In these cases facts and findings by Commissioner are all common and, hence, they are being disposed of together. 2. IT Appeal No. 868 is by M. Sanjeeva Moorthy (HUF), IT Appeal No. 869 is by Shri M. Subramania (HUF) and IT Appeal No. 870 is by M. Subramania, individual. As per memorandum of partial partition dated 15-11-1978 there was partial partition with effect from 31-10-1978 in family of M. Sanjeeva Moorthy between M. Sanjeeva Moorthy, his minor son, M. Raghavendra, and his wife, Smt. M.S. Nalina. capital invested in two firms, namely, M. Subramania Sanjeevamurthy and M. Nagappasetty & Sons were partitioned. deposits with Sri Venkateswara Automobiles, Sri Shrinivas Enterprises and M. Sanjeevamurthy were partitioned. Similarly, in case of family of Shri Subramania there was partial partition as per memorandum executed on 15-11-1978 partitioning properties with effect from 31-10-1978 between M. Subramania, his two minor sons, M. Mahesh and M. Satish, and his wife, Smt. M.S. Ratna. Here, investments by family in partnership firms, namely, M . Subramania Sanjeevamurthy and M. Nagappasetty & Sons and Lakshminarayana & Co. were partitioned. deposits with Sri Shrinivas Enterprises, Shri Channabasappa Kotambari, Salar Jung Sugar Mills, M. Kristappa & Sons and Jawahar D. Mehta were also partitioned. partial partitions in above two HUFs were recognised by ITO with effect from 31- 10-1978 as per his orders dated 24-12-1979. On basis of above partial partitions, assessments of individuals were completed. Thereafter, Commissioner issued notice under section 263 of Income-tax Act, 1961 ('the Act') proposing to set aside assessments, in response to which assessee filed objections. After considering objections of assessee, Commissioner passed orders under section 263 in each of these cases. He held that validity of partition is in doubt. There was no physical division in capital invested in firms as well as deposits. Thus, there was no valid partition which could be recognised under section 171 of Act. deposits as well as capital in firms were not transferred to various members. These accounts are still with HUF and family never ceased to be holder of these assets. interest was not only collected by HUF but also major portion of it was retained by family itself. In view of above facts, claim for partition is make-believe one and not real one. He further held that order passed under section 171 recognising partition has to be disregarded. HUF still exists and is assessable as such. He held that ITO's order assessing only portion of such income excluding those incomes returned by members of family in individual capacity is not correct. ITO should have assessed HUF including income arising to individual members on claimed partition. He directed ITO to modify assessments accordingly as indicated in his orders in case of individual, he held that for reasons given in case of HUF, assessment in case of individual has to be set aside. Accordingly, he directed ITO to do assessment on individual on protective basis. Against said orders, these appeals are preferred by assessee. 3. learned counsel for assessee kly urged that there was valid partial partition which has been recognised by ITO. Once order under section 171 is passed, it is effective and that order has not been set aside by Commissioner. As long as that order stands, partition accepted is valid and Commissioner cannot invoke section 263. Further, he urged that entries have been made in books of HUF. division of capital in books of firms was not necessary. partition is not make-believe one. After partition, members have acted on basis of partition. They have received profit and interest. Merely because HUF has received higher rate of interest, partition as such cannot be disbelieved. members have agreed to receive lesser interest. He urged that what applies to full partition applies to partial partition also. He urged that order of Commissioner should be cancelled. learned departmental representative submitted that capital in firms and deposits have not been transferred to members after partition. interest paid to HUF on deposits has not been fully passed on to members. partition made is only make-believe one and it is not valid. In view of that order under section 171 is to be ignored. Thus, he supported order of Commissioner. 4. We have considered rival submissions. We are unable to sustain orders of Commissioner passed under section 263 in all these cases. There was partial partition with effect from 31-10-1978 as evidenced by was partial partition with effect from 31-10-1978 as evidenced by memorandum of partial partition executed on 15-11-1978. ITO has, by his orders dated 24-12-1979, made under section 171, recognised partial partition with effect from 31-10-1978. Once order under section 171 is passed by ITO recognising partition, until that order is set aside by Commissioner, it is valid. That order has not been set aside by Commissioner. As long as that order stands, partition recognised is valid. In Joint Family of Udayan Chinubhai v. CIT [1967] 63 ITR 416 Supreme Court held that once order under section 25A of Indian Income-tax Act, 1922 ('the 1922 Act') has been recorded, family ceases to be assessed as HUF and thereafter, it cannot be assessed in that status unless that order is set aside by competent authority. This decision though rendered under 1922 Act, holds good in respect of provisions of 1961 Act also. In CIT v. Ganeshi Lal Sham Lal [1966] 61 