Ita/296/2009 Of The Commissioner Of Income Tax v. Shri.h.m.shivamallaiah

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 9[th]DAY OF JANUARY 2015) PRESENT THR HON’BLE MR. JUSTICK N. KUMARAN D THR HON’BLE MR. JUSTICK B.VBBRAPPA| I.T.A. NO.296/2009C/W.I.T.A. NOS. 3305/2009 & 309/200 In I.T.A. No.296/2009BETWEEN : 1.|The Commissioner otf Income-tax, C.R.Building, Queens Road, Bangalore. 2 |The Asst. Commissioner Of Income-tax, Central Circle-1(4), C.R.Building, Queens Road, Bangalore. ...APPELLANTS (By Sri.K.V.Aravind, Adv.) -9O-. AND :. sri.H.M.Shivamallaiah, No.1/1, E.A.T.Street,Gandhi Bazar, Bangalore — 560 O04. ...RESPONDENT| (By Sri.A.Shankar, Adv.) This I.T.A. is filed under Section ZJO0OA of thIncome Tax Act, 1961, arising out of order dated31.12.2008 passed in IT(SS)A No.99/Bng/2004, for theAssessment year 01.04.1990 to 23.08.2000 praying to: 3$5formulate the substantial questions of lawstated therein,stated therein, 3$$5Allow the appeal and set-aside the orderpassed by the Income Tax Appellate Tribunal,Bangalore in IT(SS)A No.99/Bng/2004, dated31.12.2008 and confirm the order passed bythe Assistant Commissioner of Income Tax,Central Circle-1(4), Bangalore in the interestof justice and equity.passed by the Income Tax Appellate Tribunal,Bangalore in IT(SS)A No.99/Bng/2004, dated31.12.2008 and confirm the order passed bythe Assistant Commissioner of Income Tax,Central Circle-1(4), Bangalore in the interestof justice and equity. In I.T.A. No.305/2009 BETWEEN : 1.|The Commissioner otfIncome-tax,Income-tax, -3-. C.R.Building, Queens Road,Bangalore. 2 |The Asst. Commissioner Of Income-tax, Central Circle-1(4),C.R.Building, Queens Road, Bangalore. ...APPELLANTS (By Sri.K.V.Aravind, Adv.) AND :. omt.K.M.Girya, No.1/1, E.A.T. Street,Gandhi Bazar, Bangalore — 560 O04. ...RESPONDENT (By Sri.A.Shankar, Adv.) . . . . This I.T.A. is filed under Section ZJO0OA of thIncome Tax Act, 1961, arising out of order dated31.12.2008 passed in IT(SS)A No.67/Bng/2004, for theAssessment Block Period 01.04.1990 to 23.08.2000|praying to: 3$5formulate the substantial questions of lawstated therein, - 4 _| 3$$5Allow the appeal and set-aside the order passedby theIncomeTax|AppellateTribunal, Bangalore|1nTT(SS)ANo.6/7/Bng/2004,dated31.12.2008confirmingtheorderoT|theAppellateCommissioner and confirm the order passedby the Assistant Commissioner of IncomeTax, Central Circle-1(4), Bangalore in theinterest of justice and equity.Tribunal, Bangalore|1nTT(SS)ANo.6/7/Bng/2004,dated31.12.2008confirmingtheorderoT|theAppellateCommissioner and confirm the order passedby the Assistant Commissioner of IncomeTax, Central Circle-1(4), Bangalore in theinterest of justice and equity. In I.T.A. No.309/2009 BETWEEN: 1.|The Commissioner of| Income-tax, C.R.Building, Queens Road, Bangalore. 2 |The Asst. Commissioner Of Income-tax, Central Circle-1(4), C.R.Building, Queens Road, Bangalore. ...APPELLANTS (By Sri.K.V.Aravind, Adv.) -5 -| AND :. ori.H.M.Shivamallaiah, No.1/1, E.A.T.Street,Gandhi Bazar, Bangalore — 560 O04. ...RESPONDENT| (By Sri.A.Shankar, Adv.) . . . . This I.T.A. is filed under Section ZJO0OA of thIncome Tax Act, 1961, arising out of order dated31.12.2008 passed in IT(SS)A No.93/Bang/2004, for theAssessment year 01.04.1990 to 23.08.2000, praying to: 3$5formulate the substantial questions of lawstated therein,stated therein, 3$$5Allow the appeal and set-aside the order|passedby the.IncomeTax|AppellateTribunal, Bangalore|1nIT(SS)ANo.93/Bang/2004 dated 31.12.2008 and.confirm the order passed by the Assistant.Commissioner of Income Tax, Central Circle-1(4), Bangalore.passedby the.IncomeTax|AppellateTribunal, Bangalore|1nIT(SS)ANo.93/Bang/2004 dated 31.12.2008 and.confirm the order passed by the Assistant.Commissioner of Income