Full Judgment Text
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PETITIONER:
KAPURCHAND SHRIMAL
Vs.
RESPONDENT:
COMMISSIONER OF INCOME TAX, ANDHRA PRADESH, HYDERABAD
DATE OF JUDGMENT28/08/1981
BENCH:
VENKATARAMIAH, E.S. (J)
BENCH:
VENKATARAMIAH, E.S. (J)
BHAGWATI, P.N.
CITATION:
1981 AIR 1965 1982 SCR (1) 505
1981 SCC (4) 317 1981 SCALE (3)1330
ACT:
Income Tax Act, 1922, section 25A, scope of-Whether an
order of assessment passed under the Indian Income Tax Act,
1922 by the Income Tax Officer in the case of a Hindu
undivided family without holding an inquiry into the
validity of the claim made within a reasonable time by a
member of the Hindu undivided family that a partition had
taken place among the members of the family is liable to be
merely cancelled in appeal by the Income-tax Appellate
Tribunal without a further direction to the assessing
authority either to modify the assessment suitably or to
pass a fresh order of assessment in accordance with law.
HEADNOTE:
The assessee is a Hindu undivided family and the
assessment years are 1955-56 and 1957-58 to 1961-62. The
assessee addressed on October 10, 1960 to the Income-tax
Officer in connection with a notice received under section
18A(1) of the Act in respect of the assessment year 1961-62
stating that all the movable and immovable properties of the
assessee had been partitioned by metes and bounds under
partition deeds and that the Hindu undivided family was no
longer receiving any income as such and there was therefore
no question of payment of any advance tax by it. A specific
request to record the factum of the partition for that
purpose of the Act effective from July 10, 1960 was also
prayed for. This was followed by another letter on June 16,
1961 by M/s. S.G. Dastagir and Co. On behalf of the assessee
in connection with advance tax demanded for the assessment
year 1962-63 with a similar request. Before fresh
assessments were completed for the years 1955-56, 1957-58
and 1958-59 as per the orders of the Appellate Assistant
Commissioner dated February 24, 1962 a third letter dated
March 11, 1962 was addressed to the same Income-tax Officer
with a similar request for recording the factum of
partition. Another letter dated March 21, 1962 was addressed
by M/s. S.G. Dastagir & Co. reminding the Income-tax Officer
of the earlier letters of October 10, 1960 and June 16,
1961.
The assessment for the years 1955-56 to 1958-59 were,
however, completed between August 21, 1962 and March 27,
1963 without holding any inquiry as contemplated by section
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25A of the 1922 Act regarding the factum of partition. The
Income-tax Officer thereafter started an inquiry under
section 25A and by his order dated March 30, 1965 refused to
record the partition. On appeal against the refusal the
Appellate Assistant Commissioner by his order dated November
8, 1967 set aside the said order and directed the Income-tax
Officer to record the partition under section 25A as on July
10, 1960. That order became final as an appeal was filed
against it by the Revenue. In the appeals filed before the
Assistant Appellate Commissioner against the assessment
orders for the years in question, that is, 1955-56 and 1957-
58 to 1961-62 the assessee con-
506
tended that the assessments were liable to be set aside on
the ground that the inquiry into the claim of partition
which was a condition precedent for making an order of
assessment on the Hindu undivided family had not been made
as required by section 25A of the Act. The Appellate
Assistant Commissioner rejected the said contention, but the
appeals preferred before the Tribunal were allowed. The
Tribunal cancelled the assessments without any directions to
make fresh assessments. At the instance of the Revenue a
reference was made by the Tribunal to the High Court of
Andhra Pradesh under section 66(1) of the Act. The High
Court answered the reference in favour of the Revenue and
hence the appeals.
