COMMISSIONER OF INCOME TAX Vs. P S SRIDHARAN

JUDGEMENT

(1.) THE assessee is a Hindu undivided family of which one P. R. Sriramulu Naidu was the karta of the family and the family is comprised of P. R. Sriramulu Naidu and his son, P. R. Sridharan, as coparceners. THE assessee owned 170 grounds of land in Chennai which was acquired by the Government of Tamil Nadu and the karta of the joint family received the compensation for the lands acquired during the year ended March 31, 1962, and deposited the same in the bank as under : <FRM>JUDGEMENT_606_ITR249_2001Html1.htm</FRM>

(2.) AFTER deducting a sum of Rs. 6,000, the balance was equally divided between the two coparceners of the family. Accordingly, a sum of Rs. 2,15,273 was transferred to P. S. Sridharan as his share from the bank account of the family to Sridharan's bank account. Subsequently, an additional compensation was received in the year 1966 and a sum of Rs. 2,24,017.64 was deposited in the bank account of P. R. Sriramulu Naidu on November 21, 1976, and a sum of Rs. 1,06,589.82 was transferred to P. S. Sridharan's bank account on November 25, 1966. The Income-tax Officer in the original assessment completed for the assessment years 1965-66 and in 1969-70 noticed the fact that the assessee was the owner of the lands and he also noticed the fact that the lands were acquired by the Government and the fact that the assessee offered the capital gain for the assessment year 1962-63, as he rejected the claim of the assessee that the lands were agricultural lands. The officer has also noticed the fact that the assessee has not brought to his attention that there was partition in the family and no order under Section 171 of the Income-tax Act, 1961, was passed. The above facts are noticed from the order of assessment passed for the assessment year 1967-68. The same pattern of assessment was adopted by the Income-tax Officer in the subsequent assessment orders as well. The Income-tax Officer in the original assessments made by him included only the interest income arising out of the deposits standing in the name of the karta of the family, but did not include the interest income said to have accrued on the deposits standing in the name of the other coparcener, viz., P. S. Sridharan. It was on the basis that the asses-see's share was limited to 50 per cent, in the compensation amount received in the books of account and other share was credited in the name of P. S. Sridharan. The Income-tax Officer, therefore, was of the opinion that the assessments made for all the said assessment years, viz., 1965-66 to 1969-70, should be reopened and the reasons recorded by him for reopening the assessment reads as under :

(3.) AS regards" the merits of the case, learned counsel for the Revenue strongly placed reliance on the decision of the Supreme Court in Kalloo-mal Tapeswari Prasad (HUF) v. CIT , wherein the Supreme Court held that unless there is an order passed under Section 171 of the Income-tax Act recognising the partial partition, the income which was the subject-matter of the partial partition could be included in the hands of the bigger Hindu undivided family and the view of the Appellate ASsistant Commissioner that even without an order passed under Section 171 of the Income-tax Act the income cannot be assessed in the hands of the assessee is not correct in law.