ORDER
S.K. Chander, Accountant Member
1. This appeal by the assessee is directed against the order of the CIT (A) dated 11-9-1985 relating to asstt, year 1982-83. Before we project the grievance of the party in appeal, we think it essential to bring the facts of the case into focus. The facts are as under.
2. The assessee is a HUF known as M/s. Mani Ram, HUF. It consists of only one male member Shri Mani Ram. The other member of the family is his wife, Smt. Mee Kaur. The HUF has been assessed to income-tax since asstt. year 1980-81. On 9th day of January, 1982 a memorandum of partition was drawn on a stamp paper of Rs. 2 between Shri Mani Ram and Smt. Mee Kaur. As per this memorandum, which appears at pages 14 to 18 of the paper book, on that date, the said HUF had properties worth Rs. 5,73,707, which, inter alia, included cash and bank balances amounting to more than Rs. 5 lakhs. The memorandum records that the parties to the memorandum agreed for the division of the HUF properties into separate lots in accordance with their shares for more convenient and exclusive possession and better enjoyment to the divided portions of the property. According to this memorandum, Smt. Mee Kaur agreed to take a sum of Rs. 2,25,000 in cash as her full and final share in the said properties. The rest of the properties remained with Shri Mani Ram. The memorandum records that the first party, namely, Mani Ram is allowed to retain a little more than half share in the properties to meet out the liabilities of the said HUF on account of taxes and other social obligations etc.
3. Before the above said memorandum of agreement, two gifts were made consisting of Rs. 70,000 and Rs. 75,000 respectively. The first gift of Rs. 70,000 was made partly by the Karta of the HUF to Smt. Ved Wati and the second gift of Rs. 75,000 was given to five children of Smt. Ved Wati. In other words, on 8-1-1982 i.e. a day before the socalled memorandum of partition a sum of Rs. 1,45,000 was gifted to the above parties. The background of the above gifts appears to be that a sum of Rs. 70,000 had been advanced by the HUF to Smt. Ved Wati on 19-5-1981 and this amount was outstanding on 8th day of January, 1982 when declaration of gift was made by the Karta treating the said amount due from Smt. Ved Wati to be a gift to her. The sum of Rs. 75,000 which was gifted to five children of Smt. Ved Wati was also outstanding as a memorandum regarding that gift of Rs. 75,000 made on 8th January, 1982 records that the HUF had given on 23-10-1981 a sum of Rs. 15,000 to each one of the five children of the said Smt. Ved Wati. These amounts were also deemed as gifts w.e.f. 8-1-1982.
4. As noted earlier as per the memorandum of partition dated 9th January, 1982 Smt. Mee Kaur was shown to have received a sum of Rs. 2,25,000 in cash. On 15th day of March, 1982 she made a declaration of gift on stamp paper of Rs. 2 and recorded therein that a sum of Rs. 1,50,000 was advanced by her to Smt. Ved Wati on 9-1-1982. After making withdrawal of the said amount from her bank account No. 2389 with the Punjab National Bank, Najafgarh village, New Delhi and in consideration of her love and affection towards her only daughter, Smt. Ved Wati the amount of Rs. 1,50,000 is declared to be a gift to the donee. On that very day, a similar declaration was made by Shri Mani Ram for a sum of Rs. 1 lakh. In other words, Smt. Ved Wati received Rs. 2,50,000 as gifts out of the funds which Shri Mani Ram and his wife Smt. Mee Kaur divided amongst themselves claming to receive on partition of the HUF consisting of two of them having Mani Ram as the only sole male member.
5. As mentioned supra, the HUF was being assessed to income-tax. Income-tax return for the asstt. year in appeal for the HUF was filed on 16-7-1982. On that very day wealth-tax as well as gift-tax returns of the HUF were furnished. Similarly, Shri Mani Ram as individual and Smt. Mee Kaur as individual filed the gift-tax returns on 16-7-1982. On 27-7-1982 an application for recognition of partition under Section. 171 was filed by the HUF. The GTO made the asstt. on the HUF on 4-10-1982. This assessment was framed under Section. 15(3) of the Gift-tax Act and the return declaring net gift of Rs. 1,40,000 was accepted as such.
6. In the return of gift filed by Shri Mani Ram individual on 16-7-1982 taxable gift of Rs. 95,000 was declared. In this return, the particulars regarding the gift of Rs. 95,000 made by the individual to Smt. Ved Wati were mentioned. The other pages of the return were marked as nil in various columns except part 4, page 7. There was no mention in this return of the gift made by Shri Mani Ram as Karta of the HUF. This case was fixed for the first time on 19-8-1983 and a protective asstt. was completed on 6-11-1984. In this asstt. which was protective in nature, the GTO recorded that the application of the HUF under Section. 171 of the IT Act, 1961 had been rejected and the gifts made by Shri Mani Ram, individual were to be clubbed in the hands of the HUF of which Shri Mani Ram was the karta. Similarly, in the case of Smt. Mee Kaur asstt. was completed.
