Opinion Of Eminent Legal Luminaries On Controversial Issues

Partition – Assessment – Hindu undivided family -Mandatory recording of Partition u/s. 171

QUERY: A has made full partition of HUF in March 2016. HUF submits ITR for the Assessment year 2017-18. The intimation u/s. 143(1) is received, but no partition u/s. 171 is recorded. What steps the assessee should take?
ANSWER: As per section 153(1) of the Act, time limit for completion of assessment is December 31, 2019 for assessment year 2017-18. So before this date the Assessing Officer should investigate the claim of partition and give finding. However, according to author, partition should have claimed in the assessment year 2016-17, as partition was on March 31, 2016.
The result of provisions of section 171 is that though a family has come to an end in law because of a partition in status vis-a-vis all the properties, its disappearance will not be recognised and it will continue to be assessed as a joint family and charged as a single unit of assessment on its income as before as per ITO v. N. K. Sarada Thampathy [187 ITR 696 (SC)].
As per Kalwa Devadattam v. UOI [49 ITR 165 (SC)], even where there is complete partition by metes and bounds the family will be deemed to continue (i) if no claim of partition is made by the members at the time of the assessment; or (ii) if a claim is made but no finding is given by the officer recording the partition.
Hence, where claim is made, it will be duty of the Assessing Officer to investigate the claim and give a finding. Where he makes an assessment on the family without disposing of the claim, the Supreme Court held in Kapurchand Shrimal v. CIT [131 ITR 451], held that the assessment should be set aside in appeal or other appropriate proceedings with a direction to the officer to make a fresh assessment according to law.
Therefore, it is necessary to assessee to pursue the Assessing Officer to record the partition before the assessment is completed.
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