Sri.a.p.oree,Kartha,(Estate Of) A.r.pandurangan (Huf)Coparceners : Sri.a.p.oree, Sri.a.p.began,Sri.a.p.nambi And Smt.a.p.nangai3-A, Anakara Apartment,Gilchrist v. The Income Tax Officer,Non-Corporate Ward 1 (1),Chennai

IN THE HIGH COURT OF JUDICATURE AT MADRAS RESERVED ON : 29.03.2021 PRONOUNCED ON : 02.06.2021 CORAM THE HONOURABLE MR.JUSTICE C.SARAVANAN Sri.A.P.Oree,Kartha,(Estate of) A.R.Pandurangan (HUF)Coparceners : Sri.A.P.Oree, Sri.A.P.Began,Sri.A.P.Nambi and Smt.A.P.Nangai3-A, Anakara Apartment,Gilchrist Avenue, Harrington Road,Chetpet, Chennai – 600 031. .. Petitioner vs The Income Tax Officer,Non-Corporate Ward 1 (1),Chennai. .. Respondent Prayer: Writ petition filed under Article 226 of theConstitution of India praying to issue a writ of certiorari, tocall for the records on the file of the respondent and quash theimpugned notice u/s 148 of the Act in PAN: dated31.03.2015 issued by the respondent and consequentially quashthe proceedings in PAN: /2008-2009 dated 16.11.2016issued by the respondent. For Respondent : Mr.Prabhu Mukunth Arunkumar Standing Counsel The petitioner has challenged the impugned notice dated31.03.2015 issued to the estate of A.R.Pandurangan (HUF) Co-parceners viz., A.P.Oree, A.P.Began, A.P.Nambi and A.P.Nangaiand the consequential speaking order dated 16.11.2016 . The 2[nd]mentioned order has been issued to A.P.Oree as the kartha,estate of A.R.Pandurangan.Co-parceners viz., Shree Oree, ShriA.P.began, Shri A.P.Nambi and Smt.N.Nangai. https://hcservices.ecourts.gov.in/hcservices/ 2. The brief facts of the case are as follows:The petitioner's father Late Shri A.R.Pandurangan was theabsolute owner of the agricultural lands at AyanambakkamVillage, Saidapet Taluk measuring about 6.28 acres of lands in 9survey number. Shri Pandurangan died on 24.10.2003 leavingbehind him, his wife, three sons and a daughter as the legalheirs. Shri A.R.Pandurangan's wife later died on 08.02.2006leaving behind their three sons and a daughter as the solesurviving legal heirs. At the time of death of the father andmother,an agricultural land measuring an extent of 6.28 acres inAyanambakkam village and a house on a 8 ground of lands situatedat Ayanambakkam village was available for being partitioned. 3. It is the case of the petitioner that the brothers andsisters entered into oral partition and recorded the same in aMemorandum on 23.08.2007 recording the aforesaid oral partition. Share in the agricultural property was divided in certainproportion and that land to an extent of 3 acres out of 6.28acres was sold and the sale proceeds was shared by each of thelegal heirs of the Late Shri.P.R.Pandurangan. They also filedtheir respective Income Tax returns and claimed exemption underSection 54 F of the Income Tax Act, 1962 i.e. Exemption frompayment of long term capital gain. 4.It is further submitted that each of the legal heirs oflate Shri.A.R.Pandurangan filed their respective Income TaxReturns in their own capacity as individual and not as membersof any HUF, pursuant to the memorandum recording the aforesaidoral partition on 23.08.2007. It is submitted that the incometax returns filed by Smt.A.P.Nangai, the sister and one of thebrother Shri.A.P.Began came to be accepted by Income TaxDepartment. 5. It is submitted that for Shri.Mr.A.P.Beganone of thepetitioner’s brother assessment was also completed videassessmentorder dated 15.12.2010 for the assessment year 2008-09under Section 143 (3) of Income Tax Act, 1961. It is submittedthat against the said assessment order dated 15.12.2010 passedthe case of the petitioner’s brother Shri.A.P.Began, a notice dated 12.3.2013 was issued by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961 to revise theaforesaid assessment order dated 15.12.2020. 6. Aforesaid notice dated 12.03.2013under section 263 ofthe Income Tax Act, 1961 was issued primarily on the groundthat there was no physical division of the property andtherefore the exemption under Section 54 F on sale appeared tobe contrary to section 171 of the Income Tax Act, 1961. 6. Aforesaid notice dated 12.03.2013under section 263 ofthe Income Tax Act, 1961 was issued primarily on the groundthat there was no physical division of the property andtherefore the exemption under Section 54 F on sale appeared tobe contrary to section 171 of the Income Tax Act, 1961. 7.Under these circumstances, the Commissioner of Income Taxhad passed order dated 26.3.2013 under section 263 of the IncomeTax Act, 1961. By the aforesaid order, the long-term capitalgains claimed under Section 54F of the Income Tax Act, 1961. Theassessment order dated 15.12.2010 was disallowed in the light ofSection 171 of the Income Tax Act, 1961. It was held that thedivision of income without physical division of property did notamount to partition under Section 171 of the Income Tax Act,1961 and therefore capital gains should have been assessed inthe hands of the Estate ofShri.A.P.Pandurangan (HUF). 