Tax, Central Circle-1(4), Bangalore. These I.T.As. coming on foradmission,this day,N.Kumar J., delivered the following: -6-. JUDGMENT 3$5formulate the substantial questions of lawstated therein,stated therein, 3$$5Allow the appeal and set-aside the order|passedby the.IncomeTax|AppellateTribunal, Bangalore|1nIT(SS)ANo.93/Bang/2004 dated 31.12.2008 and.confirm the order passed by the Assistant.Commissioner of Income Tax, Central Circle-1(4), Bangalore.passedby the.IncomeTax|AppellateTribunal, Bangalore|1nIT(SS)ANo.93/Bang/2004 dated 31.12.2008 and.confirm the order passed by the Assistant.Commissioner of Income Tax, Central Circle-1(4), Bangalore. These I.T.As. coming on foradmission,this day,N.Kumar J., delivered the following: -6-. JUDGMENT AS|COMmmMoquestionsot lawarise forconsideration in all these three appeals, they are takenup for consideration together and disposed of by acommon order. 2. The facts which emanate from the records is,under a partition deed dated 13.11.1966 betweensri.Malle Gowda, Sri. Mallaraiah, Sri. Siddaiah and)sri.Bogasiddaiah, the Joint Family properties werepartitioned. Thereafter, Sri.Mallaraiah, became theKarthaoT hisbranchconsistingot hisSOT)orl.H.M.Shivamallaiah. He had five daughters, whowere all married prior to 1990. After the death ofsri.Mallaraiah, on 23.07.1997, his son Shivamallaiah|became the sole surviving coparcenor and the jointfamily constituting of himself and his mother. All theproperties devolved on them. a a 3. There was a search of the premises ofShivamallaiah on 23.08.2000. The search warrant wasissued in the name of Sri.Shivamallaiah. On the basis|of the information secured in the _ said _ searproceedings|WETEinitiatedagainstthedeceasedMallaraiah. <A Block Assessment Order came to be'passed treating the income of all these persons in theirindividual capacity. The same was challenged by theaSSCSSEEbeforetheTribunal.TheTribunal,OTLconsideration of the entire material on record has set-aside the order on two grounds. Firstly, the BlockAssessment proceedings could not have been initiatedagainst the dead person. Secondly, all the propertiesbelonged to the Joint Family and not individually tothem. Aggrieved by the said order, the Revenue haspreferred these appeals. | 4 [It is to be noticed that the Revenue has notpreferred any appeal against that portion of the ordersetting aside the Block Assessment order in respect ofthe deceased Sri.Mallaraiah. The Revenue has raised|the following substantial questions of law in the appealMmeECM 1.Whether the Tribunal twas correct 1nholding that the assessee should be|assessed in the status of HUF and not|individual withoutexaminingtheevidence considered by the Assessing|Officer and Appellate Commissioner and|consequentlyrecorded(Operversefinding?holding that the assessee should be|assessed in the status of HUF and not|individual withoutexaminingtheevidence considered by the Assessing|Officer and Appellate Commissioner and|consequentlyrecorded(Operversefinding? 2.Whether the Tribunal twas correct inholding thattheBlockAssessmentpassed in the hands of assessee souldhave been passed in the hands of HUF|even though the evidence clearly showed|that the income earned was by_ theassessee individual and the properties|holding thattheBlockAssessmentpassed in the hands of assessee souldhave been passed in the hands of HUF|even though the evidence clearly showed|that the income earned was by_ theassessee individual and the properties| -9O-. Stood in the name of assessee individualby virtue of self acquisition or beneath|from)hisfatherand|consequentlyrecorded a perverse finding?