Commissioner of Income Tax vs MaganIal Mohanlal Panchal

M.S. Shah, J.

In this reference at the instance of the revenue, the following question has been referred for our opinion in respect of the assessment year 1980-81 :

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in directing the Income Tax Officer to pass an order u/s 171 of the Income Tax Act, 1961 for partial partition ?"

The assessee claimed before the Income Tax Officer that a partial partition had taken place amongst the members of the Hindu undivided family on 3-3-1979. It was stated that a sum of Rs. 50,000 standing to the credit of the Hindu undivided family in the bank account had been divided between the coparceners as under :

Rs.

1.

Shri Maganlal Mohanlal Panchal

30,000

2.

Shri Kacharabhai M. Panchal

10,000

3.

Shri Revabhai M. Panchal

10,000

The Income Tax Officer refused to recognise the partial partition in view of sub-section (9) of section 171 introduced with effect from 1-4-1980. The Appellate Assistant Commissioner confirmed the order made by the Income Tax Officer.

The Tribunal relying on the decision of the Madras High Court in the case of M.V. Valliappan and Others Vs. Income Tax Officer and Others, , directed the Income Tax Officer to pass an order u/s 171 in respect of the assessee''s claim for partial partition.

In the aforesaid case of M.V. Valliappan (supra), the Madras High Court had struck down the provisions of section 171(9) as violative of article 14 of the Constitution and that it suffered from the vice of legislative incompetence.

We have heard, Mr. B.B. Naik, the learned counsel for the revenue and Mr. K.H. Kaji, the learned counsel for the respondent-assessee.

At the hearing of this reference, our attention is invited to the decision of the Constitution Bench of the Supreme Court in the case of Union of India and Others Vs. M.V. Valliappan and Others, wherein the Apex Court reversed the decision of the Madras High Court and held the provisions of section 171(9) to be constitutional.

In view of the aforesaid, we have to hold that the Tribunal was not right in law in directing the Income Tax Officer to pass an order u/s 171 for partial partition. Since constitutional validity of the provisions of section 171(9) has been upheld by the Supreme Court, the Income Tax Officer was justified in refusing to recognise the partial partition in view of the provisions of section 171(9) introduced with effect from 1-4-1980.

Accordingly, our answer to the question referred to us is in the negative, i.e., in favour of the revenue and against the assessee.

The reference, accordingly, stands disposed of with no order as to costs.