8.Against the said order dated 26.3.2013 passed undersection 263 of the Income Tax Act, 1961, the petitioner’sbrother Shri.A.P.Began had also filed an appeal before theIncome Tax Appellate Tribunal in ITANo.1006/Mds/2013 AssessmentYear 2008 – 09. The appeal was allowed by way of remand. 9.Thereafter, fresh order dated 22.8.2014 came to be passedby the Commissioner of Income Tax under Section 263 of theIncome Tax Act, 1961. 10.It is submitted that though the Commissioner of IncomeTax vide order dated 22.8.2014 passed a fresh order undersection 263 of the Income Tax Act, 1961and once again set-aside the assessment order by holding that income earned fromsale of the lands was assessable in the hands of thelateA.R.Pandurangan, (HUF) as there was only a joint sale ofproperty and there was no new ownership by the coparceners andthe property and income was assessable in the hands oflateA.R.Pandurangan, (HUF), the said order was set aside by theTribunal. 11.It is submitted that though the original assessment madeon 15.12.2010 allowing deduction under section 54F of the IncomeTax Act, 1961 was held erroneous and had caused prejudice to therevenue and the original assessment was set aside the matter wasremitted back to the original authority to pass a freshassessment order, the said order dated 22.8.2014 passed by theCommissioner of Income Tax under Section 263 of the Income TaxAct, 1961. 11A.The Appellate Tribunal vide its order 27.11.2015 in ITANo. 2702/Mds 2014 allowed the appeal filed by the petitioner’sbrother Shri.A.P.Began with the following observations:- 7. Heard both sides. Perused orders oflower authorities and the material on record.The Commissioner of Income Tax passed orderunder Section 263 setting aside the assessmentdirecting the Assessing Officer to disallowdeduction allowed under Section 54F of the Actin the hands of the assessee. The Commissioner of Income Tax was of the view that saleproceeds have to be assessed in the hands oflegal heirs of late A.R.Pandurangan. Theassessee is one of the legal heirs of lateA.R.Pandurangan who disclosed capital gains onhis share after claiming deduction underSection 54F of the Act. The Assessing Officerwhile completing the assessment called fordetails in respect of claim for deductionunder Section 54F and capital gains reportedby the assessee HUF and accepted the exemptionclaimed under Section 54F of the Act on thesale proceeds reported by the assessee HUF. 8. The Hon'ble Andhra Pradesh High Courtin the case of Addl.CIT vs. P.Durgamma (166ITR 776) considered the scope of Section 171of the Act deeming HUF to be undivided. TheHon'ble High court held that provisions ofSection 171 will apply only to a HUF which hasbeen assessed earlier. While holding so, theHigh Court observed as under:- 8. The Hon'ble Andhra Pradesh High Courtin the case of Addl.CIT vs. P.Durgamma (166ITR 776) considered the scope of Section 171of the Act deeming HUF to be undivided. TheHon'ble High court held that provisions ofSection 171 will apply only to a HUF which hasbeen assessed earlier. While holding so, theHigh Court observed as under:- “The fiction that a joint family shall bedeemed to continue, enunciated in Section 171(1) of the Income Tax Act, 1961, is for thelimited purpose of roping in cases of jointfamilies which had hitherto been assessed. Itis not possible to extend that fiction beyondthe field legitimately intended by thestatute. The fiction in section 171(1) mustnecessarily be confined to the purpose forwhich it was specified in that section and forno other purpose. The expression “ hithertoassessed” occurring in Section 171(1) issignificant. It makes it clear that only aHindu undivided family which had suffered taxassessment in the past could be deemed tocontinue to be a Hindu undivided family tillan order of partition under Section 171(1) isrecorded”. 9. In the case on hand, no evidence hasbeen brought on record to suggest that lateA.R.Pandurangan HUF has been assessed. In suchcircumstances, the sale proceeds of theproperty cannot be assessed in the hands oflate A.R.Pandurangan (HUF). We also see noreason to disbelieve the memorandum of oralrecording partition furnished by the assessee. Thus the contentions of the Commissioner ofIncome Tax that sale proceeds have to beassessed in law. Thus, we set aside the orderof the Commissioner of Income Tax passed underSection 263 of the Act and restore that of theAssessing Officer since the assessment ordercannot be said to be erroneous and prejudicialto the interests of the Revenue.10. In the result, appeal of the assesseeis allowed.” 