PARAMANAND L BAJAJ Vs. COMMISSIONER OF INCOME TAX
LAWS(KAR)-1981-4-20
HIGH COURT OF KARNATAKA
Decided on April 13,1981

PARAMANAND L. BAJAJ Appellant
VERSUS
COMMISSIONER OF INCOME-TAX, KARNATAKA-II Respondents

JUDGEMENT

Rama Jois, J. - (1.) AN important question of Hindu law on the topic of reunion" of the divided coparceners of an erstwhile Hindu undivided family (hereinafter referred to as "HUF"), namely, whether the failure on the part of some of the reuniting members to bring back the properties which they had got at the time of the partition, and which were still in their possession on the date of reunion, renders the reunion invalid, i.e., no reunion in the eye of law, arises for consideration in these references in which the income-tax Appellate Tribunal Bangalore Bench, has referred for the opinion of this court under s. 256(1) of the I.T. Act, 1961 (hereinafter referred to as "the Act"), the following question : "On the facts and in the circumstances of the case, whether the Tribunal was justified in law in holding that there was no reunion ?"
(2.) THE facts of the case are as follows : THE assessment years to which these references relate are 1971-72 and 1972-73. THE assessee is an HUF consisting of one Paramanand L. Bajaj and his wife and their daughter. Prior to August, 1956, there existed a larger HUF consisting of Paramanand L. Bajaj, his wife, their three sons and two daughters. THE business of the family was that of money-lending. THE three sons of Paramanand L. Bajaj are Devendra P. Bajaj, Vijayakumar P. Bajaj and Nandlal P. Bajaj. THE assessment under the Act, was being made on the HUF represented by its karta, Paramanand L. Bajaj. On August 20, 1956, Devendra P. Bajaj got separated from the family and he made a declaration to that effect on August 23, 1956, before the Magistrate. Vijayakumar P. Bajaj got separated from the family on December 22, 1961. Nandlal P. Bajaj got separated from the family on June 30, 1963. He also made a declaration to that effect before the Magistrate on July 9, 1964. After these separations, i.e., from 1964-65 onwards, assessments were being made on the smaller HUF consisting of Paramanand L. Bajaj. his wife and an unmarried daughter. During the assessment year 1971-72, Paramanand L. Bajaj showed the income of the smaller HUF only up to March 29, 1971, on the ground that there was a reunion of the family on March 27, 1971, and that the properties which were in the hand of Paramanand L. Bajaj, representing the smaller HUF, were thrown into the hotchpot of the reunited joint family by means of a declaration made by Paramanand L. Bajaj to that effect on March 30, 1971. Paramanand L. Bajaj claimed for the making of a separate assessment in the hands of the bigger HUF which, according to him, came into existence on reunion, on and from March 30, 1971. THE ITO by his order dated June 19, 1973, rejected the claim of reunion. Aggrieved by the said order, the assessee (the smaller HUF) represented by Paramanand L. Bajaj preferred an appeal before the AAC. THE appellate authority dismissed the appeal following the judgment of the Appellate Tribunal in the case of M. Kasturiranga Shetty (I.T.A. Nos. 787 to 789 (Bang.) 73-74 dated November 15, 1975). Against the order of the AAC, the assessee preferred two appeals before the Appellate Tribunal. THEy were disposed of by a common order dated 12th January, 1977 (Annex."C"), following its earlier judgment in the case of Kasturiranga Shetty. THEreafter, at the instance of the assessee, the question set out earlier has been referred for the opinion of this court. As far as the successive separations of the three sons from the family, namely, Devendra P. Bajaj, Vijayakumar P. Bajaj and Nandlal P. Bajaj, on August 26, December 22, 1961, and June 13, 1963, respectively, there is no dispute. It is also not disputed that the reunion is evidenced by an agreement signed by Paramanand L. Bajaj and his three sons on March 27, 1971. It formed part of the assessment record. A copy of the same is also produced before us at the time of hearing. It reads : "THIS AGREEMENT OF REUNION entered into at Madras this 27th day of March 1971, between (1) Shri Paramanand Lunidasing Bajaj of the First Part, (2) Shri Devendra Paramanand Bajaj of the Second Part, (3) Shri Vijayakumar Paramanand Bajaj of the Third Part, and (4) Shri Nandlal Paramanand Bajaj of the Fourth Part. WHEREAS the parties hereto were members of a Hindu undivided family whose karta was the said Paramanand Lunidasing Bajaj the party of the First Part hereto; and WHEREAS the parties of the Second, Third and Fourth Parts hereto separated from the Hindu undivided family on 20th August, 1956, 22nd November, 1961, and 13th June, 1963, respectively; and WHEREAS the parties hereto being desirous of reuniting to form a Hindu undivided family. Now this agreement witnesseth as under : (1) The parties hereto do hereby affirm that they have reunited on 27th day of March, 1971, to form a Hindu undivided family. (2) Any party to this agreement can thrown either his self acquired property or any property got by him on partition of the Hindu undivided family before this reunion into the said Hindu undivided family. (3) The properties got by the parties to this agreement on partition prior to this reunion shall continue to be their respective separate properties unless thrown into the common hotchpot of the Hindu undivided family which has come into existence by virtue of this agreement. In witness whereof the parties hereto have hereunto set and subscribed their respective hands and seal the day, year, first hereinabove written......" All the four reunited members have affixed their signature to the above agreement. There is also no dispute that within three days thereafter on 30th March, 1971, Paramanand L. Bajaj threw the properties of the smaller HUF into the hotchpot of the reunited HUF. This is also evidenced by a declaration date March 30, 1971, which also formed part the assessment records and a copy of the same was also produced before us. Relevant portion of the said declaration excluding the schedule in which the properties thrown into the family hotchpot have been described reads as follows : "I, Paramanand Lunidasing Bajaj, aged about 57 years, and residing at V Main Road, Gandhinagar, Bangalore-9, and now at Madras, do hereby solemnly affirm as under : 1. I am the karta of the Hindu undivided family consisting of myself, my wife and my 3 sons, viz., Devendra Paramanand Bajaj, Vijayakumar Paramanand Bajaj and Nandlal Paramanand Bajaj, the Hindu undivided family having come into existence by virtue of agreement of reunion entered into on the 27th day of March, 1971. 2. The property mentioned in the schedule hereunder was my separate property belonging to the Hindu undivided family consisting of may self and my wife. 3. I have on this 30th day of March, 1971, thrown the property mentioned on the schedule hereunder into the common hotchpot of the Hindu undivided family consisting of myself, my wife and my three sons referred to supra. 4. I do hereby declare that the property mentioned in the schedule shall hereafter be the property of the Hindu undivided family which has come into existences as per agreement of reunion dated 27th day of March, 1971, consisting of myself, my wife and my three sons, of which I am the karta."
(3.) THERE is also no dispute that the three sons of Paramanand L. Bajaj have not made any declaration throwing the properties which they had got on partition and which were still in their possession on the date of agreement of the "reunion", into the family hotchpot. On the basis of the above undisputed facts, the view taken by the Tribunal was that though the agreement dated March 27, 1971, signed by Paramanand L. Bajaj and his three sons speaks of the "reunion" of the erstwhile coparceners to form a "Hindu undivided family". in fact and in law, there was no reunion as the three sons had not brought the properties, which they had got on partition and which were still in their possession, back to the family hotchpot.;


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