INCOME TAX OFFICER v. KAMAL CHAND
[Citation -1985-LL-0219-1]

Citation 1985-LL-0219-1
Appellant Name INCOME TAX OFFICER
Respondent Name KAMAL CHAND
Court ITAT
Relevant Act Income-tax
Date of Order 19/02/1985
Assessment Year 1955-56
Judgment View Judgment
Keyword Tags period of limitation • barred by limitation • prescribed period • fresh evidence • karta
Bot Summary: The main contention in this appeal is that the AAC of IT had erred in accepting the status of HUF. The assessee filed a return of income on 9th May, 1978 in the status of HUF declaring an income of Rs. 14,070. The ITO rejected these reasons and held that the correct status of the assessee was that of an Individual. The assessee appealed to the AAC. Before him, besides the evidence and the reasons advanced before the ITO, some more evidence was led to show that the correct status in which the income was earned by the assessee was that of HUF. The AAC accepted the assessee s contention and held that the status of the assessee will be that of HUF. He accordingly allowed the appeal. The second submission was that even on the facts, the correct status of the assessee was that of an HUF and the ITO was wrong in adopting it as an Individual. The ex part order which was set aside under s. 27 was the assessment made on him in the status of an individual. The Tribunal held that an AOP was an entity different from an 'Individual and a return filed in the status of an AOP could not be treated as a return in the status of an individual and since no notice was issued to the assessee in the status of an individual to file a return, the WTO had no jurisdiction to assess the assessee in the status of an individual. In view of these principles, we have no alternative but to hold that the assessment made in the status of an Individual on the basis of a return filed in the status of HUF cannot be allowed to stand and has to be cancelled.


main contention in this appeal is that AAC of IT had erred in accepting status of HUF. assessee filed return of income on 9th May, 1978 in status of HUF declaring income of Rs. 14,070. It was claimed before ITO that correct status of assessee was that of HUF. Several reasons were also advanced before him in this connection. ITO rejected these reasons and held that correct status of assessee was that of Individual. He, therefore, made assessment in that status. assessee appealed to AAC. Before him, besides evidence and reasons advanced before ITO, some more evidence was led to show that correct status in which income was earned by assessee was that of HUF. AAC accepted assessee s contention and held that status of assessee will be that of HUF. He accordingly allowed appeal. Department is now in appeal before us. Besides claiming that AAC had erred in accepting status of HUF, it is also contended before us that he had further erred in accepting fresh evidence in violation of r. 46A of IT Rues, 1962. On behalf of assessee, there were two submissions. first was that once return had been submitted in status of HUF, ITO had no jurisdiction to make assessment in difference status, i.e., in status of individual. second submission was that even on facts, correct status of assessee was that of HUF and ITO was wrong in adopting it as Individual. Besides, assessee also took certain Cross Objections in support of finding of AAC. We have heard parties and have given our careful thought to their submissions. In our opinion, there is considerable merit in legal contention raised on behalf of assessee. We will first refer to decision of Supreme Court in case of CIT vs. Rameshwarlal Sanwarlal 1972 CTR (SC) 300: (1971) 82 ITR 628 (SC). We will quote below from Headnote of this case: "For asst. yr. 1955-56, notice under s. 22(2) of Indian IT Act, 1922, was issued to S in his individual status. He submitted return on behalf of his HUF. On February 29, 1960, ITO passed ex parte assessment on S as individual. S thereupon filed application under s. 27 to cancel ex part assessment. In December, 1960, ITO set aside that order. Thereafter, on 6th Feb.,1961, ITO made assessment on HUF on basis of return submitted by S.: Held, that return submitted by S was in his capacity as Karta of his family. He field no return in his status as individual. ex part order which was set aside under s. 27 was assessment made on him in status of individual. There was no assessment made against HUF was not, therefore, n assessment under s. 27. That assessment was clearly barred by time and limitation was not saved by second proviso to s. 34(3). same person can be taxed both as in individual as well as Karta of his family. two capacities are totally different. individual and HUF are totally different units of taxation they are two different assessee". above principle was followed by Allahabad High Court in case of CWT vs. J.K. Srivastava & Sons (1983) 34 CTR (All) 319: (1983) 142 ITR 183 (All). In this case, assessee had filed its wealth-tax return in status of AOP. WTO rejected contention of assessee that no wealth-tax was chargeable as AOP and assessed it in status of Individual. Tribunal held that AOP was entity different from 'Individual and return filed in status of AOP could not be treated as return in status of individual and since no notice was issued to assessee in status of individual to file return, WTO had no jurisdiction to assess assessee in status of individual. Tribunal accordingly cancelled assessments. In reference, it was held by Hon ble High Court that if WTO was of opinion that correct status assessee was that of individual, he should have issued notice requiring it to file return, which was not done and since period of limitation for issuing notice had expired, Tribunal was justified in cancelling assessments of assessee in status of Individual. In view of these in status of Individual. In view of these principles, we have no alternative but to hold that assessment made in status of Individual on basis of return filed in status of HUF cannot be allowed to stand and has to be cancelled. On behalf of Department, it was submitted that principles laid down in above two cases had no application to present case. ld. Departmental Representative argued that principles enunciated by Hon ble Supreme Court in case referred to above had no application to provisions of IT Act, 1961 as that decision was given with reference to provisions of IT Act, 1922. As clarification, he pointed out that while no appeal had been provided in Act of 1922 against change of status, but that such appeal had been provided in s. 245(1)(c) of Act. In his opinion, therefore, principle laid down by Supreme Court in above case had undergone change. He further submitted that decision of Allahabad High Court in J.K. Srivastava & Sons (supra) had equally no application as it related to wealth-tax and not to income-tax. In support of his contention, he referred to decision of Rajasthan High Court in Munnilal Shivnarain Kothari vs. CIT (1984) 42 CTR (Raj) 11: (1984) 149 ITR 567 (Raj). In this case, Rajasthan High Court distinguished decision of Allahabad High Court in CWT vs. J.K. Srivastava & Sons (supra) by observing "we need not discuss these authorities in detail as they do not relate to assessment under IT Act of 1961 and are, therefore, not at all applicable". We have considered above submissions very carefully. In our opinion, there is no merit in them. We do not think that there is any change in principles laid down by Supreme Court in case of Rameshwarlal Sanwarmal (supra), to effect that Individual and HUF are totally different units of taxation and that they are two different assessee. This principle emerges from charging s. 4 of Act itself. This section subjects every person to charge of income-tax. word person" has been defined in s. 2(31) of Act as including individual, HUF and other entities, etc. It is, therefore, clear that individual is different from HUF. In our opinion, merely because appeal has been provided against change of status is no ground to hold that Individual is not different from HUF or vice versa or that assessment can be made on return filed in different status. In our opinion, therefore, principle laid down by Supreme Court in above case as therefore, principle laid down by Supreme Court in above case as well as that reiterated in case of J.K. Srivastava & Sons by our own High Court continues to apply to present case also, which are binding authorities, on us. Thus, we cancel assessment made on assessee in status of individual on basis of return filed in status of HUF. In view we are taking, we do not consider it necessary to go into merits of claim of rival parties. In other words, we agree with finding of AAC, though for different reasons. assessee has also taken Cross Objections supporting view taken by AAC. objection has been filed 19 days beyond prescribed period of time. Without going into question whether it is barred by limitation or is within time, we are of opinion that it is infructuous in view of our above finding. In result, both appeals and cross objections are respectively dismissed and rejected. *** INCOME TAX OFFICER v. KAMAL CHAND
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