12. It is submitted that before the order was passed by theTribunal on 27.11.2015, the impugned notice dated 31.03.2015 wasaddressed to Estate of A.R.Pandurangan (HUF) Coparceners: SriA.P.Oree, Sri A.P.Began, Sri A.P.Nambi and Smt.A.P.Nangai 3-A,Anakara Apartment, Gilchrist Avenue, Harrington road, Chetpet,Chennai 600 031. The deponent of the affidavit Shri.A.P.Oreeand receipient of the impugned notice therefore sent a letterdated 22.04.2015 to the respondentto clarify as to the basis ofnotice dated 31.03.2015that was issued to “the Estate ofA.R.Pandurangan (HUF) Coparceners: Sri A.P.Oree, Sri A.P.Began,Sri A.P.Nambi and Smt.A.P.Nangai 3-A, Anakara Apartment,Gilchrist Avenue, Harrington road, Chetpet, Chennai 600 031.” It is further submitted that notice dated 31.03.2015 wasdispatched after 31.03.2015 and therefore the impugned noticeunder Section 148 would be clearly time barred. It is submittedthat notice was issued in the name of A.P.Oree as kartha ratherthan estate of A.R.Pandurangan. The subsequent notice dated07.05.2015 addressed to 26AA was neither received in time norcan be justified in the light of the Tribunal order on meritswhich has been extracted above. It is submitted that Section171 of the Income Tax, 1961 cannot be read in the manner inwhich it is sought to be read by the department. 13. It is submitted that Section 171 of the Income Tax Act,will not apply, as the petitioner’s father LateShri.A.R.Panduranganwas never assessed as a HUF during his lifetime. It is submitted that the oral partition on 23.08.2017was recorded in the memorandum of oral partition on the sameday. Therefore, there is no legal basis on which, the assessmentcan be re-opened to deny the benefit of Section 54 F of theIncome Tax Act, 1961. It is further submitted that notice issuedto the Estate of Shri.A.R.Pandurangan is on an assumption thatHUF of Shri.A.R.Pandurangan was an assessee under the Income TaxAct, 1961 and a HUF was a mere figment inasmuch as lateShri.A.R.Pandurangan was never assessed to income tax assesseeas a HUF during his life time. 13. It is submitted that Section 171 of the Income Tax Act,will not apply, as the petitioner’s father LateShri.A.R.Panduranganwas never assessed as a HUF during his lifetime. It is submitted that the oral partition on 23.08.2017was recorded in the memorandum of oral partition on the sameday. Therefore, there is no legal basis on which, the assessmentcan be re-opened to deny the benefit of Section 54 F of theIncome Tax Act, 1961. It is further submitted that notice issuedto the Estate of Shri.A.R.Pandurangan is on an assumption thatHUF of Shri.A.R.Pandurangan was an assessee under the Income TaxAct, 1961 and a HUF was a mere figment inasmuch as lateShri.A.R.Pandurangan was never assessed to income tax assesseeas a HUF during his life time. 14.It is further submitted that it is not clear on whatbasis PAN. was assigned to the HUF on Estate ofShri.A.R.Pandurangan as Shri.A.R.Pandurangan was never anincome tax assesse as a HUF during the life time. 15.Defending the impugned notice dated 18.07.2016, thelearned counsel for the respondent – Income Tax Departmentsubmits that the impugned notice was issued to the Estate oflate Shri.A.R.Pandurangan in accordance with law. It is furthersubmitted that the PAN. was assigned as per theRules. He refer to para 19 of the counter affidavit filed bythe respondent, which reads as under:- “19. With regard to the averments madein Ground (F) of the writ affidavit it issubmitted that the assessment was reopenedafter taking cognizance of the materialsgathered while dealing with the proceedings inthe case of non-existent smaller HUF wereundertaken. There was no return filed by theHUF and for that matter, it does not possesseven a permanent Account Number. As it did notapply for one and it was suo-motu issued by theIncome Tax Department. When there was no returnfiled and no assessment undertaken, theallegation that the reasons is mere change ofopinion, is not correct and illogical.” 16.The learned counsel for the respondent further submitsthat as per Section 171 of the Income Tax Act, 1961 there was novalid partition. The learned counsel for the respondent furthersubmits that though the Tribunal has accepted the case of one ofthe brothers viz., Shri.A.P.Began vide order dated 27.11.2015 inI.T.A.No.2702/Mds/2014, the Department is in appeal before thisCourt in TCA.No.714 of 2016. 17.In any event, the petitioner can make such submissionsbefore the respondent before Assessment Order is passed. It isfurther submitted that notice was also received in time by thenotice in his capacity as the kartha of the HUF and thereforeprayed for dismissal of the present Writ Petition. 