INCOME TAX OFFICER v. M. GOVINDACHARI
[Citation -1984-LL-1130-3]

Citation 1984-LL-1130-3
Appellant Name INCOME TAX OFFICER
Respondent Name M. GOVINDACHARI
Court ITAT
Relevant Act Income-tax
Date of Order 30/11/1984
Assessment Year 1976-77
Judgment View Judgment
Keyword Tags principles of res judicata • benefits of partnership • protective assessment • individual property • pre-existing right • regular assessment • specific provision • inherited property • partial partition • source of income • cross-objection • family property • valid partition • issue of notice • share income • archakas • pooja • hundi • karta
Bot Summary: The assessee is an individual and has share income from the firm of M.G. Chari Sons, which has been registered by the ITO for the assessment year 1971-72 and registration was continued for the assessment year 1976-77 as well. Three minor children of the assessee were admitted to the benefits of partnership and, in view of the provision providing for automatic aggregation of such minor's income, the assessee became liable in respect of their share incomes. The inclusion of the minors' income in the assessee's hands falling to their share in the firm and the jurisdiction of the ITO were disputed it was claimed on the ground that there was no obligation to file the return in absence of taxable income in individual hands before inclusion of the minors' income and on the further ground that the income from the archakathvam having been assessed in the hands of the firm cannot be included again in the assessee's hands. As for the merits, he claimed that the assessment was justified as the income from archakathvam was earned by the assessee in his individual hands and was rightly taxed in his hands. Inasmuch as there was no assessment in the assessee's case prior to the issue of notice and the assessee was liable to tax in respect of the aggregate income of the minor children, the proceedings under section 148 of the Act have to be upheld as not lacking in jurisdiction. Not having done so, it prima facie follows that this assessment including t h e assessee's own family share and shares of other adult partners cannot stand. Section 67 of the Act prescribes the mode of assessment of the partners pursuant to the firm's assessment.


This is departmental appeal arising out of order of Commissioner (Appeals), for assessment year 1976-77, in case of Shri M. Govindachari of Tiruchanur. 2. assessee is individual and has share income from firm of M.G. Chari & Sons, which has been registered by ITO for assessment year 1971-72 and registration was continued for assessment year 1976-77 as well. firm's income has also been assessed. firm's source of income is from archakathvam for Shri Padmavathi Ammavari Temple of Tiruchanur. assessee, Shri M. Govindachari, had hereditary right once in four years to archakathvam of temple. This income was formally being assessed in hands of Shri M. Govindachari as karta of HUF. assessee had claim ed partial partition in said family, whereby rights in archakathvam were claimed to have been partitioned. This partition which was said to have taken place with effect from 11-3-1970, was also recognised by order under section 171 of Income-tax Act, 1961 (' Act '), dated 19-1- 1972. archakathvam which was received on this occasion, became taxable for assessment years 1975-76 and 1976-77. firm allegedly formed by partnership deed dated 30-3-1971 with other members of family, consequent to which partial partition, as stated earlier, was also registered for assessment year 1971-72 and such registration continued for all later years. Three minor children of assessee were admitted to benefits of partnership and, in view of provision providing for automatic aggregation of such minor's income, assessee became liable in respect of their share incomes. It was in this context that ITO initiated action under section 147(a) of Act, inasmuch as no return had been filed by assessee in that capacity. assessee filed returns and revised returns in response to same. inclusion of minors' income in assessee's hands falling to their share in firm and jurisdiction of ITO were disputed it was claimed on ground that there was no obligation to file return in absence of taxable income in individual hands before inclusion of minors' income and on further ground that income from archakathvam having been assessed in hands of firm cannot be included again in assessee's hands. assessee had offered his own share in his family (smaller) assessment and this was accepted by ITO only as protective measure. ITO did not consider himself bound either by order of partial partition or by his order in registering firm. He was of view that archakathvam being right to perform pooja and receive remuneration, was personal right incapable of being alienated or being treated as that of family. He was of view that decision of High Court in case of Shri Mahant Prayag Doss Jee Varu v. Archakam Bokkasam Govindacharyulu [1935] 68 MLJ 295 (Mad.) supported his view. He, therefore, taxed entire income from archakathvam in assessee's hands in his individual capacity. first appellate authority confirmed assessment on question of jurisdiction and on question of aggregation of minors' income under section 64(1)(iii) of Act, in view of Andhra Pradesh High Court decision in Sivalal Sogaji, In re. [1983] 140 ITR 39. However, in other respects, he accepted assessee's case. He was of view that archakathvam was office and that it was property. He cited number of Supreme Court and High Court decisions. right to office is again property right. Since it was inherited property and was assessed as family property he was of view that it was subject to partition and that, subsequently, firm was valid one. He, therefore, found no justification for inclusion of share income of Shri Govindachari in his individual assessment, when it was rightly assessable in hands of family as in preceding years. He found that firm's assessment was valid one. He directed that protective assessment made on family of Shri Govindachari should be treated as regular assessment under circumstances. He found that there was no case for inclusion of entire income from archakathvam solely in hands of assessee. He agreed only to inclusion of minors' income under section 64(1)(iii). It is against this order that departmental appeal has been filed. 