SREEPADOM v. COMMISSIONER OF INCOMETAX — 1984 DIGILAW 165 (KER)

Judgment :- 1. The petitioner is an assessee to wealth-tax. She is the karanavathy of Sreepadam Palace, Trivandrum, a Hindu undivided family till the assessment year 1976-77. The Hindu Joint Family (Abolition) Act, 1975, Act 30 of 1976, came into force on 1-12-1976. During the course of the assessment for the year 1977-78 the petitioner pleaded that in view of Kerala Act 30 of 1976 the joint family got statutorily disrupted. The Income-tax Officer, C. Ward, Trivandrum (who is also Wealth-tax Officer, C. Ward, Trivandrum) accepted the plea. In the income-tax assessment, by Ext. P1 order dated 19-2-1979 he assessed the income only up to 30-11-1976. It seems that subsequently the Department took the view that the provisions of Kerala Act aforesaid will have no application to the assessment proceedings of the Hindu undivided family (Sreepadom). So, proceedings were initiated under S.148 of the Income-tax Act for the year 1978-79,1979-80 and 1980-81 dated 12-6-1981. Such notices issued under the Income-tax Act were successfully challenged by the petitioner in OP.No. 375 of 1982. Exts. P3 and P4 notices in OP. 375 of 1982 for the years 1978-79,1979-80 and 1980-81 were withdrawn by the Revenue. The Revenue initiated proceedings under S.17 of the Wealth-tax Act (corresponding to S 147 of the Income-tax Act) for the years 1977-78,1978-79, 1979-80 and 1980-81, evidenced by Exts. P2, P3, P4 and P5, produced in this O.P. The petitioner assails Exts. P2 to P5 as void and illegal. 2. It is common ground that the notices issued under the corresponding provisions of the Income-tax Act for the years 1978-79 to 1980-81 were withdrawn by the Department. When the matter came up for hearing, counsel appearing for the petitioner as well as counsel appearing for the Department agreed that pending this OP. (OP. 369 of 1982) the Revenue effected assessment on the petitioner under the Wealth Tax Act for the year 1977-78 in pursuance to Ext.P2 notice. The assessment was taken in appeal before the Appellate Assistant Commissioner of Wealth-tax, Trivandrum. In W.T.A. No. 43-T/82-83 dated 10-1-1984 the Appellate Assistant Commissioner followed the decision rendered by a Division Bench of this Court in W.A.No 159/81 dated 18-81981 and also a decision of the Appellate Tribunal rendered in ITA. Nos. The assessment was taken in appeal before the Appellate Assistant Commissioner of Wealth-tax, Trivandrum. In W.T.A. No. 43-T/82-83 dated 10-1-1984 the Appellate Assistant Commissioner followed the decision rendered by a Division Bench of this Court in W.A.No 159/81 dated 18-81981 and also a decision of the Appellate Tribunal rendered in ITA. Nos. 302 and 303 (Coch)/1981 dated 19-2-1983 and held that on the valuation date relevant for the assessment year (1977-78) i e. 31-2-1977, there was no assessable entity to be assessed in the status of a Hindu undivided family and in this view annulled the assessment. The aforesaid order dated 10-1-1984 has become final. It has not been appealed against by the Department. For the assessment year 1977-78 the validity of Ext. P2 notice impugned in this OP. need not be considered. 3. We are concerned now with Exts. P3, P4 and P5 notices issued for the years 1978-79,1979-80 and 1980-81. If there was no assessable entity to be assessed in the status of Hindu undivided family, as on 31-3-1977, relevant for the year 1977-78, it is idle to contend that there could be a Hindu undivided family for the subsequent years 1978-79,1979-80, and 1980-81. The revenue has no such case. In that view of the matter, Exts. P3, P4, and P5 notices are invalid and totally without jurisdiction. I quash Exts. P3, P4 and P5 on that ground. 4. Counsel for the Revenue feebly contended that the effect of the Kerala Hindu Joint Family (Abolition) Act, Act 30 of 1976, is only to bring about a division in status and that by itself will not be sufficient to say that there is a partition as contemplated either by S.20 of the Wealth-tax Act or the corresponding provision in S.171 (with slight variation) of the Income-tax Act. Counsel further contended that until the properties have been divided in definite portions, the Hindu undivided family will continue in view of the aforesaid provisions This contention is without force. The provisions of Kerala Act 30 of 1976 were examined by a Division Bench of this Court in Writ Appeal No. 159 of 1981 dated 18-8-1981. Mr. Poti C. J. lucidly stated the scope of Act 30 of 1976 as follows: "Act 30 of 1976 operated to put an end to the existence of all joint Hindu families in Kerala. The provisions of Kerala Act 30 of 1976 were examined by a Division Bench of this Court in Writ Appeal No. 159 of 1981 dated 18-8-1981. Mr. Poti C. J. lucidly stated the scope of Act 30 of 1976 as follows: "Act 30 of 1976 operated to put an end to the existence of all joint Hindu families in Kerala. The consequence was that from that day onwards there could be no joint Hindu family in the State. It is no a case of the family disrupting by partition. It is a case of statutory extinction of joint families'' Referring to a notice sent under the Wealth-tax Act after 1-12-1976 it was held: "The notice on the petitioner is issued admittedly after 1-12-1976 and on that day there was no Hindu undivided family in existence. Therefore there is no question of addressing any adult male member of a joint Hindu family in order to serve a notice intended for the family" Referring to S.20 of the Wealth-tax Act on which reliance was placed, the learned Chief Justice held: "We do not consider that this section has any relevance. That is because we are not concerned with any partition of a Hindu Undivided family here. We need not also consider the scope of the corresponding Section of the Income-tax Act which is not identical with S.20 of the Wealth Tax Act. Legislature has made provision in S.20 of the Wealth Tax Act to assess a Hindu joint family even after its extinction by a partition. So despite a partition the provision could be used to assess the family. Evidently the situation arising by reason of extinction by a statutory enactment was not conceived at that time But that would not furnish any justification to apply S.20 of the Wealth Tax Act to a case to which the provision does not apply." The provisions of Kerala Act 30 of 1975 are clear. The Act is enacted to put an end to the joint Hindu family in Kerala and the consequence is that from that date onwards there will be no joint Hindu family in the State. It is a far cry to say that the family is disrupted by partition. Partition is one brought about by act or conduct of parties In this case the cessation or extinction of the Hindu undivided family is by the provision of a statute. It is a far cry to say that the family is disrupted by partition. Partition is one brought about by act or conduct of parties In this case the cessation or extinction of the Hindu undivided family is by the provision of a statute. S.20 of the Wealth Tax Act as also the corresponding provision in the Income-tax Act S. 171 of the Act deal only with the case of assessment of a Hindu joint family even after its extinction by partition. They do not provide for the situation arising by reason of extinction by a statutory enactment. If by force of the statutory enactment there will be no joint Hindu family in the State from 1-12-1976, it follows that there can be no entity assessable as Hindu undivided family either for the purpose of the Incometax Act or for the purpose of Wealth-tax Act. 5. The contention to the contrary by the counsel for the Revenue is negatived. 6. The OP. is allowed. Exts. P3, P4 and P5 are quashed. In view of the fact that the assessment for the year 1977-78 has already been nullified by the Appellate order dated 101-1984 no further relief is necessary regarding Ext. P2, The OP. is disposed of as above. There shall be no order as to costs.