Allowing the appeals, the Court
^
HELD: (1) Under section 25A of the 1922 Act the Income-
tax Officer was bound to hold an inquiry into the claim of
partition if it is made by or on behalf of any member of the
Hindu undivided family which is being assessed hitherto as
such and record a finding thereon. If no such finding is
recorded sub-section (3) of section 25A of the Act becomes
clearly attracted. When a claim is made in time and the
assessment is made on the Hindu undivided family without
holding an inquiry as contemplated by section 25A(1), the
assessment is liable to be set aside in appeal as it is in
clear violation of the procedure prescribed for that
purpose, [517 A-C]
Kalwa Devadattam and two Ors. v. The Union of India and
Ors., [1964] 3 S.C.R. 191; Additional Income-tax Officer,
Cuddapah v. A. Thimmayya & Anr., (1965) 55 I.T.R. 666 and
Karri Ramkrishna Reddy v. Tax Recovery Officer, Vijayawada,
(1973) 87 I.T.R. 86, discussed and distinguished.
(2) The duty of the Tribunal does not end with making
declaration that the assessments are illegal and it is duty
bound to issue further directions. The appellate authority
has the jurisdiction as well as the duty to correct all
errors in the proceedings under appeal and to issue, if
necessary, appropriate directions to the authority against
whose decision the appeal is preferred to dispose of the
whole or any part of the matter afresh unless forbidden from
doing so by the statute. The statute does not say that such
a direction cannot be issued by the appellate authority in a
case of this nature. [517 D-E]
In the instant case, however, since it is not
established that the claim was a belated one the proper
order to be passed is to set aside the assessments and to
direct the Income-tax Officer to make fresh assessments in
accordance with the procedure prescribed by law. The
Tribunal, therefore, erred in merely cancelling the
assessment orders and in not issuing further directions.
[517 G-H]
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JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 1286-
1291 of 1973.
Appeals by certificate from the judgment and order
dated the 30th June, 1972 of the Andhra Pradesh High Court
at Hyderabad in Referred Case No. 5 of 1971.
507
A. Subba Rao for the Appellant.
S.C. Manchanda, and Miss A. Subhashini, for the
Respondent.
The Judgment of the Court was delivered by
VENKATARAMIAH, J. The only question which arises for
consideration in these six appeals by certificate is whether
an order of assessment passed under the Indian Income-tax
Act, 1922 (hereinafter referred to as ’the Act’) by the
Income-tax Officer in the case of a Hindu undivided family
without holding an inquiry into the validity of the claim
made within a reasonable time by a member of the Hindu
family that a partition had taken place among the family is
liable to be merely cancelled in appeal by the Income-tax
Appellate Tribunal (for short, ’the Tribunal’) without a
further direction to the assessing authority either to
modify the assessment suitably or to pass a fresh order of
assessment in accordance with law.
The assessee is a Hindu undivided family and the
assessment years are 1955-56 and 1957-58 to 1961-62. An
assessment order made on May 30, 1959 in respect of the
assessment year 1955-56 had been set aside by the Appellate
Assistant Commissioner on February 24, 1962 with a direction
to make a fresh assessment. When fresh assessment
proceedings were commenced pursuant to the above said
direction in respect of the assessment year 1955-56,, the
assessment proceedings for the assessment years 1957-58 and
1958-59 were also taken up. Earlier a letter had been
addressed on October, 10, 1960 by Kapurchand Shrimal to the
Income-tax Officer in connection with a notice received by
the assessee under section 18A (1) of the Act in respect of
the assessment year 1961-62 stating that all the movable and
immovable properties of the assessee had been partitioned by
metes and bounds under partition deeds and that the Hindu
undivided family (the assessee) was no longer receiving any
income as such and there was therefore no question of
payment of any advance tax by it. The second para of that
letter contained a specific request to record the factum of
the partition for the purpose of the Act. Again on June 16,
1961 M/s S.G. Dastagir and Co. addressed a letter on behalf
of the assessee in connection with advance tax demanded for
the assessment year 1962-63, the second para of which
contained a similar request for recording the factum of
partition. Before the fresh assessments were completed for
the three years referred to above a third letter dated March
11, 1962 was addressed to the same
508
officer who received it on the next day itself in which
again there was a claim made regarding the partition. But
this letter however was written specifically in respect of
the assessment year 1957-58. On March 21, 1962, M/s S.G.
