COMMISSIONER OF INCOME TAX Vs. GOVIND NARAIN

JUDGEMENT

(1.) THIS is a consolidated reference for the assessment years 1965-66 and 1966-67 under Section 256(1) of the Income-tax Act, 1961.

(2.) THE assessee, Sri Govind Narain, was assessed to income-tax in the status of an individual up to the assessment year 1963-64. During the assessment proceedings for the year 1964-65, he claimed that the correct status should be that of a Hindu undivided family and not of an individual, because he had been allotted share on partition of a bigger Hindu undivided family of which he was a member. This claim was accepted by the Income-tax Officer. During the course of assessment proceedings for the assessment year 1965-66, he submitted an application dated May 20, 1965, before the Income-tax Officer claiming a partial partition in the family business carried on in the name of Munnilal and Company with effect from 31st March, 1965, on which date the total capital invested in the business was divided amongst the various members of the family. It was claimed that with effect from 1st April, 1965, the business which had been carried on by the Hindu undivided family was taken over by a partnership firm. In support of the claim reliance was placed upon the entries in the books of accounts and a deed of partition dated 1st April, 1965. THE claim was rejected by the Income-tax Officer on the ground that the agreement purported, to bring about partial partition with effect from 1st April, 1965, but was typed on a stamp paper which was purchased on 2nd April, 1965. For that reason the Income-tax Officer held that the deed was fictitious. On appeal, the Appellate Assistant Commissioner of Income-tax held that the disparity between the date of the execution of the deed and the date of the stamp paper was due to a typing error. He, accordingly, accepted the assessee's claim. On second appeal preferred by the department, the Tribunal upheld the order of the Appellate Assistant Commissioner of Income-tax. THE Commissioner is now aggrieved and has brought this reference before us on the following question :

(3.) ONE of the grounds upon which the assessee's claim for partial partition was resisted by the department was that his widowed mother, Radha Devi, was also allotted a share even though she was not entitled to it. It was said that Radha Devi was entitled to a share when the partition of a bigger Hindu undivided family took place in 1952. She did not claim any share at that time but instead accepted a maintenance of Rs. 30 per month. The Tribunal found that merely because she accepted a maintenance of Rs. 30 per month did not mean that she had relinquished her share. That apart, even if a share has been allotted to a person who is not entitled to it, it can be no ground for saying that the partition was illegal or void. Such a partition may be voidable at the instance of the members affected by it but the department has no locus standi to hold that such a partition was void ab initio. In these circumstances, it is not necessary to call for a reference on this question because even if the department's contention is accepted it will not affect the partial partition carried out by the assessee. We, accordingly, decline to call for a reference on the question of law suggested in these applications.