ITR 408 Punjab High Court held that where order under section 25A has been passed by ITO, it is not open to him to take proceedings for reassessment under section 34 of 1922 Act ignoring earlier order under section 25A on ground that he has received information that order under section 25A was obtained by misrepresentation. It was held that proper course for ITO to adopt in such case is to move Commissioner to take action under section 33B of 1922 Act to set aside order under section 25A. order under section 25A has to be passed only once and remains effective for subsequent years unless set aside in accordance with law. above decisions squarely apply to instant case. Thus, order passed under section 171 holds good and so income from properties partitioned in family cannot be assessed in hands of HUF. 5. On basis of above partition, which was recognised by ITO, assessments have been made on individual members. In books of HUF necessary entries have been made transferring capital in firms as well as deposits with firms in names of divided members of family as per memorandum of partial partition. This is sufficient to give effect to memorandum of partial partition and that would be enough for completing partition. Merely because in books of firm capital invested or deposits have not been transferred in names of members of family, partition itself cannot be doubted. After partition, share of profit to members has been credited to their accounts in books of HUF as well as interest on deposit due to them. It is true that entire interest received by HUF on deposits has not been paid to individual members. Merely on that ground partition itself cannot be doubted. explanation of assessee has been that members of HUF after partition agreed to receive lesser rate of interest. After partition, family and individual members filed their advance tax estimates acting on partition. It shows that partition has been given effect to. 6. In Charandas Haridas v. CIT [1960] 39 ITR 202 (SC) income received from managing agency was assessed as income of HUF. There was partial partition in managing agency commission between members of family. question arose whether there was effective partition. Supreme Court held that while it was joint, department could treat income as that of family; but after partition department could not say that it was still income of HUF. Supreme Court observed as under: " In our opinion, here there are three different branches of law to notice. There is law of partnership, which takes no account of Hindu undivided family. There is also Hindu law, which permits partition of family and also partial partition binding upon family. There is then income-tax law, under which particular income may be treated as income of Hindu undivided family or as income of separated members enjoying separate shares by partition. fact of partition in Hindu law may have no effect upon position of partner, insofar as law of partnership is concerned, but it has full effect upon family insofar as Hindu law is concerned. Just as fact of karta becoming partner does not introduce members of undivided family into partnership, division of family does not change position of partner vis-a-vis other partner or partners. income-tax saw before partition takes note, factually, of position of karta, and assessees not him qua partner but as representing Hindu undivided family. In doing so, income-tax law looks not to provisions of Partnership Act, but to provisions of Hindu law. When once family has disrupted, position under partnership continues as before, but position under position under partnership continues as before, but position under Hindu law changes. There is then no Hindu undivided family as unit of assessment in point of fact, and income which accrues cannot be said to be of Hindu undivided family. There is nothing in Indian income-tax law or law of partnership which prevents members of Hindu joint family from dividing any asset. Such division must, of course, be effective so as to bind members; but Hindu law does not further require that property must in every case be partitioned by metes and bounds, if separate enjoyment can otherwise be secured according to shares of members. For asset of this kind, there was no other mode of partition open to parties if they wished to retain property and yet hold it not jointly but in severalty, and law does not contemplate that person should do impossible. Indeed, result would have been same, even if dividing members had said in so many words that they had partitioned assets, because insofar as firms were concerned, steps would have been wholly inconsequential. " Thus, Supreme Court held that there was nothing in Indian income- tax law or law of partnership which prevented members of HUF from dividing any asset. 7. In CIT v. K.G. Ramakrishnier [1963] 49 ITR 608 Madras High Court held that entries made in capital accounts of members of family, effected partition of assets and absence of any entries in firm's account relevant to partition did not militate against claim for partition. In CIT v. M.D. Kanoria [1982] 137 ITR 137 (Bom.) there was partition of assets of HUF insofar as capital in partnership firm was concerned. memorandum of partition expressly divided capital standing in name of karta in firms among members of joint family with result that though capital stood in assessee's name in firms' account books, that capital was severally owned by erstwhile members of joint family in definite shares with further agreement that assessee was to receive profits for and on behalf of contracting parties severally. On these facts, Bombay High Court held that share income of assessee in firm was subject to overriding title in favour of other members of HUF in proportion to shares allotted to them in partial partition and as such could not be taxed in hands of assessee. This decision was again followed by same High Court in CIT v. Indramohan Sharma [1982] 138 ITR 696. 