Dastagir too addressed a further letter to the Income-tax
Officer reminding him of the earlier letters of October 10,
1960 and June 16, 1961 and that letter stated:
"Apart from these letters the matter has been
discussed with you on a number of occasions personally
during the course of the assessment proceedings of the
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year 1957-58 and your attention has already been drawn
to the facts that an order under section 25A has to be
passed before the completion of the assessment for the
year 1957-58. The letter dated 11th March, 1962 was
addressed to you by the assessee only when it was
gathered that you were going to pass the assessment
order for the year 1957-58 without making the
contemplated enquiry under section 25A."
The assessments for the years 1955-56 to 1958-59 were
however completed between August 31, 1962 and March 27, 1963
without holding an inquiry as contemplated by section 25A of
the Act regarding the factum of partition. The Income-tax
Officer, thereafter started an inquiry under section 25A and
by his order dated March 30, 1965 refused to record the
partition. On appeal the Appellate Assistant Commissioner by
his order dated November 8, 1967 set aside the said order
and directed the Income-tax Officer to record the partition
under section 25A as on July 10, 1960. That order became
final as no appeal was filed against it by the Department.
It should be stated here that the Income-tax Officer
passed assessment orders against the assessee for the
assessment years 1959-60, 1960-61 and 1961-62 on March 26,
1964, March 30, 1965 and March 26, 1966 respectively before
the Appellate Assistant Commissioner held that the partition
had taken place on July 10, 1960.
In the appeals filed before the Appellate Assistant
Commissioner against the assessment orders for the years in
question i.e. 1955-56 and 1957-58 to 1961-62 it was
contended that the assessments were liable to be set aside
on the ground that the inquiry into the claim of partition
which was a condition precedent for making an order of
assessment on the Hindu undivided family had not been made
as required by section 25A of the Act. The Appellate
Assistant Commissioner rejected the above contention. The
assessee there upon filed appeals before the Tribunal
against the orders of the
509
Appellate Assistant Commissioner and one question which was
A common to all the appeals that was urged before the
Tribunal was about the validity of the assessment made
against the assessee (Hindu undivided family) without
holding an inquiry regarding the claim of partition before
the assessment proceedings were completed. While the
assessee contended that the assessments were liable to be
cancelled on account of the non-compliance with the
mandatory provisions of section 25A of the Act it was urged
on behalf of the Department that in fact there was no
violation at all of section 25A and even if it was held that
there was any such violation the proper order to be passed
was either to direct the Income-tax officer to give effect
to section 25A (2) of the Act without cancelling the
assessments made on the assessee or to set aside the
assessments with a direction to the Income-tax Officer to
pass fresh orders of assessment. On a consideration of the
submissions made by the parties, the Tribunal came to the
conclusion that the assessments which had been made without
holding an inquiry into the claim of partition as required
by section 25A of the Act were illegal and void Accordingly
it cancelled the assessments and added ’We do not consider
it necessary to direct fresh assessments. It would be open
to the Income-tax Officer to do so if the law otherwise so
permits.’
Thereafter at the instance of the Revenue a reference
was made by the Tribunal to the High Court of Andhra Pradesh
under section 66(1) of the Act in all the cases for a
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decision on the following question:
"Whether on the facts and in the circumstances of
the case, the assessments made by the Income-tax
Officer on the Hindu undivided family of Shri
Kapurchand Shrimal for the years under reference
without passing an order under section 25A were
valid ?"
We are not concerned in these appeals with another
question arising out of the assessment order made for the
year 1958-59 which was also referred alongwith the above
common question.
The High Court after hearing the learned counsel for
the parties answered the common question which arose in all
the appeals stating that the assessment made by the Income-
tax Officer without passing the order under section 25A on
the claim of partition were valid but only required
modification and directed the Tribunal while giving effect
to the order of the High Court to direct the Income-tax
Officer to modify the assessments in the light of section
25A (2) of
510
the Act. Aggrieved by the decision of the High Court the
assessee has filed these appeals.
