PARAMANAND L BAJAJ Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AN important question of Hindu law on the topic of reunion" of the divided coparceners of an erstwhile Hindu undivided family (hereinafter referred to as "HUF"), namely, whether the failure on the part of some of the reuniting members to bring back the properties which they had got at the time of the partition, and which were still in their possession on the date of reunion, renders the reunion invalid, i.e., no reunion in the eye of law, arises for consideration in these references in which the income-tax Appellate Tribunal Bangalore Bench, has referred for the opinion of this court under s. 256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), the following question :

(2.) THE facts of the case are as follows : THE assessment years to which these references relate are 1971-72 and 1972-73. THE assessee is an HUF consisting of one Paramanand L. Bajaj and his wife and their daughter. Prior to August, 1956, there existed a larger HUF consisting of Paramanand L. Bajaj, his wife, their three sons and two daughters. THE business of the family was that of money-lending. THE three sons of Paramanand L. Bajaj are Devendra P. Bajaj, Vijayakumar P. Bajaj and Nandlal P. Bajaj. THE assessment under the Act, was being made on the HUF represented by its karta, Paramanand L. Bajaj. On August 20, 1956, Devendra P. Bajaj got separated from the family and he made a declaration to that effect on August 23, 1956, before the Magistrate. Vijayakumar P. Bajaj got separated from the family on December 22, 1961. Nandlal P. Bajaj got separated from the family on June 30, 1963. He also made a declaration to that effect before the Magistrate on July 9, 1964. After these separations, i.e., from 1964-65 onwards, assessments were being made on the smaller HUF consisting of Paramanand L. Bajaj. his wife and an unmarried daughter. During the assessment year 1971-72, Paramanand L. Bajaj showed the income of the smaller HUF only up to March 29, 1971, on the ground that there was a reunion of the family on March 27, 1971, and that the properties which were in the hand of Paramanand L. Bajaj, representing the smaller HUF, were thrown into the hotchpot of the reunited joint family by means of a declaration made by Paramanand L. Bajaj to that effect on March 30, 1971. Paramanand L. Bajaj claimed for the making of a separate assessment in the hands of the bigger HUF which, according to him, came into existence on reunion, on and from March 30, 1971. THE ITO by his order dated June 19, 1973, rejected the claim of reunion. Aggrieved by the said order, the assessee (the smaller HUF) represented by Paramanand L. Bajaj preferred an appeal before the AAC. THE appellate authority dismissed the appeal following the judgment of the Appellate Tribunal in the case of M. Kasturiranga Shetty (I.T.A. Nos. 787 to 789 (Bang.) 73-74 dated November 15, 1975). Against the order of the AAC, the assessee preferred two appeals before the Appellate Tribunal. THEy were disposed of by a common order dated 12th January, 1977 (Annex."C"), following its earlier judgment in the case of Kasturiranga Shetty. THEreafter, at the instance of the assessee, the question set out earlier has been referred for the opinion of this court.

(3.) THERE is also no dispute that the three sons of Paramanand L. Bajaj have not made any declaration throwing the properties which they had got on partition and which were still in their possession on the date of agreement of the "reunion", into the family hotchpot.