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Can assessment be made in case of a disrupted HUF if it ceased to exist when the order of assessment was made?

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Court :
ITAT Bangalore

Brief :
This is an appeal by the assessee against the Order dated 24.03.2017 of CIT(A)-4, Bengaluru, relating to Assessment Year 2002-03.

Citation :
ITA No.1057/Bang/2017

IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH : BANGALORE
BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT
AND SHRI B. R. BASKARAN, ACCOUNTANT MEMBER
ITA No.1057/Bang/2017
Assessment Year : 2002-03

Shri. K. Ramesh Reddy, HUF,
No.144, 10th Cross, Indiranagar I Stage,
Bengaluru – 560 038.
PAN : AAGHK 4712 F

vs

The Assistant Commissioner of Income Tax,
Circle -1(2)(2),
Bengaluru

Appellant by : Shri. V. Srinivasan, Advocate
Respondent by : Shri. Sankar Ganesh, JCIT(DR)(ITAT), Bengaluru
Date of hearing : 08.09.2021
Date of Pronouncement : 20.09.2021

O R D E R

The assessee Sri. K.Ramesh Reddy(HUF) did not file any return of income for AY 2002-03. K.Ramesh (Individual) filed return of income for AY 2002-03. In the case of Sri K Ramesh Reddy(Indl) an assessment u/s 143(3) of the IT Act was completed on 31.3.2005. During the course of assessment proceedings in the case of K.Ramesh Reddy(Individual), the assessee took stand stating that all the income(other than the rental income derived by him from Renuka Commercial complex which is his separate property) that arose during the previous year relevant to assessment year 2002-03 belonged to his erstwhile joint family vide page 2 of written explanation dated 25.2.2005.

2. By an order dated 30.11.2006, passed u/s.143(3) read with Sec.147 of the Act, wherein the AO recorded the fact that in a reply dated 18.2.2005, K.Ramesh Reddy (Individual) has stated that except income derived from Renuka complex, the rest of the properties belong to his HUF.

3. The learned Counsel for the assessee brought to our notice decision of the ITAT Bengaluru Bench in assessee’s own case for Assessment Year 2003-04 in ITA No.1163/Bang/2013 order dated 7.6.2017. The learned DR on the other hand apart from relying on the order of the CIT(A) made a submission that Chapter XV Section G containing Sec.171, deals with liability in special cases and it is not a general provision. He relied on the following judicial pronouncements: 91 taxman 20 ACIT Vs. Maharani Laxmi Devi (SC); 55 ITR 666 Additional CIT Vs. Thimmaiah (Karn.) 105 ITR 109 Narendra Kumar J Modi.

4. For the reasons given above, we allow the appeal of the Assessee and hold that the assessment in the hands of the HUF is liable to be held as invalid and consequently annulled. In view of the above conclusion the other grounds of appeal are not taken up for consideration.  In the result, the appeal of the Assessee is allowed. Pronounced in the open court on the date mentioned on the caption page.

Please find attached the enclosed file for the full judgement

 

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