Section 25A of the Act which arises for consideration
in these cases reads thus:
"25A. Assessment after partition of a Hindu
undivided family-(1) Where, at the time of making an
assessment under section 23, it is claimed by or on
behalf of any member of a Hindu family hitherto
assessed as undivided that a partition has taken place
among the members of such family, the Income-tax
Officer shall make such inquiry thereinto as he may
think fit, and, if he is satisfied that the joint
family property has been partitioned among the various
members or groups of members in definite portions he
shall record an order to that effect:
Provided that no such order shall be recorded
until notices of the inquiry have been served on all
the members of the family.
(2) Where such an order has been passed, or where
any person has succeeded to a business, profession or
vocation formerly carried on by a Hindu undivided
family whose joint family property has been partitioned
on or after the last day on which it carried on such
business, profession or vocation, the Income-tax
Officer shall make an assessment of the total income
received by or on behalf of the joint family as such,
as if no partition had taken place, and each member or
group of members, shall in addition to any income-tax
for which he or it may be separately liable and
notwithstanding anything contained in sub-section (1)
of section 14, be liable for a share of the tax on the
income so assessed according to the portion of the
joint family property allotted to him or it; and the
Income-tax Officer shall make assessments accordingly
on the various members and groups of members in
accordance with the provisions of section 23;
Provided that all the members and groups of
members whose joint family property has been
partitioned shall be liable jointly and severally for
the tax assessed on the total income received by or on
behalf of the joint family as such.
511
(3) Where such an order has not been passed in
respect A of a Hindu family hitherto assessed as
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undivided, such family shall be deemed, for the
purposes of this Act, to continue to be a Hindu
undivided family.
A Hindu undivided family is an entity which is treated
as an assessee for the purposes of the Act. In the Act as it
was originally passed there was no effective machinery to
assess the income which was received by a Hindu undivided
family during an accounting year but was no longer in
existence as such at the time of assessment. By reason of
section 14(1) of the Act which provided that no tax would be
payable by an assessee in respect of any sum which he
received as a member of a Hindu undivided family, there was
further difficulty in subjecting such income tax. Section
25A was, therefore, enacted to get over these difficulties
by providing for a special procedure to be followed in a
case where a claim was made that there has been a partition
satisfying the tests laid down in that section. Sub-section
(3) of section 25A of the Act provides that a Hindu
undivided family which is being assessed as such shall be
deemed for the purposes of the Act to continue to be a Hindu
undivided family until an order is passed under sub-section
(1) of section 25A that a partition has taken place among
the members of the family as stated therein. Sub-section (1)
of section 25A provides that if at the time of making as
assessment a claim is made by or on behalf of any member of
a Hindu undivided family which is being assessed till then
as undivided that a partition has taken place among the
members of such family, the Income-tax officer shall make
such inquiry there into as he may think fit and if he is
satisfied that the joint family property has been
partitioned among the various members groups of members in
definite portions he shall record an order to that effect.
Such order can however be made only after notices of the
inquiry have been served on all the members of the family.
It may be noted that sub-section (I) of section 25A does not
actually prescribe the form in which such a claim can be
made. It does not also state the specific stage of the
assessment proceedings when such claim should be made. Sub-
section (2) of section 25A of the Act provides that where an
order is passed under sub-section (1) thereof recording the
partition or where any person has succeeded to a business,
profession or vocation formerly carried on by a Hindu
undivided family where joint family property has been
partitioned on or after the last day on which it carried on
such business, profession or vocation the Income-tax officer
shall make an assessment of the total income received by or
on behalf of the
512
joint family as such as if no partition had taken place and
each member or group of members shall, in addition to any
income-tax for which he or it may be separately liable and
notwithstanding any thing contained in sub-section (section
14, be liable for a share of the tax on the income so
assessed according to the portion of the joint family
property allotted to him or it. The Income-tax officer is
further authorised to make assessments accordingly on
various members and groups of members in accordance with
section 23 of the Act. By virtue of the proviso to sub-
section (2) of section 25A of the Act the liability which so
long as an order was not recorded under sub-section (I) of
section 25A was restricted to the assets of ., the Hindu
undivided family is transformed when such an order is
recorded into the personal liability of the members for the
amount of tax due by the family.