3. learned departmental representative took us over order of ITO. According to him, right was personal one. He exercises his right in consequence of khararnama executed by assessee with devasthanam authorities. His remuneration is for services rendered as archaka in doing pooja. Even if it was to be treated as office, it could under circumstances be considered as personal to assessee. fact that such income from archakathvam was assessed in past in hands of family or that partial partition thereof was recognised or further fact that there was recognition of firm formed consequent to partition, would not, in his opinion, stand in way of correct assessment in correct hands inasmuch as it is well established that principle of res judicata and estoppel do not apply to income-tax cases. He pointed out that this was view of first appellate authority himself as per his conclusion on question of jurisdiction. As for merits, he claimed that assessment was justified as income from archakathvam was earned by assessee in his individual hands and was rightly taxed in his hands. According to him, it was also not alienable as was wrongly assumed by first appellate authority. 4. learned counsel for assessee contended that assessment suffers even for lack of jurisdiction, though on this point first appellate authority has decided against him. He claimed that he had not come in appeal or in cross-objection, because he was otherwise satisfied with relief in respect of quantum granted by first appellate authority. Since objection against jurisdiction was taken up by him specifically and decided against him, he canvassed claim that it was open to him to question jurisdiction even while defending decision of first appellate authority. He claimed that once partition was accepted, it is no longer open to ITO to go behind same. He cited decision of Supreme Court in Joint Family of Udayan Chinubhai v. CIT [1967] 63 ITR 416 and Orissa High Court decision in Damodar Hansraj v. ITO [1971] 82 ITR 83. He also claimed that there has been firm constituted in consequence of partition and that such firm had also been assessed in respect of self-same income. He was of view that partner's assessment should follow firm and it was not possible for ITO to ignore decision taken in firm's assessment. As for merits, he contended that facts are very clear. He took us over lengthy order of first appellate authority for inference that right to archakathvam was property. It was also hereditary property. He depended upon various cases cited by ITO himself for his view that it was property. It was heritable property. It was found to be alienable to other family members. Since it was hereditary property, it was family property. If it were family property, it was capable of division. Such division has also been recognised. It was also found that it was alienable to family members. It has been so specifically decided in some of decisions cited by him and referred to by first appellate authority. Here also, there has been no right conferred on stranger whether consequent on partition or partnership. He, therefore, contended that there is no merit in departmental appeal, which should be rejected both on question of jurisdiction as well as merits. 5. We have carefully considered records as well as arguments. We w o u l d prefer to deal with question of merits first inasmuch as departmental appeal is only on merits. assessee is one of hereditary archakas of Shri Padmavathi Ammavari Temple at Tiruchanur. These hereditary archakas customarily take turn for period of archakathvam. assessee's turn comes once in four years. assessee was assessed in past on this income as HUF. assessee purported to divide his future right in archakathvam between family members and, consequently, formed partnership as well. partial partition, whereby right to archakathvam was recognised by ITO under section 171 stands till today. order of registration for assessment year 1971-72, dated 30-3-1971 has been continued for incomes for all years including year under consideration. According to ITO, this right to perform pooja and customary right to share income from collections are rights shortly described as archakathvam, which is personal to archakas because of khararnama or agreement with devasthanam authorities. However, what is described as ' Mirasi rights ' in archakathvam is not matter of contract between archaka and devasthanam (temple management) under charitable and Hindu Religious Institutions and Endowments Act, 1966 (later replaced by Tirumala Tirupathi Devasthanam Act, 1979) notwithstanding khararnama or agreement between executive officer and archakas from time to time. right to be archaka is hereditary right. Devasthanams do not have right to take any other archakas due to long custom and tradition recognised by Courts. At same time, they do not get remuneration until they perform duty of archakathvam. It is for this purpose, devasthanam authorities insist upon khararnama. In other words, agreement is not sole source of income but it merely recognizes pre-existing right of assessee to be archaka in his turn. right to office of archaka is distinct from his consent to carry out obligations of office to which he is entitled. Any attempt even to reduce rights of these hereditary priests was not upheld by Courts, as in case of Sri Archakam Peddinti Srinivasamurthy Dikshitulu v. Commissioner, Charitable & Hindu Religious Institutions & Endowments in Andhra Pradesh at Hyderabad AIR 1973 AP 325 notwithstanding specific provision in Andhra Pradesh Charitable and Hindu Religious Institutions and Endowments Act, 1966 to fix his share. High Court observed that rights, honours, emoluments and perquisites were prescribed by long custom and usage. In coming to this conclusion, Andhra Pradesh High Court followed decision of Supreme Court in Kakinada Annadana Samajam v. Commissioner of Hindu Religious & Charitable Endowment, AIR 1971 SC 891. purport of this decision of Andhra Pradesh High Court is that office of archakathvam itself is property. Madras High Court in case of Shri Mahant Prayag Doss Jee Varu had held in respect of very temple (Shri Padmavathi Ammavari Temple) that archaka Mirasi in Padmavathi Temple was hereditary. Certain disputes had arisen in settlement