ORDER
T.V. Rajagopala Rao, Judicial Member
1. These are all assessee’s appeals. The assessee is common in all these appeals and the point involved in all these penalty appeals is also common. Hence, they can be disposed of by a common order for the sake of convenience. One Sri Venkataiah has got three sons and one daughter and it constituted a bigger HUP. The bigger HUF was partitioned fully and completely long back. Now we are concerned with the branch headed by the third son of Shri Venkataiah, viz., Ramaswamy. Ramaswany has got a wife by name Sarojadevi and has a minor son through her by name Master Balakrishna. Bala-krishna was born on 13-11-1968. There was a partition of the family assets between Ramaswamy and his minor son on 31-12-1974. In the said partition Smt. Sarojadevi was not given any share inasmuch as she did not want any share from out of the family and she was also reported to have relinquished her right of maintenance on the ground that she had adequate wealth for herself and did not want any further. Admittedly, the family of Mr. Ramaswamy was governed by the Southern School of Mitakshara Hindu Law. According to the peculiar customs existing in that School of Law, when there is a partition in a family the wife of the karta is not entitled to a share equal to that of son, since such a right had fallen to disuse since a very long time. For assessment year 1975-76 the wealth-tax return and for assessment year 1976-77 the income-tax returns were filed in the status of individuals. It was represented to us that for assessment on income-tax side for these years except assessment year 1976-77 were completed on regular basis under Section 143(3) in the status of an individual. However, for assessment year 1976-77 the income-tax assessment was completed on protective basis in the status of individual.
2. For assessment year 1977-78 regular income-tax assessment was completed in the status of HTJF. The assessee went in appeal before the Appellate Assistant Commissioner of Income-tax against the said regular assessment. The AAC allowed the asses-see’s appeal vide his order dated 13-12-1984 which is provided at p. 59 of the paper compilation filed before us. As against the AAC’s orders dated 13-12-1984 the department preferred a second appeal before this Tribunal. We have disposed it of by our orders dated 27-2-1987 in IT A -No. 640(H) of 1985. We held that the matter is directly covered by the Andhra Pradesh High Court decision in Prem Chand v. CIT [1984] 148 ITR 440 where it was held that even on parbition there was no change in the joint family character of the property received by the husband at the partition even though a portion was given to his wife. The marital bond between the husband and wife continued and was not snapped in spite of the share given to the wife. Unlike the son who goes out of the family after partition, or, the daughter on marriage, the wife continues to be the member of the HUF of her husband as long as marital tie lasts, in spite of taking a share in the partition. The karta and his wife are, therefore, assessable as a HUF. The Tribunal’s decision is provided at pp. 61 to 63 of the Paper Compilation.
3. Penalties under Section 271(1)(a) of the Income-tax Act and Section 18(1)(a) of the Wealth-tax Act were levied by the ITO and WTO respectively for not filing the returns of income-tax side and wealth-tax side in the HUF status within the time allowed under law. In this case the Tribunal’s order was passed on 27-2-1987 whereas the AAC’s order was passed on 13-2-1984. As against the penalty orders passed for assessment years 1977-78, 1978-79,1979-80 and 1980-81 on the income-tax side and for assessment years 1975-76, 1976-77 and 1977-78 on the wealth-tax side, the assessee went in appeal before the AAC. The AAC, B-Range, Hyderabad by his consolidated orders without date disposed of the income-tax as well as wealth-tax penalty appeals. Before him it was contended that the appellant should be held as being under the bona fide belief that his status was an individual and he need file the returns in the said status only. The AAC held disagreeing with this contention that it is not enough if some return is filed in some status. Filing of a return in the correct status is more important than filing of the return itself because the tax liability varies depending upon the status and, therefore, it is imperative that the return should be made in the correct status or else the return becomes non est in law. He went on in dealing with the probable intention of the parties in effecting partition with a six year old son and virtually-held that it is a part of tax planning scheme. However, the AAC made it clear that it is not his point to challenge the validity of the alleged partition between the karta and the six year old minor son since such partitions are held to be legally not impermissible and he cited the Supreme Court’s decision in Apoorva Shantilal Shah v. CIT [1983] 141ITR 558. He further held that if the returns were filed admitting the status as HUP consisting of Sri B. Ramaswamy and his wife Smt. B. Saroja Devi, that HUP would have suffered higher rate of tax because Mrs. B. Saroja Devi the member of the HUF is having an individual income/wealth attracting tax liability and that would have been assessed as specified HUF attracting higher rate of tax as per sub-para II of the Schedule to Finance Act, 1974. The AAC further held that adopting a device and by filing the return in the status of an individual the assessee managed to pay lesser tax to a considerable extent, but for the alertness of the officers of the revenue, revenue would have suffered enormously. Ultimately he had confirmed the penalties levied by the ITO/WTO under Section 271(1)(a) and 18(1)(a) as follows :