In these appeals there is a finding of fact recorded by
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the Tribunal that a proper and valid request for recording a
partition had been made as far back as October 10, 1960. The
first of the assessment orders impugned in these appeals was
passed on August 31, 1962 by the Income-tax officer and the
other assessment orders were passed subsequently. It is not
shown that the Income-tax officer before whom the claim of
partition had been made on October 10, 1960 had not got
reasonable time to inquire into the claim and then to make
the assessment orders on the basis of the finding on the
question of partition. Admittedly all the orders of
assessment were passed against the assessee (Hindu undivided
family) before holding an inquiry as required by section 25A
(I) of the Act into the claim of partition. In fact the
Income-tax officer refused to record the partition only on
March 30, 1965 but in appeal the Appellate Assistant
Commissioner held that a partition had taken place as on
July 10, 1960 by his order dated November 8, 1967 and that
order had become final. The questions for consideration are
whether under these circumstances the orders of assessment
can be treated as valid orders and if they are not whether
the Income-tax officer can be directed by the appellate
authority to pass fresh orders of assessment in accordance
with law.
The first decision relied on by the assessee is Kalwa
Devadattam and two ors. v. The Union of. India and ors.(l)
That was a case arising out of a suit in which the validity
of certain assessment
513
Orders passed against a Hindu undivided family under the Act
and A the proceedings instituted to recover the amounts
payable under these assessment orders by sale of certain
properties had been questioned. The plaintiffs in that suit
were the sons of one Nagappa. Nagappa and the plaintiffs who
formed a Hindu joint family had carried on business and the
said family had been assessed to tax under the Act. When
proceedings were instituted to recover the dues under the
assessment orders for the sale of some properties, the
plaintiffs filed the suit contending that some of the
properties could not be sold as they were their separate
properties and the remaining properties could not be sold as
they had been allotted to them on partition of the joint
family estate on March 14, 1947 before the orders of
assessment were made by the income-tax authorities. The
claim of the plaintiffs based on the ground of non-
compliance with section 25A of the Act was rejected by this
Court with these observations:-
"It may be assumed that by this statement within
the meaning of section 25A it was claimed "by or on
behalf of any member of a Hindu family hitherto
assessed as undivided" that a partition had taken place
among the members of his family and that the Income-tax
officer was bound to make an inquiry contemplated by
section 25A. But no inquiry was in fact made and no
order was recorded by the Income-tax officer about the
partition: by virtue of sub-s. (3) the Hindu family
originally assessed as undivided had to be deemed for
the purposes of the Act to continue to be a Hindu
undivided family. If by the assessment of the family on
the footing that it continued to remain undivided
Nagappa or his sons were aggrieved their remedy was to
take an appropriate appeal under s. 30 of the Indian
Income-tax Act and not a suit challenging the
assessment. The method of assessment and the procedure
to be followed in that behalf are statutory, and any
error or irregularity in the assessment may be
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rectified in the manner provided by the statute alone,
for s. 67 of the Indian Income-tax Act bars a suit in
any Civil Court to set aside or modify any assessment
made under the Act. The Income-tax officer made the
assessment of tax under the Act. Granting that he
committed an error in making the assessment without
holding an inquiry into the partition alleged by
Nagappa, the error could be rectified by resort to the
machinery provided under the Act and not by a suit in a
Civil Court."
514
This Court dismissed the suit against the Revenue on
three independent grounds: (1) the suit which was in
substance one for setting aside an assessment was in law not
maintainable because of s. 67 of the Act; (2) that in the
absence of an order under s. 25A (1 assessment of the Hindu
joint family was properly made; and (3) even if an order
recording partition was made the liability of the plaintiffs
to pay income tax assessed on the family could still be
enforced against them jointly and severally under s. 25A (2)
proviso. The above case was not obviously one in which an
order of assessment which had been passed contrary to
section 25A of the Act had been challenged in an appeal
under the Act.