of hereditary rights of one of archakas, Shri Krishnamacharyulu, who had executed will, authorising his wife to adopt mate to bequeath moiety of his half share to son to be adopted and bequeathed other half share to his son Shri Narasimhacharyulu. This settlement was disputed. Madras High Court observed as under: " alienation of religious office such as that of archakaship of temple is not invalid when it is made in favour of one in line of heirs of aliener and when it is neither for consideration nor in any way opposed to or inconsistent with interests of institution. right of delegation has been expressly recognised in case of archakas by permitting system of proxies. Consequently, device by will of archakaship to testator's sister's son who is not in any way personally unfit or disqualified from performing duties of office is valid." It is, therefore, clear that office of archakaship is not only property but it is capable of being alienated as long as such alienation is in respect of eligible persons in line of his heirs. State enactments for better eligible persons in line of his heirs. State enactments for better administration of temples, it was found, cannot interfere with these hereditary rights inasmuch as such rights being rights in property are protected by Constitution. No doubt, right to hundi collections is not automatic in sense that it is given to him without any obligation. archaka has to equip himself with working knowledge of Sanskrit, Mantras, Agamas and other relevant Sastras, rituals, mode of worship according to sampradaya, sthalapurana and other traditions of temple. Thus, there is personal element involved but that is not dominant. number of decisions had been cited by Commissioner, but it is not necessary to deal with all of them. We find that there cannot be any reasonable doubt or dispute about proposition that right to be archaka in Shri Padmavathi Ammavaru Temple of Tiruchanur is hereditary sanctioned by custom and that it is office which can be alienated in favour of one's heirs. fact that khararnama is to be executed, would only mean that particular archaka accepts obligations of office to which he is entitled by law in view of established customs. His hereditary right to office is too well established in relation to decisions mentioned hereinbefore even with reference to archakaship of very temple with which we are concerned. If it were property, which had come to assessee hereditarily, it stands to reason that it is family property. fact that it was so assessed would have converted even individual property into family property inasmuch as it is possible to blend individual's property into family property. In any view of matter, it could not be said that it was individual property prior to partition. If it were family property, as concluded by us, there could be valid partition covering this asset. Such partition has also been recognised by formal order. If it would be asset which could be partitioned, it also stands to reason that erstwhile coparceners could form partnership. This is precisely what was claimed to have been done. Such partnership has also been registered and such registration continued even for assessment year under consideration. It appears that assessee's share is liable to be included only in family (smaller) assessment, inasmuch as assessee offered same in family assessment and such assessment was also made in that capacity though as protective measure. assessee is liable only in respect of minor's share income, because of provision relating to automatic aggregation under section 64(1)(iii), introduced with effect from 1-4-1976. Such aggregation is not now in dispute, though objection was raised at stage of first appeal. order of Commissioner, upholding liability only to this extent, is therefore, right and deserves to be upheld. There is no case for adopting entire income from archakaship, which now forms asset of firm as being available to assessee in his individual capacity. 6. Inasmuch as there was no assessment in assessee's case prior to issue of notice and assessee was liable to tax in respect of aggregate income of minor children, proceedings under section 148 of Act have to be upheld as not lacking in jurisdiction. assessee's other objection is that there cannot be any assessment in assessee's hands in respect of income from asset, which is subject-matter of recognised partition and registration of firm subsequently formed. We should ordinarily imagine that this objection is quite reasonable. authorities should have simultaneously invoked their powers to modify or cancel order under section 171 and order of registration, One would have expected that at least continuation of registration for assessment year under consideration would have been denied. Not having done so, it prima facie follows that this assessment including t h e assessee's own family share and shares of other adult partners cannot stand. argument that principles of res judicata and estoppel do not apply to income-tax proceedings, cannot help revenue in case where same assessment year is involved. Section 67 of Act prescribes mode of assessment of partners pursuant to firm's assessment. Once firm's assessment is made, method prescribed by section 67 in computing partner's share income should be followed. This, we should imagine, is statutory requirement. We should also imagine that similarly having chosen to accept amount as having been partitioned between members of family, it may not be open to revenue to take different view in respect of erstwhile coparceners' assessments as long as such order of partition stands. We do not consider it necessary to go into case law on subject, as this legal position, we are of view, is self-evident. Even if we were to hold that principles relied upon by authorities would justify their taking different stand in this assessment, we would still be unable to disturb order of first appellate authority because we are of view that both orders of partition and registration are correct even as specifically found by first appellate authority. In any view of matter, departmental appeal has to fail and it is, accordingly, dismissed. 7. In result, departmental appeal is dismissed. *** INCOME TAX OFFICER v. M. GOVINDACHARI
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