18.The learned counsel for the petitioner relied on thedecision of this Court in Alamelu Veerappan vs. The Income TaxOfficer, Non Corporate Ward 2(2), Chennai, W.P.No.30060 of 2017. 19.The learned counsel also drew my attention to Section 114of the Income Tax Rules which reads as under: “ Where the total income of an assessee, notbeing a company, includes any interest onNational Savings Certificates (First Issue), https://hcservices.ecourts.gov.in/hcservices/ the tax payable by him on his total incomeshall be- (a) the amount of income-taxpayable on the total income as reduced by theamount of such inclusion, had the totalincome so reduced “. 20.I have considered the arguments advanced by the learnedcounsel for the petitioner and the learned counsel for therespondent, income tax Department. I have also perused therelevant provisions of Income Tax Act,1961 and the rules madethereunder. 21.The impugned notice 31.3.2015 was originally issued tothe Estate of A.R.Pandurangan(HUF). In the said notice, thethree brothers and the sister, i.e., the four children of lateShri.A.R.Pandurangan were shown as coparceners. https://hcservices.ecourts.gov.in/hcservices/ the tax payable by him on his total incomeshall be- (a) the amount of income-taxpayable on the total income as reduced by theamount of such inclusion, had the totalincome so reduced “. 20.I have considered the arguments advanced by the learnedcounsel for the petitioner and the learned counsel for therespondent, income tax Department. I have also perused therelevant provisions of Income Tax Act,1961 and the rules madethereunder. 21.The impugned notice 31.3.2015 was originally issued tothe Estate of A.R.Pandurangan(HUF). In the said notice, thethree brothers and the sister, i.e., the four children of lateShri.A.R.Pandurangan were shown as coparceners. 22.The deponent who has filed the affidavit in support ofthe present writ petition Shri.A.P.Oree is the eldest son oflate A.R Pandurangan. He has questioned the basis of the notice.The respondents have thereafter issued subsequent notice to thedeponent namely, Shri.A.P.Oree as the Kartha of a Estate ofShri.A.R.Pandurangan(HUF) with others as coparceners. Theimpugned order is also issued in the same name. 23.I have also perused the assessment orders passed by theIncome Tax Officers in the case of the petitioner’s sister andbrothers. An assessment order dated 31.3.2016 for theassessment year 2008-09 for the petitioner’s other brotherShri.A.P.Nambi. There it has been categorically stated thatShri.A.R.Pandurangan was never assessed in the status of HUF. Thus, Section 54F deduction was allowed. 24.Similarly, the assessment was completed for one ofpetitioner’s other brother, Mr.A.P.Began HUF for the 2008-09vide assessment order dated 15.12.2010 with PAN No. . 25.Though, the said assessment order was made in the name ofSri N. Began, the subsequently orders passed under section 263of the Income Tax Act, 1961 it is in the name as A.P.Began with the same PAN Number. This is also evident from a look atorder dated order dated 30.10.2013 in ITA No. 1006/Mds/2013andthe subsequent order dated 27.11.2015 of the Income TaxAppellate Tribunal in ITA No. 2702of 2014, in the second round,content of which has been extracted above. 26.The respondents have justified impugned notice dated 31.3.2015 and the impugned communication dated 16.11.2016 bystating that the notice was in time as it was despatched to “TheEstate of Late A.R Pandurangan (HUF)” on 31.3.2015 from the AnnaRoadHead Post Office. 27.However, the copy of the speed post cover at page 22 ofthe typedset papers filed along with the writ petition shows thedate of booking of the speed post as 1.4.2015 and not as31.3.2015. 28.Thus, prime facie it appears notice dated 31.3.2015 was despatched on 1.4.2015. It wasthus despatched after the duedate which had already expired on 31.3.2015. In the impugnedorder/communication dated 16.11.2016, a content of communicationdated 7.11.2016 of the Seniors Superintendent of Post Office,Chennai City, North Division Chennai 600008 addressed to therespondent has been extracted. 29.It merely states that the request of the respondentDepartment regarding delivery of the post had been forwarded tothe Manager, National Sorting Hub Chennai, Chennai 600016 fromwhom, the respondent may kindly wait for further communications. However, no further communication has been filed. 30.The counter filed by the respondent is alsosilent on thesame. Therefore, on this preliminary ground itself the writpetition is to be allowed as the impugned notice appears to beprima facie booked for delivery beyond the period of limitation. 