The next case relied on by the assessee is Additional
Income tax officer, Cuddapah v. A. Thimmayya & Anr.(l) There
again the question raised was a different one although some
of the material facts were similar to the facts in these
appeals. The facts there were those: Krishnappa and his two
sons Thimmayya and Venkatanarsu constituted a Hindu
undivided family which had carried on some business during
the previous years corresponding to assessment years 1941-42
to 1946-47. When the assessment proceedings for these years
were pending, on May 20, 1946 Venkatanarsu claimed before
the ’Income-tax officer that the property of the family had
been partitioned among the members of the family in definite
portions. The said claim was not disposed of till June 30,
1952. In the meanwhile assessments for the five years in
question were completed between September 30, 1948 and
November 30, 1950 resulting in a tax liability of Rs.
67,750/- in the aggregate for the five years. Appeals were
preferred against the said orders of assessment but in the
appeals it was not contended that the orders were illegal as
no inquiry had been made as contemplated in section 25A (1).
The appeals were unsuccessful. On June 30, 1952, the Income-
tax officer made an order under section 25A recording that a
partition had taken place on November 2, 1946. As the tax
due was not paid the Income-tax officer made the order under
section 46(S) of the Act on June 25, 1958 calling upon the
managing director of a private limited company which had
taken over the business of Krishnappa and his two sons not
to pay the salaries payable to Thimmayya and Venkatanarsu by
the company and to pay it to the credit of Government of
India towards the payment of arrears of income-tax referred
to above. Thimmayya and
515
Venkatanarsu questioned that order before the High Court
under A Article 226 of the Constitution. The High Court held
that the order on the claim made under section 25A(I) on
June 30, 1952, was given "a clear retrospective operation",
and the Income-tax officer was bound "to give effect to that
order recognising the partition and to follow up the
consequences which flowed from the order". In the view of
the High Court, the petitioners were entitled to insist upon
an order for apportionment under section 25A (2) and without
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such an order, proceedings for collection of tax could not
be commenced against them under the proviso to sub-section
(2) of section 25A. On appeal this Court held that because
prior to the orders of assessment there was no order
recording that the property of the family had been
partitioned among the members of the family no personal
liability of the members arose under the proviso to section
25A (2) to pay the tax assessed thereunder and the remedy of
income-tax authorities was to proceed against the property,
if any, of the Hindu undivided family. It was therefore held
that the Income-tax officer was not competent to make the
order under section 46 (5) directing the company to withhold
the tax from the salaries payable to Thimmayya and
Venkatanarasu. The relevant observations of this Court are
these:-
"In the present case no orders were recorded by
the lncome-tax officer at the time of making
assessments in respect of the five years, and therefore
no personal liability of the members of the family
arose under the proviso to sub-section (2). The Income-
tax officer does not seek to reach in the hands of
Thimmayya and Venkatanarsu the property which was once
the property of the Hindu undivided family: he seeks to
reach the personal income of the two respondents. That
the Income-tax officer could do only if by virtue of
the proviso to sub-section (2) a personal liability has
arisen against them. In the absence of an order under
sub-section (1), however, such a liability does not
arise against the members of the Hindu undivided
family, even if the family is disrupted.
We are therefore of the view, but not for the
reasons mentioned by the High Court, that because there
has been before the orders of assessment no order
recording that the property of the family has been
partitioned among the members, the two respondents are
not personally liable to satisfy the tax due by the
joint family. The remedy of the income-tax authorities,
in the circumstances of the case,
516
was to proceed against the property, if any, of the
Hindu undivided family. That admittedly they have not
done."
It will be seen that in this case no question was
raised as to whether the assessment orders were void as they
were passed without holding an inquiry as required by
section 25A (I) of the Act. The only question was whether in
the absence of an order under section 25A (1), any personal
liability can be enforced against the members of the joint
family.
Strong reliance is, however, placed on behalf of the
assessee on the decision of the Andhra Pradesh High Court in
Karri Ramakrishna Reddy v. Tax Recovery officer,
Vijayawada(’) which involved the interpretation of section
171 of the Income-tax Act, 1961, which, in so far as the
question involved in these appeals is concerned, contains
similar provisions. In that case a person who was a member
of a Hindu undivided family questioned in a proceeding under
Article 226 of the Constitution an assessment made against
the Hindu undivided family after it had been partitioned
without holding an inquiry as required by section 1.71 (2)
of the Income-tax Act, 1961 even when a claim of partition
had been made by his father in the assessment proceedings.
