KAPURCHAND SHRIMAL versus COMMISSIONER OF INCOME TAX, ANDHRA PRADESH,HYDERABAD

Citation: [1982] 1 S.C.R. 505 · Decided: 28-08-1981 · Supreme Court of India · Bench: P.N. BHAGWATI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

KAPURCHAND SHRIMAL 
v. 
COMMISSIONER OF INCOME TAX, 
ANDHRAPRADESH,HYDERABAD 
August 28, 1981 
[P.N. BHAGWATI AND E.S. VENKATARAM!AH, JJ.) 
505 
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 Hi'ndu undivi'ded family without holding an inquiry into the validity of the 
claim made within a reasonable time by a mem'ier of the Hindu undivided family 
that a partition had taken place among the n1embers of the family is liable to be 
merely cancelled in appeal by the lncome--tax Appellate Tribunal without a further 
direction to the asres-;ing authority either to modify the assessmeilt suitably or to 
pass a fresh order of assess1nent in accordance with law. 
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(l) 
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 que~tion 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 !6, 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. A.nother 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, L962 and March 27, 1963 without holding any jnquiry as 
contemplated by section 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 
b:fore the Assistant Appellate Com1nissioner again5t the assessment orders for 
the years in question, that is, 1955-56 and 1957-58 to 1961-62. the assessee con-
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506 
SUPREME COURT REPORTS 
[1982] I S.C.R. 
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 n1ade 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 
IIELD: (1) Under section 25A of the 1922 Act the Income-tax Officer was 
C 
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

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