29.It merely states that the request of the respondentDepartment regarding delivery of the post had been forwarded tothe Manager, National Sorting Hub Chennai, Chennai 600016 fromwhom, the respondent may kindly wait for further communications. However, no further communication has been filed. 30.The counter filed by the respondent is alsosilent on thesame. Therefore, on this preliminary ground itself the writpetition is to be allowed as the impugned notice appears to beprima facie booked for delivery beyond the period of limitation. 31.However, it is also noticed that no serious objection wasraised on this ground at the earliest occasion by Mr.A.P.Oreewhen the first representation dated 22.4.2015 wassent to the respondent seeking an explanation as to the basis onwhich the impugned notice dated 31.3.2015 had been issued. Therefore, on limitation, this Court is inclined to answerthe issue against the petitioner. 32.Therefore, theother point for consideration in thepresent writ petition is whether impugned notice issustainable under section 148 of the Income Tax Act, 1961 forthe reasons stated in the impugned communication dated16.11.2016 over-ruling the objection of the petitioner. https://hcservices.ecourts.gov.in/hcservices/ 33.The surviving legal heirs of late A.R.Pandurangan haveinherited about 6.28 acres of agricultural land and a parcel ofthe land from 6.28 acres was sold without physical division. Share was orally divided between and proceeds from the sale ofparcel of the land were distributed in proportion with theirrespective shares in the land and the balance parcel continuedin their name without physical division. 34.It is the contention of the Income Tax Department thatthe income was taxable in the hands of a Estate of lateA.R.Pandurangan as HUF in the light of Explanation to section171 of theIncome Tax Act, 1961. 35.On the other hand, it is the contention of the petitioneron merits, not only the issue is squarely covered against IncomeTax Department vide Income Tax Appellate Tribunal order dated 27.11.2015 of in ITA No. 2702/Mds//2014in the case of thepetitioner’s brother, namely Shri.A.P.Began but also in view ofthe language of section 171 of the Income Tax Act, 1961. 36.The Explanation to Section 171 of the Income Tax Act,1961, defines the expression partition, reads as under:-“Explanation.— In this section,— (a) ‘partition’ means— (i) where the property admits of a physicaldivision, a physical division of the property,but a physical division of the income without aphysical division of the property producing theincome shall not be deemed to be a partition;or (ii) where the property does not admit of aphysical division, then such division as theproperty admits of, but a mere severance ofstatus shall not be deemed to be a partition.” 36B.In Govind Das v. ITO, (1976) 1 SCC 906 : 1976 SCC (Tax) 133in para 10 the Court held as under:- 10. Now it is clear on a plain grammaticalconstruction of the language of sub-sections(2) to (5) of Section 171 that these sub-sections contemplate a case where at the timeof making assessment under Section 143 or 144,a claim is made by or on behalf of any member https://hcservices.ecourts.gov.in/hcservices/ (ii) where the property does not admit of aphysical division, then such division as theproperty admits of, but a mere severance ofstatus shall not be deemed to be a partition.” 36B.In Govind Das v. ITO, (1976) 1 SCC 906 : 1976 SCC (Tax) 133in para 10 the Court held as under:- 10. Now it is clear on a plain grammaticalconstruction of the language of sub-sections(2) to (5) of Section 171 that these sub-sections contemplate a case where at the timeof making assessment under Section 143 or 144,a claim is made by or on behalf of any member https://hcservices.ecourts.gov.in/hcservices/ of a Hindu family that a total or partialpartition has taken place among its members.Then the claim would be investigated by theIncome Tax Officer and if satisfied, the IncomeTax Officer would record a finding that therehas been such partition of the joint familyproperty and the assessment of the total incomeof the joint family would then be made as if nosuch partition had taken place. And in such acase all the members would be jointly andseverally liable for the tax assessed aspayable by the joint family and for determiningtheir several liability, the tax assessed onthe joint family would be apportioned among themembers “according to the portion of the jointfamily property allotted to” each of them. Butit may happen that at the time of a makingassessment under Section 143 or 144 no claim ofpartition, total or partial, is put forward onbehalf of any member of a Hindu family, eitherbecause no such partition has taken place orbecause of inadvertent or deliberate omissionon the part of the members of the Hindu familyand where that happens, the Hindu family wouldcontinue to