The petitioner therein con tended that such an order would
not be binding upon the other members of the family. The
High Court accepted the contention of the petitioner therein
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and held that the assessment order could not be enforced
against him. This again is a case where the validity of the
assessment order had been questioned not in an appeal filed
against it but in a separate proceeding. The observations
made therein may not, therefore, be of much assistance to
the assessee because we are concerned in these appeals with
the powers of the appellate authority where appeals are
filed against the assessment orders themselves contending
that there has been non-compliance with section 25A(I).
Moreover it appears that certain observations made in that
case in respect of the decision of this Court in Additional
Income-tax officer, Cuddapah v. A. Thimmayya & Anr.(2) and
the Full Bench decision of the Andhra Pradesh High Court in
Commissioner of Income-tax v. Tatavarthy Narayanamurthy (3)
need further examination. We refrain from expressing any
opinion on
517
the correctness of this decision which does not even appear
to have been cited before the High Court when the reference
out of which these appeals arise was argued.
From a fair reading of section 25A of the Act it
appears that the Income-tax officer is bound to hold an
inquiry into the claim of partition if it is made by or on
behalf of any member of the Hindu undivided family which is
being assessed hitherto as such and record a finding thereon
If no such finding is recorded, sub-section (3) of section
2SA of the Act becomes clearly attracted. When a claim is
made in time and the assessment is made on the Hindu
undivided family without holding an inquiry as contemplated
by section 25A (1), the assessment is liable to be set aside
in appeal as it is in clear violation of the procedure
prescribed for that purpose. The Tribunal was, therefore,
right in holding that the assessments in question were
liable to be set aside as there was no compliance with
section 25A (l) of the Act. It is, however, difficult to
agree with the submission made on behalf of the assessee
that the duty of the Tribunal ends with making a declaration
that the assessments are illegal and it has no duty to issue
any further direction. It is well known that an appellate
authority has the jurisdiction as well as the duty to
correct all errors in the proceedings under appeal and to
issue, if necessary, appropriate directions to the authority
against whose decision the appeal is preferred to dispose of
the whole or any part of the matter afresh unless forbidden
from doing so by the statute. The statute does not say that
such a direction cannot be issued by the appellate authority
in a case of this nature. In interpreting section 25A (l) we
cannot also be oblivious to cases where there is a
possibility of claims of partition being made almost at the
end of the period within which assessments can be completed
making it impossible for the Income-tax officer to hold an
inquiry as required by section 25A (1) of the Act by
following the procedure prescribed therefor. We, however, do
not propose to express any opinion on the consequence that
may ensue in a case where the claim of partition is made at
a very late stage where it may not be reasonably possible at
all to complete the inquiry before the last date before
which the assessment must be completed. In the instant case,
however, since it is not established that the claim was a
belated one the proper order to be passed is to set aside
the assessments and to direct the Income-tax officer to make
fresh assessments in accordance with the procedure
prescribed by law. The Tribunal, therefore, erred in merely
cancelling the assessment orders and in not issuing further
directions as stated above.
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518
We do not, however, agree with the orders made by the
High Court by which it upheld the assessments and directed
the Income-tax officer to make appropriate modifications.
Such an order is clearly unwarranted in the circumstances of
this case. The order of the High Court is, therefore, set
aside. The question referred by the Tribunal to the High
Court does not appear to be comprehensive enough to decide
the matter satisfactorily. The question may have to be read
as including a further question regarding the nature of the
orders to be passed by the Tribunal if the orders of
assessments are held to be contrary to law. In the light of
the above, we hold that the orders of assessments are liable
to be set aside but the Tribunal should direct the Income-
tax officer to make fresh assessments in accordance with
law.
The appeals are accordingly disposed of. There shall be
no order as to costs.
S.R. Appeals allowed.
519