7. The Gift-tax Officer issued notice on 11-2-1985 under Section. 16(1) after recording reasons that he had, “reasons to believe that by reason of omission or failure on the part of the donor to disclose fully and truly all material facts necessary for his asstt. taxable gift amounting to Rs. 2,50,000 had escaped asstt.”. The section mentioned is 16(1)(b) which apparently is misnomer for Section 16(1)(a) of the Gift-tax Act, 1958. The assessee objected to the reopening of this assessment on various grounds, inter alia, including that he was acting merely on a change of opinion. The GTO, however, met these objections and completed the impugned reassessment under Section. 15(3) read with Section 16 of the Gift-tax Act on 14-2-1985 and to the gift amount Rs. 1,45,000 taxed as per original asstt. order, he added the sum of Rs. 2,50,000 and after basic exemption of Rs. 5,000 determined net taxable gift of Rs. 3,90,000. This assessment was challenged in appeal before the Commissioner of Gift-tax (A).
8. The C.G.T. (A) rejected the assessee and confirmed the impugned assessment order. Hence, the proceedings before us.
9. We have heard the parties and very carefully considered their rival submissions. In nut shell the argument before us put forward on behalf of the assessee is that the GTO was in error in initiating reassessment proceedings and completing the reassessment as he did. The assessee-HUF was headed by Karta Mani Ram and even if. the gifts of Rs. 3,95,000 are considered as made by the HUF these are not liable to gift-tax in view of the ratio of the decisions of the Punjab and Haryana High Court in the case of CGT v. Tej Nath [1972] 86 ITR 96 (FB) and CGT v. Man Singh. Reliance was also placed upon the judgment of Hajee Mohamed Ibrahim v. GTO [1983] 143 ITR 333 (Kar.). The revenue, on the other hand, supported the order of the authorities below and contended that in view of the judgment of the Tribunal on the issue of partition under Section. 171 of the Income-tax, 1961 the arguments on behalf of the assessee are untenable. The 1d. counsel for the assessee at this stage was fair enough to concede that the judgment of the Tribunal in ITA Nos. 3243/DEL/86 and CO. No. 175/DEL/86 dated 19th March, 1987 has been accepted by the assessee and had become final. By this judgment the Tribunal upheld the order of the ITO refusing to recognize the partition claimed by memorandum dated 9th January, 1982.
10. After giving a lot of thought to the issue before us, we find that taking the position of law as laid down by the Full Bench of the Punjab and Haryana High Court in the case of Sat Pal Bansal v. CIT [1986] 162 ITR 582, the matters stand simplified. In this judgment the Hon’ble High Court has laid down that according to Hindu Law, female members of a Hindu undivided family have no share in the joint family property and therefore, their interest is confined to maintenance only. A wife cannot herself demand a partition of a Hindu undivided family property but if a partition takes place between her husband and his sons (emphasis added) she is entitled to receive a share equal to that of his son and to hold and enjoy that share separately even from her husband. However, before a partition can be visualised or thought of the property has to be owned by more than one person. The sole owner cannot divide the property. The giving of any share in the property by the sole surviving male member of the Hindu undivided family to the wife or to the mother would be only in the nature of settlement of the property by them in lieu of their right to maintenance and cannot by any stretch of reasoning be said to amount to a partition of the property amongst them. Therefore, no partition whether partial or complete would be possible in the case of an HUF consisting only of one male member or the sole coparcener. Therefore, a Karta who is the sole surviving coparcener of an HUF cannot purport to effect partition of the family property between himself and his wife.
11. The assessee is within the jurisdiction of the Hon’ble Punjab and Haryana High Court. The above position of law has to be taken as obtaining even on the date when the so called memorandum of partition was drawn up on 9th January, 1982. The Full Bench judgment of the Punjab and Haryana High Court was delivered much later. In accordance with this judgment the memo of partition dated 9th January, 1982 is non est in law and as such could not be given effect to. In this view of the matter, neither Shri Mani Ram nor his wife can be said to have received any amounts on the purported partition of the HUF consisting of Shri Mani Ram and his wife because Shri Mani Ram was the sole surviving coparcener and he could not have done what is aimed to have been done in the memo of partition drawn on 9-1-1982. The amounts sought to be distributed between them, therefore, continued to belong to the HUF of which Shri Mani Ram is the Karta. As such, no gifts could be said to have been made in accordance with law either by Shri Mani Ram or by his wife in their individual capacity because the amounts claimed to have been received by them on the basis of the purported partition continue in law to belong to the HUF of which Shri Mani Ram was the Karta. The gifted amount, therefore, could not be brought to tax either in the hands of the individual or that of the HUF because the HUF did not gift the disputed amounts. In view of our above finding the question of examining the validity of the reassessment would not arise. However, in case such a question were taken to arise, for the sake of argument, we are of the opinion that the reassessment proceedings were valid. This is so because, the entirety of the facts and circumstances of the cases narrated in the various documents which we have referred to supra and the impugned orders of the authorities below indicate that there was no true and full disclosure before the GTO assessing the HUF about the gift made by the individuals out of the HUF funds in view of the position of law stated by us above. However, though the initiation of the reassessment can be said to be valid no amount of gift purported to have been made by the Karta and his wife could be included in the gift-tax assessment of the HUE because those gifts were ab initio void. The amounts which the Karta and his wife claimed to have received by virtue of the purported partition on 9-1-1982 never belonged to them because they continued to belong to the HUP and formed part of the assets of the HUF in the eyes of law. Therefore, even on the basis of this reasoning the amounts of Rs. 1,50,000 and Rs. 1,00,000 could not be clubbed in the reassessment proceedings in the hands of the HUP. In this view of the matter we cancel the reassessment proceedings and the result would be that the order made by the GTO under Section. 15(3) for the asstt. year 1982-83 on 4-10-1982 will stand.
12. In the result, appeal is allowed.