be assessed as a Hindu undividedfamily and the tax determined as payable by itwould be recoverable only out of the jointfamily properties and no member would bepersonally liable for any part of the tax, eventhough an order recording partition may havebeen passed after the assessment, since sub-section 4(b) of Section 171 would have noapplication in such a case, That was also theposition under Section 25-A of the old Act withthis difference that under that section theonly partition which could be recorded wastotal partition and not partial partition. Thelegislature, while enacting Section 171 in thenew Act, decided to introduce another radicaldeparture from the old Act by providing in sub-section (6) that even where no claim of totalor partial partition is made at the time ofmaking assessment under Section 143 or Section144 and hence no order recording partition ismade in the course of assessment ascontemplated under sub-sections (2) to (5), ifit is found, after the completion of theassessment, that the family has alreadyeffected a partition, total or partial, all themembers shall be jointly and severally liable for the tax assessed as payable by the jointfamily and the tax liability shall beapportioned among the members according to theportion of the joint family property allottedto each of them. Sub-section (6) of Section 171thus for the first time imposed, in cases ofthis kind, joint and several liability on themembers for the tax assessed on the Hinduundivided family and this was a personalliability as distinct from liability limited tothe joint family property received onpartition. 37.In ITO v. N. K. Sarada Thampatty (Smt), 1991 Supp (2)SCC 737while dealing with scope of Section 171 of theIncome Tax Act, 1961, the Hon’ble Supreme Court held asunder:- for the tax assessed as payable by the jointfamily and the tax liability shall beapportioned among the members according to theportion of the joint family property allottedto each of them. Sub-section (6) of Section 171thus for the first time imposed, in cases ofthis kind, joint and several liability on themembers for the tax assessed on the Hinduundivided family and this was a personalliability as distinct from liability limited tothe joint family property received onpartition. 37.In ITO v. N. K. Sarada Thampatty (Smt), 1991 Supp (2)SCC 737while dealing with scope of Section 171 of theIncome Tax Act, 1961, the Hon’ble Supreme Court held asunder:- 5. The main question which falls forconsideration is as to whether the partition aseffected by the agreement dated February 21,1963 and also the decree of the civil courtamount to “partition” under the Explanation toSection 171 of the Act and further whether theIncome Tax Officer acted contrary to law inholding that in spite of the partition asalleged by the respondent, the status of HUFwas not disrupted and that status continued forthe purposes of assessment during the relevantassessment years. Under Section 171 a Hindufamily assessed as HUF, is deemed for thepurposes of the Act to continue as HUF exceptwhere partition is proved to have been effectedin accordance with the section. The sectionfurther provides that if any person at the timeof making of assessment claims that partitiontotal or partial has taken place among themembers of the HUF, the Income Tax Officer isrequired to make an inquiry after giving noticeto all the members of the family, and to recordfindings on the question of partition. If oninquiry he comes to the finding that there hasbeen partition, individual liability of membersis to be computed according to the portion ofthe joint family property allotted to them.What would amount to partition for the purposesof the section is contained in the Explanationto the section which defines partition asunder: “Explanation.— In this section,— (a) ‘partition’ means— (i)where the property admits of a physicaldivision, a physical division of the property,but a physical division of the income without aphysical division of the property producing theincome shall not be deemed to be a partition;or (ii)where the property does not admit of aphysical division, then such division as theproperty admits of, but a mere severance ofstatus shall not be deemed to be a partition.” 38.The Apex Court was of the opinion that sub-section (6) ofSection 171 thus, for the first time, imposed a kind of jointand several liability on the members of Hindu Undivided familyand thus personal liability as distinguished from the liabilityof a joint family property received on partition. 