Sl. Assessment Under Amount No. year Section Rs. 1. 1977-78 271(1)(a) of Income-tax Act 16,926 2. 1978-79 -do- 5,127 3. 1979-80 -do- 16,189 4. 1980-81 -do- 21,042 5. 1975-76 18(1)(a) of Wealth-tax Act 12,120 6. 1976-77 -do- 15,862 7. 1977-78 -do- 7,540
4. As against the common order passed by the AAC these second appeals are filed before this Tribunal. It was contended before us that the assessee was never had the intention of either to evade or avoid payment of tax. The assessee had submitted income-tax return in individual status and the taxes were also paid promptly. Further, he contended that the order of the AAC was in his favour and hence the appellant should be held as being under a bona fide belief that his status is that of an individual and he need to file return also in the same capacity. It was submitted by Mr. B. Satyanarayanamurty, learned counsel for the assessee that income-tax returns and wealth-tax returns for these 7 years under consideration were already filed. The dates of returns filed on income-tax side for assessment years 1977-78 to 1980-81 in the status of individual as well that of HUF were given at p. 65. The assessments for 1977-78, 1978-79 and 1979-80 as well as 1980-81 were also completed on regular basis on income-tax side. For assessment year 1980-81 there was a marginal delay for which the asses-see was penalised under Section 271(1)(a) and the penalty of Rs. 342 levied was promptly paid on 12-2-1986. So also on wealth-tax side the dates when the returns were submitted for 1975-76, 1976-77 and 1977-78 in the status of an individual as well as in the status of HUF were furnished at p. 67 of the paper compilation. On income-tax side notices dated 18-1-1981 were served against the assessee under Section 148 of the I.T. Act. In response to those notices the assessee filed only nil returns. So also on wealth-tax side notices under Section 17 dated 4-3-1983 were issued to the assessee. It was submitted that in pursuance of those notices only nil returns were filed on wealth-tax side also. Whether the status was that of HUF of an individual the same wealth was offered for assessment. Because the assessee was under a bona fide impression that on partition whatever he got towards his share is his individual property and from the date of partition there is no joint family existing, even though his wife is living along with him, he thought that he is the sole surviving coparceners and he has got the full right and authority to dispose of any item of property which fell towards his share in the partition without the concurrence or consent of any other person in his family, therefore, he thought his status was that of an individual. The fact that he steadfastly held the same opinion would be proved by the fact that despite issue of notices under Section 148 of the Income-tax Act and Sections. 17 and 18 of the Wealth-tax Act only nil returns were filed by the assessee and it would amply prove the bona fide of his belief. Further, the AAC by his order dated 13-12-1984 gave a decision in favour of the assessee confirming the bona fide belief of the assessee about his status. Further, CIT v. K. Satyanarayan Murty [1984J 147 ITR 140, Shri R.M. Misra, the then Chief Justice of the Orissa High Court held that when a HUF business was partitioned among the karta and his sons, the share allotted to the karta should be considered as an individual property and the share of income from business derived by the erstwhile karta should be assessed as his individual income. This decision was rendered on 17-11-1982 by the Orissa High Court. No doubt Prem Chand’s case (supra) was determined by the Andhra Pradesh High Court struck a different note and it dissented from the Orissa decision rendered in K. Satyanarayan Murty’s case (supra’). However, the decision itself was rendered on 30-3-1983. Section 148 notice was issued by the department in this case for the four assessment years with which we are concerned on income-tax side on 18-1-1981, whereas Section 17 notices were issued by the department for assessment years 1975-76, 1976-77 and 1977-78 were all dated 4-3-1983. So, it is clear that the reopening notices were issued by the department at a time when Prem Chand’s case (supra) was never in the field (its judgment is dated 30-3-1983) and there is a specific decision supporting the view of the assessee was found in the Orissa High Court’s decision rendered in K. Satyanarayan Murty’s case (supra). Therefore, in our opinion there is every scope for the assessee to hold a bona fide opinion about the position of law that whatever he get on partition with his son is his individual property and does not belong to his family. The Hon’ble Supreme Court in Lakshmi Chand Khajuria v. Smt. Ishroo Devi AIR 1977 SO 1694 at p. 1699 considered whether a mother is entitled to a share of partition of a Mitakshara joint family governed by Southern School of Mitak-shara Law or not. In that case their Lordships of the Supreme Court, held that in Madras though