revenue initiated proceedings under Section 17 of the W.T. Act, 1957 (corresponding to Section 147 of the I.T. Act), for the years 1977-78 1978-79, 1979-80 and 1980-81, evidenced by Exts. P2, P3, P4 and P5, produced in this O.P. The petitioner assails Exts. P-2 to P5, as void and illegal.

2. It is common ground that the notices issued under the corresponding provisions of the I.T. Act for the years 1978-79 to 1980-81, were withdrawn by the Department. When the matter came up for hearing, counsel appearing for the petitioner as well as counsel appearing for the Department agreed that pending this O.P. (O.P. No. 369 of 1982), the Revenue effected assessment on the petitioner under the W.T. Act for the year 1977-78 in pursuance of Ext. P2 notice. The assessment was taken in appeal before the AAC of Wealth-tax, Trivandrum. In W.T.O. No. 43-T/ 82/83 dated January 10, 1984, the AAC followed the decision rendered by a Division Bench of this court in W.A. No. 159/81 dated August 18, 1981, and also a decision of the Appellate Tribunal rendered in I.T.A. Nos. 302 and 303 (Coch)/1981 dated December 19, 1983, and held that on the valuation date relevant for the assessment year (1977-78), i. e., March 31, 1977, there was no assessable entity to be assessed in the status of a HUF and in this view annulled the assessment. The aforesaid order dated January 10, 1984, has become final. It has not been appealed against by the Department. For the assessment year 1977-78, the validity of Ext. P2 notice impugnedin this O.P. need not be considered.

3. We are concerned now with Exts. P3, P4 and P5 notices issued forthe years 1978-79, 1979-80 and 1980-81. If there was no assessable entity to be assessed in the status of a HUF, as on March 31, 1977, relevant for the year 1977-78, it is idle to contend that there could be a HUF for the subsequent year 1978-79, 1979-80 and 1980-81. The Revenue has no such case. In that view of the matter, Exts. P3, P4 and P5 notices are invalid and totally without jurisdiction. I quash Exts. P3, P4 and P5 on that ground.

4. Counsel for the Revenue feebly contended that the effect of the Kerala Joint Family (Abolition) Act (Act 30 of 1975) is only to bring about a division in status and that by itself will not be sufficient to say that there is a partition as contemplated either by Section 20 of the W.T. Act or thecorresponding provision in Section 171 (with slight variation) of the I.T. Act. Counsel further contended that until the properties have been divided in definite portions, the HUF will continue in view of the aforesaid provisions. This contention is without force. The provisions of the Kerala Act 30 of 1975 was examined by a Division Bench of this court in Writ Appeal No. 159 of 1981 dated August 18, 1981. Mr. Potic J. lucidly stated the scope of Act 30 of 1975 as follows :

'Act 30 of 1975 operated to put an end to the existence of all joint Hindu families in Kerala. The consequence was that from that day onwards there could be no joint Hindu family in the State.

It is not a case of the family disrupting by partition. It is a case ofstatutory extinction of joint families.

......... ......'

5. Referring to a notice sent under the W.T. Act after December 1, 1976, it was held:

'The notice on the petitioner is issued admittedly after December 1, 1976, and on that day there was no Hindu undivided family in existence. Therefore, there is no question of addressing any adult male member of ajoint Hindu family in order to serve a notice intended for the family. ........'

6. Referring to Section 20 of the W.T. Act on which reliance was placed, the learned Chief Justice held :

' ......we do not consider that this section has any relevance. Thatis because we are not concerned with any partition of a Hindu undivided family here. We need not also consider the scope of the corresponding section of the Income-tax Act which is not identical with Section 20 of the Wealth-tax Act. Legislature has made provision in Section 20 of the Wealth-tax Act to assess a Hindu joint family even after its extinction by a partition. So, despite a partition, the provision could be used to assess the family. Evidently, the situation arising by reason of extinction by a statutory enactment was not conceived at that time. But that would not furnish any justification to apply Section 20 of the Wealth-tax Act to a case to which the provision does not apply.'

7. The provisions of the Kerala Act 30 of 1975 are clear. The Act is enacted to put an end to the joint Hindu family in Kerala and the consequence is that from that date onwards, there will be no joint Hindu family in the State. It is a far cry to say that the family is disrupted by partition. Partition is one brought about by act or conduct of parties. In this case, the cessation or extinction of the Hindu undivided family is by the provision of a statute. Section 20 of the W.T. Act as also the correspondingprovision in the LT. Act--Section 171 of the Act--deal only with the case of assessment of a Hindu joint family even after its extinction by partition. They do not provide for the situation arising by reason of extinction by a statutory enactment. If by force of the statutory enactment there will be no joint Hindu family in the State from December 1, 1976, it follows that there can be no entity assessable as HUF either for the purpose of the LT. Act or for the purpose of the W.T. Act.

8. The contention to the contrary by the counsel for the Revenue is negatived.

9. The O.P. is allowed. Exts. P3, P4 and P5 are quashed. In view of the fact that the assessment for the year 1977-78. has already been nullified by the appellate order dated January 10, 1984, no further relief is necessary regarding Ext. P2. The O.P. is disposed of as above. There shall be no order as to costs.


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