THE COMMISSIONER OF INCOME TAX vs. SHRI.H.M.SHIVAMALLAIAH

The Commissioner of Income-tax, C.R.Building, Queens Road, Bangalore.

The Asst. Commissioner Of Income-tax, Central Circle-1(4), C.R.Building, Queens Road, Bangalore. ...APPELLANTS

The Commissioner of Income-tax,

The Asst. Commissioner Of Income-tax, Central Circle-1(4), C.R.Building, Queens Road, Bangalore. ...APPELLANTS

The Commissioner of Income-tax, C.R.Building, Queens Road, Bangalore.

The Asst. Commissioner Of Income-tax, Central Circle-1(4), C.R.Building, Queens Road, Bangalore. ...APPELLANTS

The facts which emanate from the records is, under a partition deed dated 13.11.1966 between Sri.Malle Gowda, Sri. Mallaraiah, Sri. Siddaiah and Sri.Bogasiddaiah, the Joint Family properties were partitioned. Thereafter, Sri.Mallaraiah, became the Kartha of his branch consisting of his son Sri.H.M.Shivamallaiah. He had five daughters, who were all married prior to 1990. After the death of Sri.Mallaraiah, on 23.07.1997, his son Shivamallaiah became the sole surviving coparcenor and the joint family constituting of himself and his mother. All the properties devolved on them.

There was a search of the premises of Shivamallaiah on 23.08.2000. The search warrant was issued in the name of Sri.Shivamallaiah. On the basis of the information secured in the said search, proceedings were initiated against the deceased Mallaraiah. A Block Assessment Order came to be passed treating the income of all these persons in their individual capacity. The same was challenged by the assessee before the Tribunal. The Tribunal, on consideration of the entire material on record has set- aside the order on two grounds. Firstly, the Block Assessment proceedings could not have been initiated against the dead person. Secondly, all the properties belonged to the Joint Family and not individually to them. Aggrieved by the said order, the Revenue has preferred these appeals.

It is to be noticed that the Revenue has not preferred any appeal against that portion of the order setting aside the Block Assessment order in respect of the deceased Sri.Mallaraiah. The Revenue has raised the following substantial questions of law in the appeal memo: 1. Whether the Tribunal was correct in holding that the assessee should be assessed in the status of HUF and not individual without examining the evidence considered by the Assessing Officer and Appellate Commissioner and consequently recorded a perverse finding?

Whether the Tribunal was correct in holding that the Block Assessment passed in the hands of assessee sould have been passed in the hands of HUF even though the evidence clearly showed that the income earned was by the assessee individual and the properties

Whether the Tribunal was correct in holding that the income earned by the assessee from the business carried on and interest income from deposits should be brought to tax in the hands of the HUF when the business was carried on and the investments made in bank were standing in the individual name of the assessee and consequently recorded a perverse finding?

Whether the Tribunal was correct in holding that the income from capital gains and house property cannot be brought to tax in the hands of the assessee without taking into consideration the material evidence considered by the Assessing Officer as

Whether the Tribunal was correct in holding that the unexplained investment in the assessee’s wife and the consequential rental income cannot be brought to tax in the hands of the assessee?

Whether the Appellate Commissioner was correct in holding that no surcharge was leviable in respect of the Block Assessment order?

From the aforesaid material on record, it is clear that Sri.Mallaraiah, in a partition between his father and brothers got his share in the Joint Family property. He had a son by name Shivamallaiah. They constituted a Joint family. After the death of Mallaraiah, Shivamallaiah who is his son, became the sole coparcenor and the joint family continued consisting of

In the light of the aforesaid facts, we are satisfied that the finding recorded by the Tribunal that these persons ought to have been assessed in their capacity of Joint Family and not as individual and therefore, the entire Block Assessment proceedings