Mitakshara Law is applicable it has been held that on a partition between sons and the father, the mother is not entitled to any share. While giving the said judgment the Hon’ble Supreme Court approved the Full of Bench of Andhra Pradesh High Court’s decision in Adusunilli Seethamahalakshmamma v. Yemeni Chalamaiah AIR 1974 AP 130 (FB). In a recent decision of the Andhra Pradesh High Court by a Full Bench in Rayani Appayya v. Special Tahsildar, Addanki [1988] 1 APIJ 1 (FB), it was held that neither the wife nor the mother gets a share in the joint family property when the joint family was governed by the Madras School of Mitakshara Law. In those circumstances we are of the opinion that the assessee has reasonable cause in entertaining a belief that his correct status is that of an individual and not that of a HUF. In Prem Chand’s case (supra) decided by the Andhra Pradesh High Court, the parties do not belong to Southern School of Mitakshara Law but they are governed by Benaras School of Hindu Law. We are not for a moment disputing that as long as the marital tie between a man and his wife lasts, whether the wife was given any share or not in the family, she constitutes a member of the family and her husband. However, that is quite different from saying whether there is justifiable reason for belief for the assessee to hold the opinion that his correct status is that of an individual and not that of a HUF. In this connection admittedly the returns in the status of an individual were filed both on income-tax side as well as on wealth-tax side within time except for one assessment year for which a small penalty of Rs. 342 was levied and also paid. Ultimately the correct status of the assessee was found as that of HUF and not individual. The question is whether there was sufficient cause for delay in filing revised returns or not. In our opinion this question is fully covered by the decision of the Gujarat High Court in CWT v. Senatkumar Jayantilal [1982] 135 ITR 180. Facts as well as the decision were fully summarised in the head-note of the decision as follows :
The assessee filed his return of wealth in his individual capacity within the prescribed time. Subsequently, in view of some judicial pixmouncements, the assessee filed a separate return as karta of an HUF in respect of the ancestral property which had come into his hands, which he was so far including and had earlier included in his individual return as if it was his self-acquired property. Since under the law it was open to the assessee to treat the ancestral property as property belong to an HUF and to exclude it from his individual return, he revised the original return filed by him, which had been filed within time, by excluding the ancestral property from his individual net wealth. The Tribunal held that there was sufficient cause for the delay in filing the return and cancelled the penalty imposed on the assessee. On a reference :
Held, affirming the decision of the Tribunal, that the cancellation of penalty was valid.
5. Having regard to the above discussion firstly we hold that in the return either in the status of the HUF or in the status of individual the same wealth was returned. Secondly, we are of the opinion that there is every likelihood for the assessee to entertain reasonable belief that his correct status is that of individual and whatever he gets towards his share in a partition between himself and his son is his individual property and does not belong to his family. The binding decisions also support the view held by the assessee. Thirdly, we hold that by the date of issue of the reopened notices Prem Chand’s case (supra) decision which was rendered by the Hon’ble Andhra Pradesh High Court on 30-3-1983 was never there and hence the validity of reopening itself was of doubtful authority. Fourthly, it is not a case where the assessee did not file his income-tax and wealth- tax returns at all for these several years. In one capacity or the other he had filed the returns. The gravamen of the charge was that he did not file his returns in his true legal status. According to the Gujarat High Court decision cited, wo hold that there is sufficient cause for delay in filing the returns. Further, the learned CWT, AP-I while revising the orders for 1978-79 and 1979-80 held as follows :
I direct the Wealth-tax Officer to take the status of the assessee for the two assessment years under consideration as HUF. Further as the assessee’s wife Smt. B. Saroja Devi did possess taxable wealth for the two assessment years under consideration, I direct the Wealth-tax Officer to apply the rates of wealth-tax appropriate to a HUF having at least one member who has taxable wealth.
Therefore, it is seen that the learned CWT himself did not feel any difficulty to treat the status of the assessee in a different way than the status disclosed in the wealth-tax returns. So, applying the same logic for these seven assessment years also nothing prevented the department to take the correct status and complete the assessments. Therefore, ultimately we find that there was sufficient and reasonable cause for delay in filing the revised returns and hence it is not a fit case where penalties should be sustained, either Section 271(1)(a) of the Income-tax Act or under Section 18(1)(a) of the Wealth-tax Act.
6. Hence, we cancel all the penalties for these 7 years and allow the appeal.