COMMISSIONER OF INCOME TAX Vs. BRIJRAJ SINGH

JUDGEMENT

(1.) THE assessments made for the years 1971 -72 to 1974 -75 have been challenged by the Revenue in this case by raising the following question of law :

(2.) SHRI Sumer Singh, Ex -ruler of Kishangarh, expired on 16th Feb., 1971. The original return in respect of asst. year 1971 -72 was filed on 30th June, 1971 by Shri Brijraj Singh, minor in guardianship of Rajmata Gita Kumari, as legal heir of late Shri Sumer Singh. The said return was filed in the status of individual. Subsequently, a revised return was filed with the claim that the status of the assessee was of HUF originally and after the demise of late Shri Sumer Singh, that status should be allowed to continue. The ITO came to the conclusion that the assessee was assessed all through as an individual and no probate was taken till 30th June, 1971, the accounting year for which the assessment was made and, therefore, he came to the conclusion that the income accrued or arisen was belonging to the assessee in his individual capacity. The ITO held that the law of primogeniture is applicable and it was an impartible estate by custom as well as by law in the context of corpus and income. The ITO while assessing in the year 1972 -73 also found that right from 1950 -51 assessment years, i.e., from the inception of income -tax law in Rajasthan and 1957 -58, i.e., the inception of WT Act, the assessee namely late His Highness had been assessed as an individual. Shri Brijraj Singh after the death of his father, being the eldest son as per rule of primogeniture stepped into the shoes of late His Highness Shri Sumer Singh. He was recognised as Ruler of the former Kishangarh State by the President of India and Rajtilak ceremony was performed for Shri Brij Raj Singh on 29th Feb., 1971. The estate from which the income has arisen is an impartible estate according to the rule of primogeniture. It was found that since the eldest son acquires the right and it has not been shown that he has renounced or surrendered his rights, the estate held was of individual as on 16th Feb., 1971. Prithviraj Singh was minor and other members not being coparceners were not entitled to claim partition and as such there could be no HUF in existence in accordance with K.R. Ramachandra Rao vs. CWT (1963) 48 ITR 959 (Mad). It was held that the impartible estate has to be considered as an individual property and, therefore, in accordance with S. 27(ii), the income which has arisen will have to be assessed in the status of individual. The assessment for the asst. yrs. 1972 -73, 1973 -74, 1974 -75 were completed in the status of individual. The matter was challenged before the AAC, Ajmer Range, Ajmer and it was found that the returns for the asst. year 1971 -72 was filed on 30th June, 1971 in the status of individual for the period ending on 31st March, 1971 under the signatures of Smt. Gita Kumari, widow of late Shri Sumer Singh and mother and guardian of Brijraj Singh. The subsequent return which is said to have been filed on 10th July, 1971 in the status of HUF was not found on record and accordingly a duplicate return was filed on 27th Feb., 1974 and the assessment was completed on 27th Feb., 1974 by the ITO Ajmer Range, Ajmer. It was submitted before the AAC that it was under the mistake of law that the return of income as well as of wealth was filed by late Shri Sumer Singh in the status of individual, though he was adopted in the family and all the properties movable or immovable of Kishangarh ultimately devolved on him at the time of adoption. Late Shri Sumer Singh is survived by his wife, two sons and two unmarried daughters and, therefore, the property being ancestral, it should be considered as HUF property and the assessment should be framed in the status of HUF. The AAC has given a finding that opportunity too was given to the assessee by the ITO for deciding the status and even written arguments were submitted before the ITO. The AAC came to the conclusion that S. 27(ii) of the IT Act has provided that the holder of an impartible estate shall be deemed to be individual owner of all the properties comprised in the estate. Accordingly, it was held that for the purpose of income -tax the status has to be taken as that of individual. The appeal for the asst. year 1971 -72 was accordingly dismissed.

(3.) WHEN the matter was challenged before the Tribunal, reliance was placed on the decision of this Court in the case of CWT vs. Ridh Karan & Ors. (1972) 84 ITR 705 (Raj) wherein it was held that where the return has been filed in one status then the assessment cannot be completed without serving a notice under S. 14(2) in another status. In that case a notice was issued in the name of Shri Ridh Karan Munnalal and Prithviraj for filing their WT return. The notice which was issued has not specified their status and the returns were filed by those persons in the capacity of Karta of HUF. The WTO assessed in the status of individual the returns. The High Court has held that it is ss. 16(1) and 16(3) which contemplates a return having been filed by the assessee and there can be no assessment under these sub -sections if the assessee has not filed the return. If the assessee has not filed the return, then the assessment can be under sub -s. (5) of S. 16 and since the returns were filed in the status of Karta of HUF and no returns were filed in the status of individual, therefore, the assessment would not have been completed under S. 16(3) of the Act. The status of individual and HUF were considered as separate units and, therefore, it was held that without issuing fresh notices under S. 14(2) to file the returns, the WTO exceeded his jurisdiction under s. 16 of the Act, framed the assessment in the status of individual on the returns which were filed in the status of HUF.