SORIDANDAU MADANMOHAN RAO Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Tribunal referred the following questions for the opinion of the High Court: "1. Whether, in the circumstances and on the facts of the case, the order dt. 28th March, 1973 of the ITO allowing the assessee's claim of partial partition dt. 5th Aug., 1971 is in accordance with the provisions of s. 171 of the IT Act, 1961.

(2.) WHETHER, in the circumstances and on the facts of the case, the Addl. CIT is justified in holding that there could not be a partition in a Hindu joint family consisting of only the karta, his wife and minor daughter?

(3.) A further submission made by Mr. Dasaradharama Reddy, arising out of Qeustion No. 2 remains to be considered. The Addl. CIT revised the order of the ITO made under s. 171(3), in purported exercise of his revisional powers under s. 263 of the Act. The Addl. CIT could exercise such power, if he considers that any order passed by the ITO is erroneous insofar as it is prejudicial to the interest of the Revenue, but in such cases, it is incumbent on him to give the assessee an opportunity of being heard. The submission of Mr. Dasaradharama Reddy is that the Addl. CIT revised the order only after giving notice to Madanmohan Rao, the assessee, but he did not give any such notice to either Padamavathi or Narsamma and for such defect in the procedure followed by the Addl. CIT, the order passed by him in revision cannot be sustained. He placed reliance on T. G. Sulakhe vs. CIT (1960) 39 ITR 394 (AP). The facts in that case are; a joint Hindu family consisted of T. G. Sulakhe, K. G. Sulakhe and B. G. Sulakhe. All the three brothers were being assessed under that status for 1950-51 for which period the accounting year ended on 21st Sept., 1949. In the course of the assessment proceedings for 1950-51, the members of the family claimed that there was a division in status between them and the joint family properties were divided among the three members of the family on 22nd Oct., 1949. The ITO accepted the division in status and the partition and passed an order under s. 25A of the 1922 Act, to the effect that there was a separation in the family on 22nd Oct., 1949. It was also claimed before the ITO that after such partition, the three brothers carried on the businesses in partnership of the same date as the partition deed. The ITO on an application being made by the assessee-firm and having regard to the recognition by him of the division in status and partition in the family on 22nd Oct., 1949, by his order dt. 31st March, 1952, recognised the partnership with effect from that date and registered the firm under s. 26A of the 1922 Act. The assessment for the year 1951-52 was completed. For the year 1952-53, registration of the firm was renewed by the order of the ITO, dt. 12th June, 1953 but the assessment was not completed. The CIT issued a notice under s. 33B of the 1922 Act, on T. G. Sulakhe for the cancellation of the orders made by the ITO (1) under s. 25A, dt. 22nd March, 1952, (2) under s. 26A, dt. 31st March, 1952, and 12th June, 1953 in respect of 1951-52 and 1952-53 assessments, and (3) the order of the assessment made on the firm for the year 1951-52. The question then arose whether the revisional order passed by the CIT after giving notice to only one of the members of the joint family was valid. Jaganmohan Reddy, J. (as he then was) speaking for the Bench observed: