ORDER
M.A. Bakhshi, Judicial Member
1. The appeal by the revenue is directed against the order of Commissioner of Income-tax, Dehradun dated 24th December, 1986 on the following grounds:
Learned AAC has erred in law and on facts in accepting the group partition claimed by the assessee and which too was not acted upon by the members and mere deed of partition is sufficient to establish that the partition has actually taken place -ITO v. Bachu Lal Kapoor [1966] 60 ITR 74 (SC).
2. The Cross Objection has also been filed by the assessee supporting the order of CIT(A). We dispose of the appeal as well as the Cross Objection by this order for the sake of convenience.
3. The brief facts giving rise to this appeal are that Shri Tilak Raj Batra was karta of a HUF with his wife Smt. Krishna Batra, two minor sons Master Rajan Batra and Raman Batra and two minor daughters Km. Renu Batra and Km. Ranjana Batra as members/coparceners. For the assessment year 1978-79 to 1982-83 assessee filed returns of income on 21st January, 1983 and in Part III of the returns claimed to have partitioned two trucks bearing registration Nos. HRE 3399 and CHW 3165 as under:
Truck No. HRE 3399 Shri Tilak Raj Batra and Smt. Krishna Batra along with two minor daughters Km. Renu Batra and Km. Ranjna Batra, without specifying their interest inter se.
Truck No. CHW 3165 Master Rajan Batra and Master Raman Batra without specifying interest inter se.
The return for assessment years 1978-79 and 1979-80 had been filed in response to notice under Section 148 whereas for assessment years 1980-81 to 1982-83 the returns had been filed voluntarily. Assessing Officer rejected the claim of partition under Section 171 vide order dated 10th January, 1984 on the following grounds : (0 that no accounts had been maintained by the assessee ; (if) that the liabilities against both the trucks had been allotted to the two groups; (Hi) that the loan had been granted in the name of Tilak Raj Batra in respect of two trucks and even after partition the bank account continued in the same name ; and (iv) that the registration of the trucks with the Regional Transport Officer was not changed in the name of respective groups.
4. The other reason for rejecting the claim of the assessee was that opportunities afforded to the assessee for producing the members of the family was not availed of.
5. In appeal the A AC vide his order dated 28th November, 1984 remitted the matter back to the Assessing Officer with the direction to examine all the facts and evidence relevant to the case and examine various members of the HUF in connection with the alleged partial partition.
6. When the matter came for hearing before the Assessing Officer, affidavits of Shri Tilak Raj Batra, Smt. Krishna Batra and Master Rajan Batra confirming the partial partition was filed before the Assessing Officer. The Assessing Officer declined to recognize the partition for the reasons mentioned in para 3 of his order which is reproduced hereunder for the sake of reference :
I have carefully considered all the facts mentioned in the affidavits. The assessee has no accounts. Further as per memorandum of partial partition the liabilities against both the trucks have also been allotted to the alleged groups A & B. It is found that Bank accounts stood in the name of Shri Tilak Raj Batra and not to the alleged groups. The Bank account is still being operated by Shri Tilak Raj Batra and that the trucks also stood in the name of Shri Tilak Raj Batra in the office of RTO meaning thereby there was no physical division of assets alleged to have been partitioned. Furthermore the said memorandum of partial partition is also silent about the definite share of each member of the alleged groups.
7. Referring to the case law cited on behalf of the assessee, the Assessing Officer remarked that the facts were distinguishable. Considering the conduct of the assessee and the fact that the Department not having accepted such type of partition, the Assessing Officer declined the claim of the assessee with regard to partial partition. The CIT(A) accepted the appeal of the assessee and directed the Assessing Officer to accept the partial partition as claimed by the assessee.
8. The Revenue is aggrieved. Shri D.K. Singh the learned D.R. contended that the mere statement of the assessee or mere declaration of partial partition is not enough for recording the fact of partial partition under the provisions of Section 171 of the Income-tax Act, 1961, Apart from the declaration the assessee has got to establish that the partition as claimed has in fact taken place. According to the learned D.R. the entire evidence on record is indicative of the fact that the partial partition as claimed has not in fact taken place. According to the learned D.R. the law regarding partial partition has been amended w.e.f. 1-4-1980 on the basis of which partial partition effected after 31st December, 1978 are no longer recognized for the purposes of Income-tax Act, 1961. Assessee has for the first time made a claim of partial partition after the amendment of the law, i.e., on 21st February, 1983 and thus a strong burden lies on the assessee to establish that partial partition in fact took place on 1st April, 1977 as claimed. The learned D.R. referred to the decision of the Hon’ble Supreme Court in the case of ITO v. Bachu Lal Kapoor [1966] 60ITR74 in support of his contention that the Assessing Officer has die jurisdiction to examine the genuineness of the claim despite the fact that the individual members have separately been assessed. According to the learned D.R. the claim of the partial partition is nothing, but a make believe as no evidence has been produced before the Assessing Officer or before any other authorities apart from a declaration of partition.
9. The learned counsel for the assessee Shri K.P. Bhatnagar vehemently argued that the order of the Assessing Officer was contrary to law and that the CIT(A) was justified in accepting the claim of the partial partition in respect of two trucks belonging to HUF. According to the learned counsel, it was not necessary for the assessee to in form the bankers regarding the partial partition effected amongst the members. Similarly, according to the learned counsel, it. was not necessary for the assessee to change the registration of the vehicles in the name of respective groups. The objection of the Assessing Officer that the individual shares inter se had not been indicated is not a valid ground, according to the learned counsel for the assessee, for rejecting the claim of the partial partition. The learned counsel heavily relied upon the decision of the Hon’ble Supreme Court in the case of Seth Gopaldas (HUF) v. CIT [1983] 141 ITR 577 in support of his contention {hat minor sons can form a group in the case of partial partition and that there was no irregularity in such a partition. The learned counsel further contended that the document evidencing the partition is prima-facie evidence in support of the partial partition even if motive for the transaction may be avoidance of tax as held by their Lordships of the Allahabad High Court in the case of Day Shanker Vijay Kumar v. CIT[1980] 124 ITR 691. It was accordingly pleaded that the order of the CIT(A) may be confirmed and the appeal of the revenue dismissed.
10. We have given our careful consideration to the rival contentions. Section 171 of the Income-tax Act, 1961 was amended w.e.f. 1-4-1980 by virtue of which partial partition effected after 31st December, 1978 are not to be recognized for the purposes of income-tax. Assessee claims to have effected the partial partition w.e.f. 1-4-1977 by a memorandum of oral partial partition purported to have been executed on 2nd April, 1977. A Photostat copy of this memorandum was filed before the revenue authorities, copy of which has been made available to us is the only evidence produced on which assessee has based his claim on partial partition. The original document has not been produced before any of the authorities. It is observed from the copy of the memorandum of partial partition that though it was purported to have been executed amongst the six members of the family yet it has been signed on behalf of only four of them. Though the signatures of the witnesses appear in the agreement, the name, parentage and addresses have not been indicated in this agreement. The assessee has for the first time made the claim on 21st February, 1983 by making a mention of partial partition in Part III of the return. Copy of the application for partial partition made available to us is dated 31st December, 1985. This all has happened after the law has been amended. When a claim of partition is made by the assessee, it is necessary for the assessee to produce sufficient evidence so as to enable the Assessing Officer to record a finding regarding the partition. In the case Mst. Rukhmabai v. Lala Laxminarayan AIR 1960 SC 335, their Lordships of the Supreme Court held that normal state of HUF is one of joint ness and the onus of proving the partition lies upon the parties alleging it. A similar view has been taken by their Lordships of the Calcutta High Court in the case of Harahan Vastaram v. CIT [1965] 58ITR 533. In the case Sree Meenakshi Mills Ltd. v. CIT [1963] 49 ITR 156 (Mad.) it was held by their Lordships of High Court that mere deed of partition is not sufficient to establish that the partition has actually been taken place in case there are circumstances which indicate to the contrary.
11. In this case the fact that the registration of the vehicles had not been transferred in the name of respective groups and that the bank loans have been continued in the name of bigger HUF are the circumstances, which in the absence of any other evidence lilt the balance against the assessee. We may point out that despite the partial partition assessee may establish the circumstances under which registration of the vehicles was not transferred to the respective groups after the partition. Assessee may also establish the circumstances justifying continuation of bank loan in the name of bigger HUF. But in the absence of any evidence to the contrary Assessing Officer would be justified in drawing adverse inference from these facts. It is because of these facts that it has become necessary for the assessee to produce strong evidenc6 in support of the claim of partial partition. It is true that the Assessing Officer was not justified in rejecting the claim on the ground that the individual shares inter se have not been indicated in the memorandum of partial partition. Similarly, there is no bar for the minor children of the karta to represent the group in the matter of the partition of the HUF property. But at the same time assessee has not produced enough evidence to remove the doubts created in the mind of the Assessing Officer by not transferring the registration certificates in the name of respective groups and by not transferring the bank loan to them. We accordingly consider it just and reasonable to remit the matter to the file of the Assessing Officer for fresh determination in accordance with law. The Assessing Officer shall give reasonable opportunity of being heard to the assessee for production of any evidence in support of the claim of the partial partition. In case sufficient evidence is produced to establish that partial partition in fact had taken place w.e.f. 1 -4-1977 the Assessing Officer shall pass an order under Section 171 recognizing the partial partition. In case sufficient evidence is not produced before the Assessing Officer establishing the partial partition, the claim of the assessee shall be refused. The mere fact that the revenue has made assessments in the case of separate groups for the subsequent assessment years is not a bar for consideration of the genuineness of the claim of the partition. The Assessing Officer has jurisdiction to go into the genuineness of the partial partition even if individual members have been separately assessed. This view is supported by the decision of the Hon’ble Supreme Court in the case of Eac.hu Lal Kapoor (supra). We would also like to refer to the decision of the Hon’ble Supreme Court in the case of Apoorva Shantilal Shah v. CIT [1983] 141 ITR 558 wherein their Lordships of Supreme Court have held that it is open to the Assessing Officer before recognizing the partition to come to a conclusion on proper scrutiny whether partition is genuine or not. If on an enquiry ITO comes to a finding that the partition is sham or fictitious he will be perfectly within his rights to refuse to recognize the same. Thus mere production of partition document before the Assessing Officer is not enough for recognition of the claim of the partition. The burden is on the assessee to establish that the partition as claimed has in fact taken place. The assessee shall thus ha veto establish that a partial partition has taken place in reality. The appeal of the revenue is partly allowed.
12. The Cross Objection filed by the assessee is supporting the order of the CIT( A). In view of our decision in revenue’s appeal, the Cross Objection filed by the assessee is dismissed.