UNION OF INDIA Vs. M V VALLIAPPAN

JUDGEMENT

(1.) These appeals by special leave are filed against the judgments and orders passed by the High Court of Madras dated 13-1-1988 in Writ Petition Nos. 992 and 993 of 1981, 162 and 6036 of 1983, 904-905, 994, 995, 5430,6162 and 9283 of 1984 (reported in 1988 Tax LR 773) by the High Court of Karnataka dated 9-11-1993 in Writ Petition Nos. 12312 to 12317 of 1987 and dated 25-11-1992 in W.P. No. 23708 of 1992, and by the High Court of Gujarat dated 29-6-1993 in Income-tax Application Nos. 164 and 165 of 1993.

(2.) By a common judgment and order passed in various writ petitions filed before the Madras High Court (M. V. Valliappan v. Income-tax Officer, (1988) 170 ITR 238 the High Court struck down the provisions of Section 171(9) of the Income-tax Act, 1961 as violative of Article 14 of the Constitution of India and that it suffers from the vice of legislative incompetence. In the High Court, number of writ petitions were filed involving questions relating to the validity, scope and interpretation of the provisions of Section 171(9). For our purpose, it would suffice to mention facts of Writ Petition No. 994 of 1984 for deciding the question involved in these appeals. In the said petition, it was the case of the petitioner that he was a Karta of a Hindu undivided family consisting of himself, his wife, his minor son and minor daughter. It was his contention that the Hindu undivided family was a partner in a partnership firm in which its funds were invested. On 13th April, 1979, a partial partition of certain assets belonging to the Hindu undivided family was effected with effect from that date by executing a deed of partition. An application under Section 171(2) of the Income-tax Act, 1961 for recognition of the said partial partition came to be filed before the Income-tax Officer. The Income-tax Officer passed an order dated 28th December, 1979 recognizsing the partial partition. Thereafter for the assessment year 1980-81, a return was submitted on behalf of the Hindu undivided family on April 12, 1980 which did not include the income from the property which was the subject-matter of partial partition. The income derived from the assets that were the subject-matter of partial partition were declared by the respective individuals in their respective returns. In accordance with the said return, assessment was finalised. Similarly, wealth-tax return for the assessment year 1980-81 was also filed and accepted by the Income-tax Officer. Thereafter, a notice dated March 4, 1983 under Section 148 of the Act was received by the petitioner stating that income of the petitioner had escaped assessment and the Income-tax Officer proposed to reopen the completed assessment for the year 1980-81. The assessee objected to the reopening of the assessment on the ground that order under Section 171 of the Act recognising the partition not having been cancelled or revoked, continued to be effective and, thereafter, no income from the partitioned properties could be assessed in the hands of the Hindu undivided family. These objections were rejected by the I.T.O. by order dated 30th November, 1983. Fresh assessment order for H.U.F. was made by including the income relating to the assets which were partially partitioned and allotted to the individual members of the Hindu undivided family. That re-assessment order was challenged by filing writ petition. Facts in the other writ petitions were also similar to the facts as stated above.

(3.) The High Court after considering the various contentions and decisions relied upon by the parties arrived at and summarised its conclusion as under:-