High Court Of Karnataka
A.M. Shankare Gowda vs. Agricultural Income Tax Officer & Anr.
Asst. Year 1981-82
Tirath S. Thakur, J.
Writ Petn. No. 1229 of 1990
20th June, 1997
S. Ramesh Rao, for the Petitioner : K.M. Shivayogiswamy, for the Respondents
TIRATH S. THAKUR, J. :
In this petition for a writ of certiorari, the petitioner calls in question an order passed by the Jt. Commr. of Agrl. IT, Bangalore, dt. 27th March, 1989, in suo motu revisional proceedings, whereby he has set aside the assessment order made by the Agrl. ITO, Chickmagalur, and directed him to redo the same after determining the status of the assessee as HUF. The order dt. 15th Dec., 1989, passed by the Agrl. ITO in pursuance of the above direction assessing the petitioner as an HUF has also been assailed.
The petitioner, his brother, Sri A. M. Manjunath, and his mother, Smt. Puttamma, were assessed to Agrl. IT under the Karnataka Agrl. IT Act, 1957, as an HUF with Sri A. Malegowda as its Karta. For the asst. yr. 1981-82, the Karta of the HUF filed a return of income dt. 6th Feb., 1992, declaring an income of Rs. 91,621.20 in their capacity as tenants-in-common. Reliance in support was placed upon an agreement dt. 5th March, 1980, executed by the members of the family, according to which they were to hold the immovable property earlier owned by the HUF as tenants-in-common with effect from 1st April, 1980. Accepting the validity of the agreement, the Agrl. ITO, Chickmagalur, passed an assessment order dt. 22nd Jan., 1983, determining the status of the members of the HUF as tenants-in-common and apportioning the net agricultural income among them in accordance with their respective shares. The Jt. Commr. of Agrl. IT, Bangalore, was, however, of the view that the order passed by the assessing authority was erroneous and prejudicial to the interests of the Revenue. He, therefore, issued a show cause notice calling upon the members of the HUF to show cause why the Agrl. ITOâs order may not be set aside with a direction to him to redo the assessment after determining their status as HUF. Several objections were raised against the said notice by the petitioner and others, which were considered by the Jt. Commr. in his order dt. 27th March, 1989, but found untenable. The Jt. Commr. held that since the petitioner had been assessed as an HUF in the previous years any claim suggesting partition of the said status had to be enquired into in terms of s. 30(1) of the Act before making an order of assessment. No such enquiry having been held by the Agrl. ITO the acceptance of the status of the family members as tenants-in-common by him was declared by him to be legally unsustainable. The Jt. Commr. accordingly set aside the order passed by the Agrl. ITO and directed him to redo the same after determining the status of the assessee as an HUF. Consequent upon the said order, the Agrl. ITO issued a notice calling upon the assessee as to why the assessment be not concluded afresh by treating the assessee’s status as an undivided family. In response, the assessee pointed out that it had filed the present writ petition in this Court challenging the order passed by the Jt. Commr. Since, however, the assessee did not produce any order of stay from this Court within the extended period granted to it for the purpose, the Agrl. ITO proceeded to complete the assessment by treating the assessee as an HUF. Aggrieved, the petitioner has filed the present writ petition assailing the validity of the order passed by the Jt. Commr. as also that passed by the Agrl. ITO.
Counsel appearing for the petitioner strenuously argued that the Jt. Commr. was in error in having interfered with the order passed by the Agrl. ITO on the ground that no order under s. 30 (1) and (2) of the Act had been passed before completing the assessment in the status of tenants-in-common. He further contended that the Jt. Commr. could not have rejected the assessee’s claim of a partition having taken place in summary proceedings conducted without any enquiry within the contemplation of s. 30, thereby leaving no option for the Agrl. ITO except to treat the assesseeâs status to be that of HUF only.
