SEETHAMMAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) IN this reference under s. 256(1) of the, I.T. Act of 1961, the Income -tax Appellate Tribunal has referred the following question at the instance of the assessee

(2.) ONE Sannanna Chettiar, his two wives, Venkatammal and Seethammal, and their four sons constituted a HUF of which Sannanna Chettiar was the karta. He was being assessed in the status of a HUF for the purpose of income -tax. There was a partition in the family on 19th April, 1951, by a partition deed. Under the said partition deed all the properties were divided between Sannanna Chettiar and his four sons and there was also a provision that the properties set out in sch. 'B' to the partition deed and allotted to the share of Sannanna Chettiar would devolve, on his death, on his two wives, Seethammal and Venkatammal, to be enjoyed by them for their lives and thereafter on the four sons absolutely. The sons too effected a division of the said properties subsequently. The assessment year under consideration is 1965 -66 and the relevant previous year ended on April 12, 1965. Sannanna Chettiar died on 27th January, 1967. The assessment came to be made on 21st March, 1970. In the assessment, the ITO took the income from the properties allotted to Sannanna Chettiar as assessable in the hands of a HUF. He had given notices to the surviving widow of Sannanna Chettiar, viz., Seethammal, and also to the four sons after the death of Sannanna Chettiar. Venkatammal, the other wife of Sannanna Chettiar, had died earlier. The ITO referred to the widow as well as the sons as the legal heirs of Sannanna Chettiar. The assessee objected to the status being determined as HUF and filed an appeal against the assessment before the AAC who by his order dated 31st December, 1970, held that the ITO should have made the assessment on Seethammal as representing the joint family. The ITO had included his four sons also, as mentioned earlier, as legal heirs. In the view of the AAC, this was not proper and he, therefore, restricted the liability to tax on Seethammal and deleted the liability of the heirs. The assessee appealed to the Appellate Tribunal. The Tribunal agreed with the view of the AAC and found no reason to interfere with the assessment, which emerged as a result of the order of the AAC. It is this order of the Tribunal that is now challenged by raising the question extracted aboveThe contention of the learned counsel for the assessee was that the joint family, after the partition of 1951, consisted of only Sannanna Chettiar and his two wives and on the death of Sannanna Chettiar and the other wife, the family ceased to exist. It was, therefore, submitted that there can be no assessment on the income as there was no machinery for this purpose. For the department, the submission was that the joint family continued to exist until an order under s. 171(1) of the Act recognising the partition of the family was passed and that the deeming provision of s. 171 of the Act would apply here so as to enable the assessment being made on the family as such. It is this controversy that is now to be resolved

(3.) THE contention for the revenue in the present case was that so long as there was a possibility of an addition to the family, there was a scope for a family being held to exist. In the present case, the widow could not have made an adoption, as her husband has natural sons. The cases cited in the above passage related to the widows without natural issues. That principle cannot be imported here. As the said decision cannot apply to the facts here, we do not find it possible to hold that the said passage is of any assistance in coming to the conclusion that there is a potential joint family in the present caseFurther, it was pointed out by the Supreme Court in C. Krishna Prasad v. CIT that the question of the existence of the family will have to be decided in the light of the circumstances that obtained in the relevant year. At page 497, it was observed as follows