| 2.Whether the Tribunal twas correct inholding thattheBlockAssessmentpassed in the hands of assessee souldhave been passed in the hands of HUF|even though the evidence clearly showed|that the income earned was by_ theassessee individual and the properties|holding thattheBlockAssessmentpassed in the hands of assessee souldhave been passed in the hands of HUF|even though the evidence clearly showed|that the income earned was by_ theassessee individual and the properties| -9O-. Stood in the name of assessee individualby virtue of self acquisition or beneath|from)hisfatherand|consequentlyrecorded a perverse finding?| 3.Whether the Tribunal was correct in|holding that the income earned by the|assessee from the business carried on|and interest income from deposits should|be brought to tax in the hands of the HUF|when the business was carried on andthe investments made in bank were§Standing in the individual name of theassessee and consequently recorded a\perverse finding?holding that the income earned by the|assessee from the business carried on|and interest income from deposits should|be brought to tax in the hands of the HUF|when the business was carried on andthe investments made in bank were§Standing in the individual name of theassessee and consequently recorded a\perverse finding? 4.Whether the Tribunal twas correct inholding that the income from _ capitagains and house property cannot be.brought to tax in the hands of the|aASSCSSCCwithouttakinginto|considerationthematerialevidenceconsidered by the Assessing Officer as|holding that the income from _ capitagains and house property cannot be.brought to tax in the hands of the|aASSCSSCCwithouttakinginto|considerationthematerialevidenceconsidered by the Assessing Officer as| -10-. well as the Appellate Commissioner and|recorded a perverse finding?| 5)Whether the Tribunal twas correct inholding that the unexplained investmentholding that the unexplained investment In|the|assessee’s.wifeandtheconsequential rental income cannot be|brought to tax in the hands of the|assessee?consequential rental income cannot be|brought to tax in the hands of the|assessee? 6.Whether the Appellate Commissioner wascorrect in holding that no surcharge was|leviableIn|respectof|the|BlockAssessment order?correct in holding that no surcharge was|leviableIn|respectof|the|BlockAssessment order? >. From the aforesaid material on record, it is.clear that Sri.Mallaraiah, in a partition between hisfather and brothers got his share in the Joint Familyproperty. He had a son by name Shivamallaiah. Theyconstituted a Joint family. After the death of Mallaraiah, shivamallaiah who is his son, became the _ solcoparcenor and the joint family continued consisting of himself and his mother. Subsequently, he also effecteda partition of Joint Family properties between himself,his wife, children and his mother on 15.01.2000. Thedaughter also got a share in the _ said property.Therefore, from the aforesaid facts, it is clear that thesaid properties were not individual properties but it was.Joint Family properties. In fact the finding of theTribunal that the said properties were all Joint FamilyProperties and deceased Mallaraiah was the kartha inthe status of Joint family, was not questioned bypreferring an appeal. The said finding is recorded in thevery Same common order, which is in appeal. 6. In the light of the aforesaid facts, we aresatisfied that the finding recorded by the Tribunal thatthese persons ought to have been assessed in theircapacity of Joint Family and not as individual andtherefore, the entire Block Assessment proceedings -10-. initiated and orders passed are vitiated, cannot befound fault with. In that view of the matter, we do not)see any merit in these appeals. Accordingly, all thesubstantial questions of law raised are answeredagainst the Revenue and in favour of the Assessee. Appeals are.dismissed No costs. Sd/-.JUDGE| Sd/-.JUDGE| SPS