4. Sec. 30, sub-s. (1), regulates assessment after partition of an HUF and provides that where at the time of making an assessment under s. 19, it is claimed by or on behalf of any member of an HUF, or branch, an aliyasanthana family or a marumakkattayam tarwad or tavazhi hitherto assessed as undivided that a partition or maintenance division has taken place among the members or groups of members of such family, branch, tarwad or tavazhi, the Agrl. ITO shall make such inquiry thereinto as he may think fit, and if he is satisfied that there has been a partition or maintenance division of the property by metes and bounds among the various members or groups of members, he shall record an order to that effect. The proviso to s. 30(1) requires a notice of the enquiry to be served upon all the adult members of the family, branch, tarwad or tavazhi entitled to the property in the manner prescribed. Upon the making of an order under s. 30(1), the Agrl. ITO has in terms of s. 30(2) to make an assessment of the total agricultural income received by or on behalf of the family, branch, tarwad or tavazhi as such in the manner stipulated therein. It would thus appear that the Agricultural ITO is obliged to make an enquiry into any claim of partition and if satisfied that there has been a partition or maintenance division of property by metes and bounds to record an order to that effect. In the instant case the Agrl. ITO while concluding the assessment, conducted no enquiry nor passed any order under s. 30(1) of the Act. He had on the contrary given implicit credence to the agreement produced by the assessee suggesting that there had been a partition among the members constituting the HUF. The Jt. Commr. was, therefore, perfectly justified in holding that the order of assessment made by the Agrl. ITO without a proper enquiry as envisaged by s. 30 was unsustainable. As a consequence of the said finding, the order passed by the Agrl. ITO could have been and was rightly set aside by the Jt. Commr. in exercise of his revisional powers. What ought to have followed was an order remitting the matter back to the Agrl. ITO for passing an appropriate order in terms of s. 30 on the claim of partition made by the assessee. But that is not what the Jt. Commr. did. He not only found fault with the legality of the order passed by the Agrl. ITO on account of the absence of an enquiry under s. 30, but went ahead to declare that the agreement propounded by the assessee in support of their claim of being tenants-in-common was no more than a device. This the Jt. Commr. was not justified in doing. That is so because whether or not there had been a partition as claimed by the assessee was a matter that could be decided only after a proper enquiry was conducted by the Agrl. ITO in terms of s. 30. No such enquiry having been held by the Agrl. ITO, the proper course for the Jt. Commr. was to direct him to hold such an enquiry and record a proper order before proceeding further. Even assuming that the Jt. Commr. could have in exercise of his revisional powers returned a finding whether or not there had been a partition or maintenance division of the property as claimed by the assessee, yet such a finding could be returned only after an enquiry into the matter was conducted, for such an enquiry constitutes the very basis of any order rejecting or accepting the claim of partition. What is significant is that in the course of any such enquiry each adult member of the HUF said to have undergone partition would be entitled to a hearing in the course of the same. It is not the case of the respondents that any enquiry within the meaning of s. 30(1) and the proviso thereto was conducted by the Jt. Commr. himself in the course of the suo motu revisional proceedings. In the circumstances, the finding returned by the Jt. Commr. that the claim of partition or dissolution of the joint family status was only a make-believe cannot be sustained. That being so, the order by the Agrl. ITO in pursuance of the direction made by the Jt. Commr. shall also have to be set aside. A reading of the said order shows that even though a show cause notice was issued to the assessee proposing to conclude the assessment in the status of an HUF, yet no enquiry or other reasoning has been advanced in the assessment order why the claim for partition has been rejected.
In the totality of the above circumstances, therefore, the order passed by the Agrl. ITO as also that passed by the Jt. Commr. to the extent the same declares the status of the assessee to be an HUF shall have to be quashed with a direction to the former to redo the assessment in accordance with law after holding an enquiry under s. 30(1) of the Act.
In the result, this writ petition succeeds and is hereby allowed. The order dt. 15th Dec., 1989, passed by the Agrl. ITO is hereby quashed with a direction that he shall conclude the assessment afresh after passing an appropriate order within the contemplation of s. 30 of the Act after due and proper enquiry, in which the assessee and the adult members of the family shall be given a reasonable opportunity of being heard. In case the Agrl. ITO comes to the conclusion upon enquiry that the joint family status of the erstwhile HUF continues, he shall be at liberty to pass appropriate orders of assessment assessing the income of the assessee in that status. In the circumstances, however, there shall be no orders as to costs.
[Citation: 230 ITR 880]