5. In CWT v. J.K.K. Angappa Chettiar [1979] 116 ITR 456, identical issue was considered by Madras High Court. headnote reads as under: " As result of partition on March 31, 1961, between assessee and his two minor sons, capital account of HUF, of which assessee was karta, in various partnership firms was equally divided between assessee and his two sons. This partition was accepted and order under section 25A of Indian Income-tax Act, 1922, was also passed by ITO. claim of assessee in his wealth-tax assessments that as two-thirds of capital in various partnerships belonged to minor sons, two-thirds of share of profits from various firms also belonged to them was negatived by WTO who held that after partition according to terms of partition deed sons had no further interest in partnership business and hence entire share of profits belonged exclusively to assessee. This view was confirmed by AAC. Tribunal, however, held that profits, assets, accretion and investments made out of profits from partnership firms attributable to minors' shares cannot be considered as wealth of assessee and consequently upheld assessee's claim. On reference to High Court at instance of department: Held, that assessee had been receiving his share of profits on behalf of HUF and when partition took place HUF ceased to exist and parties held investment as tenants-in-common and were entitled to profits arising therefrom in accordance with their shares. On and from date of partition karta becomes liable to render account of profits and liability to such account is that of trustee or agent. provision of partition deed relied on by revenue dealt only with liability of assessee for anything he does after partition and not with profit arising from investment of family funds already made. Therefore, on and from date of partition, assessee was not entitled to profits in its entirety but was entitled to only that portion of profit referable to his share in capital investment and minors were entitled to profits referable to their shares. Accordingly, share of future profits from firms was held by assessee and his two divided sons and was not vested in assessee wholly and exclusively and hence profits attributable to interest of two minor sons in various partnerships cannot be treated as wealth of assessee but will have to be treated as wealth of minors. " It was held that karta on and from date of partition becomes liable to render account of profits and liability to such account is as that of trustee or agent. It was also held that when partition took place HUF ceased to exist insofar as capital investments were concerned. Since there is no division in metes after partition, parties were holding investments as tenants-in-common and, thus, they were entitled to profits arising from such investments in accordance with their shares in investments. 9. Thus, it is clear from above decisions that if there are entries in capital accounts of members of family effecting partition in books of HUF, partition is valid even if there are no entries in firm's accounts transferring capital in names of divided members. As already pointed out, in instant case, there are entries in names of members in books of HUF transferring amounts in their names evidencing partition in respect of capital in partnership as well as deposits. Profits are credited to their accounts in books of HUF. memorandum of partial partition evidences partial partition. ITO has recognised partial partition as per his order dated 24-12-1979 made under section 171. above facts clearly prove that partition is genuine one. 10. Partition under section 171(1) includes partial partition also. In Kalloomal Tapeswari Prasad (HUF) v. CIT [1982] 133 ITR 690 Supreme Court held that section 171 applies to all partitions, total or partial, and unless finding was recorded under section 171, income from properties had to be included in total income of family by virtue of sub-section (1) of section 171. Thus, it is clear from above decision that section 171 applies to both partial partition as well as full partition and once order is passed under section 171 recognising partition, income from partitioned property cannot be included in hands of HUF. 11. decision in case of Juggilal Kamlapat v. CIT [1969] 73 ITR 702 (SC) referred to by Commissioner has no application to facts of instant case. 12. Thus, on careful consideration of entire facts, we hold that there was valid partition. ITO has recognised partition as per his order dated 24-12-1979. As long as that order is not cancelled, it holds good. entries in names of members in books of HUF support partition. memorandum of partial partition evidences partition. Thus, ITO was perfectly justified in completing assessments on basis of partition. Commissioner was wrong in invoking provisions of section 263 and directing ITO to modify assessments. We cancel orders of Commissioner in all these years. 13. In result, appeals are allowed. *** M. SANJEEVA MOORTHY (HUF) v. INCOME TAX OFFICER