Income Tax Reference v. Shri Krishnarao D.dhanwatey (Huf),Nagpur

IN THE HIGH COURT OF JUDICATURE AT BOMBAY, NAGPUR BENCH, NAGPUR INCOME TAX REFERENCE NO.7 OF 1999THE COMM.OF INCOMETAX. V/S SHRI KRISHNARAO D.DHANWATEY (HUF),NAGPUR. .......................................................................................................................................................Office Notes, Office Memoranda of Coram,appearances, Court orders or directions Court's or Judge's Orderand Registrar's orders Court's or Judge's Order ....................................................................................................................................................... Shri Bhoot, counsel for the appellant. CORAM: B.P. DHARMADHIKARI & V.M. DESHPANDE, JJ.DATED: MARCH 4, 2016. Heard. We have heard learned counsel ShriAnand Parchure with learned counsel Shri Bhoot on3.3.2016 and as nobody appeared for the assessee,the matter was shown as part-heard. Today, againwhen the matter is called out, nobody appears forthe assessee. Following question has been referred tothis Court under Section 256(1) of the Income TaxAct, 1961: “Whether on the facts and in thecircumstances of the case, the Tribunal was justified in law in allowing theassessee's appeal holding that DCIT(A)'sorder dt. 26.10.1993 is infructuous?” The respondent is, HUF consisting of itsKarta, Shri Krishnarao Dattaji Dhanwatey, his wifeis Smt. Sarala and their a minor son is Sanjay.Karta and his wife (parents) executed deed ofrelinquishment in favour of minor son Sanjay on12.9.1974 and gave their 2/3rd interest in the houseproperty i.e. house No.61, Ramdaspeth, Nagpur tohim. The deed was registered at Serial No.4149with the office of the Joint Sub-Register at Nagpuron 12.9.1974 itself and the releasers acceptedresponsibility to complete necessary formalities.The respondent HUF then filed an application on24.1.1983 under Section 171 of the Income Tax Act,1961. It appears that then wealth tax assessmentproceedings for Assessment Year 1978-79 pendingand the request was made therein that familyarrangement in the deed of relinquishment shouldbe treated as partial partition of family in previousyear relevant to assessment Year 1978-79. The assessment officer, vide application dated24.1.1983, was called upon to recognize partialpartition by passing necessary orders under Section171 of the Income Tax Act, 1961. The Income Tax Officer, on 30.3.1983,passed an order and de-recognized the partialpartition. He also recorded relevant reasonstherefor. This order of de-recognition waschallenged by the respondent before the firstappellate authority viz. The Commissioner ofIncome Tax (A). That authority decided the appealon 29.11.1988. It has recorded in paragraph No.8reasons for remanding the matter back to theIncome Tax Officer. The reasons show need ofconsideration of necessary facts. The matter wasremanded back for de novo consideration. In the light of remand, the AssistantCommissioner of Income Tax, Central Circle-2,Nagpur proceeded to pass fresh orders on20.12.1990. While passing orders again for reasons recorded by him, he did not recognize the saidpartition. This order dated 20.12.1990 formedsubject-matter of further appeal by the respondentassessee before the Commissioner of Income Tax(Appeal). The appellate authority on 26.10.1993maintained the order of the Assistant Commissionerof Income Tax. This orders of appellate authority dated26.10.1993 was then questioned before the ITAT bythe assessee. The ITAT has on 11.4.1996 set itaside. In the light of remand, the AssistantCommissioner of Income Tax, Central Circle-2,Nagpur proceeded to pass fresh orders on20.12.1990. While passing orders again for reasons recorded by him, he did not recognize the saidpartition. This order dated 20.12.1990 formedsubject-matter of further appeal by the respondentassessee before the Commissioner of Income Tax(Appeal). The appellate authority on 26.10.1993maintained the order of the Assistant Commissionerof Income Tax. This orders of appellate authority dated26.10.1993 was then questioned before the ITAT bythe assessee. The ITAT has on 11.4.1996 set itaside. As pointed out by learned counsel ShriBhoot, we are satisfied that order on 11.4.1986passed by ITAT shows total non-application of mind.The ITAT has, after noticing first order passed bythe authority on 30.3.1983 and earlier appellateorder dated 29.11.1988, remanded the matter backfor de novo consideration and observed that it wasnot in a position to know the fate of furtherproceeding if any, undertaken after this remand. Asthere was already order of remand, it found thatlater order dated 26.10.1993 upholding the orders de-recognizing partial partition could not have beenpassed. It has, therefore, allowed the appeal filedby the assessee. It is apparent that the order of CIT(Appeal) passed subsequently on 26.10.1993 oughtto have been perused along the relevant records bythe ITAT. Perusal of order dated 26.10.1993 showsthat appeal in which that order came to be passedwas instituted on 15.2.1991. This verification wouldhave enabled the ITAT to comprehend that therewas fresh order of the Assistant Commissioner ofIncome Tax after that remand and on that freshcause of action, an appeal was filed before theauthority. In this situation, order dated 11.4.1996allowing the appeal of the respondent assessee isunsustainable. The order impugned in that appealand passed by the first appellate authority on26.10.1993 was not passed in any infructuousmanner. Accordingly, the question referred to this Court is required to be answered in negative i.e.against the respondent and in favour of thedepartment. Consequently, the ITAT has to hearappeal in ITA No.61/Nag/94 for Assessment Year1978-79 afresh in accordance with law. The reference is answered accordingly. JUDGEJUDGE !! BRW !!