38A.Under the Hindu law, members of a joint family may agreeto partition of the joint family property by private settlement,agreement, arbitration or through court's decree. Members of thefamily may also agree to share the income from the propertyaccording to their respective share. In all such eventualitiesjoint status of family may be disrupted but such disruption offamily status is not recognised by the legislature for purposesof income tax. Section 171 of the Act and the Explanation to it,prescribes a special meaning to partition which is differentfrom the general principles of Hindu law. It contains a deemingprovision under which partition of the property of HUF isaccepted only if there has been actual physical division of theproperty, in the absence of any such proof, the HUF shall bedeemed to continue for the purpose of assessment of tax. Anyagreement between the members of the joint family effectingpartition, or a decree of the court for partition cannotterminate the status of HUF unless it is shown that the jointfamily property was physically divided in accordance with theagreement or decree of the court. 38B.The above definition of the partition in Explanation toSection 171 of the Income Tax Act, 1961 does not recognise apartition even if it is effected by a decree of court unlessthere is a physical division of the property or if the propertyis not capable of being physically divided then such a division https://hcservices.ecourts.gov.in/hcservices/ of the property to the extent admits shall be partition. However, mere severance of status will not amount to partition.In considering the factum of partition for the purposes ofassessment it is not permissible to ignore the special meaningassigned to partition under the explanation, even if thepartition is effected through a decree of the court. Ordinarilydecree of a civil court in a partition suit is good evidence inproof of partition but under Section 171 a legal fiction hasbeen introduced according to which a preliminary decree ofpartition is not enough. Instead there should be actualphysical division of the property pursuant to final decree, bymetes and bounds. The legislature has assigned special meaningto the expression partition under the aforesaid Explanation witha view to safeguard the interest of the revenue. Any assesseeclaiming partition of HUF must prove the disruption of thestatus of HUF in accordance with the provisions of Section 171having special regard to the Explanation. The assessee mustprove that a partition effected by agreement or through court'sdecree, was followed by actual physical division of theproperty. In the absence of such proof partition is notsufficient to disrupt the status Hindu Undivided Family for thepurpose of assessment of tax. 39. A reading of sub- section 171 of the Income Tax Act,1961 makes it very clear that it is applicable only where aHindu family was already assessed as an Hindu Undivided Family(HUF). Otherwise, there is no meaning to the expression “hitherto” in Section 171(1) of the Income Tax Act, 1961. It shall forthe purpose of the Act be deemed to continue to be a HinduUndivided Family, except where and insofar as a finding ofpartition has been given under the said section in respect ofthe said Hindu Undivided Family(HUF). 40.Admittedly, during the lifetime of Shir.A.R.Pandurangan,the family was not assessed as a Hindu Undivided Family(HUF). 41.It is only where there is a prior assessment as a HinduUndivided Family(HUF) and during the course of assessment undersection 143 or section 144 it is claimed by or on behalf ofmember of such Hindu Undivided Family which was assessed as aHindu Undivided Family that there was a partition whether totalor partial among the members of such family, such assessingofficer shall make an enquiry thereto after giving notice ofenquiry of all members. Where no such claim is made, questionof making such enquiry by an Assessing Officer does not arise. 42.It is only in the above circumstances, the definition of“partition” in Explanation to Section 171 of the Income Tax Act,1961 is attracted. The above definition cannot be read in https://hcservices.ecourts.gov.in/hcservices/ isolation. Where a Hindu family was never assessed as a HUF,Section 171 of the Income Tax Act, 1961 will not apply even whenthere is a division or partition of property which does notanswer to the above definition. 43.Therefore, I am inclined to interfere with impugnednotice dated 31.3.2015 and the impugned communication dated 16.11.2016 overruling the objection of the petitioner against the petitioner. 44.In the result, the writ petition stands allowed. Nocosts. Consequently, connected Miscellaneous Petition is closed. Sd/- Assistant Registrar(CS-VI) //True Copy// Sub Assistant Registrar jas To The Income Tax Officer,Non-Corporate Ward 1 (1),Chennai. +1cc to Ms.Hema Murali Krishnan, Advocate, S.R.No.27376 W.P.No.41642 of 2016 and W.M.P.No.35629 of 2016RK(CO)CB(09/07/2021)