- (1.) AT the instance of the Revenue, the Income-tax Appellate Tribunal, Delhi Bench "B", New Delhi, referred the following questions for the opinion of this court : ''1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the order of the Commissioner of Income-tax under Section 2G5 was bad in law and was without jurisdiction, as no notices were served on the other members of the family ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the partial partition between the two groups effected on January 1, 1971, was valid under the Hindu law ?"
(2.) THE facts recorded in the statement of facts by the Appellate Tribunal are that the assessee is a Hindu undivided family, headed by Shri Shrawan Kumar Swarup as its karta. Smt. Asha Kumari Swarup is the wife of the karta and they had two minor children, namely, Harish Kumar Swarup and Nandita Swarup. THE karta by virtue of powers and rights vested in him, voluntarily and with the consent of other members of the family, effected a partial partition in respect of the share capital and rights in the profits and in the reserve of the firm. Sharwan Cold Storage and General Mills in two groups on January 1, 1971. THE two groups consisted of Shri Sharwan Kumar Swarup and his minor daughter, Km. Nandita Swarup, on the one hand, and Smt. Asha Kumari Swarup and minor son, Harish Kumar Swarup, on the other. THE total share capital invested by the assessee family through us karta in the said firm was Rs. 50,000. It was divided into two equal shares between the two groups. THE shares of the two groups were specified in detail in the memorandum of partition. The Income-tax Officer accepting the claim of partial partition under Section 171 of the Income-tax Act, 1961 (briefly, "the Act"), held as follows; "I am satisfied that a partial partition in the bigger Hindu undivided family in respect of the share capital and share profit ratio in the firm Sharwan Cold Storage, which were hitherto held by the bigger Hindu undivided family has been effected with effect from January 1, 1971." Exercising the powers under Section 263 of the Act, the Commissioner of Income-tax held as under : "During the proceedings for the assessment year 1972-73, the assessee put forward his claim for partial partition and the Income-tax Officer vide his order dated February 5, 1975, accepted the same under Section 171 of the Income-tax Act. Consequently, the Income-tax Officer did not include in the total income of the assessee the share from the registered firm, Sharwan Cold Storage and General Mills ... On a perusal of the assessment records I found that the partial partition made by the assessee by dividing the interest of the Hindu undivided family in the firm of Sharwan Cold Storage and General Mills and the capital invested therein was not according to law. Not that the Hindu undivided family was not entitled to make a partial partition, but the partial partition should have been made defining the share of each and every person entitled to get the share. Instead of doing that, the share in the firm has been divided in two groups, viz., one consisting of Sharwan Kumar Swarup and his minor daughter, Kumari Nandita Swarup, and the second group consisting of Smt. Asha Kumari Swarup and her minor son, Harish Kumar Swarup. The shares of the members in each group were never defined and as such the partial partition could not be said to be valid .. . Thus, the acceptance of partial partition by the Income-tax Officer under Section 171, vide his order dated February 5, 1975, was not only incorrect and erroneous but also prejudicial to the interests of the Revenue inasmuch as the share income from Sharwan Cold Storage and General Mills was not assessed in the hands of the assessee-Hindu undivided family ..."
(3.) THE Commissioner of Income-tax further held in para. 4 of his order as under : "As already stated above, the partial partition has not been validly effected because shares have not been defined for each and every member. On the other hand, shares have been given to two separate groups of members, which is not in accordance with the Hindu law and so is invalid . . ." This is how the Commissioner of Income-tax held that the partial partition as claimed by the assessee qua the property as well as qua the members of the family was not valid.;