vil Appeal Nos 778 and 781 of 1976
From the Judgment and Order dated 306 1975 and 88 1975 of the Kerala High Court in Writ Appeal Nos 126 and 378 of 1973
V Gaurishanker section Rajappa and Ms A Subhashmi for the Appellant
G Vishwanatha Iyer
Mrs K Prasanti and N Sudhakaran for the Respondent
The Judgment of the Court was delivered by SINGH J
These appeals on certificate issued by the High Court under Article 133 of the Constitution are direct ed against the order and judgment of the High Court of Kerala
Briefly the facts giving rise to these appeals are the respondent was a member of the erstwhile Nilambut Kovilagam governed by the Madras Marumakkathyyam Act she was assessed to Income Tax as Hindu Undivided Family as the family pos sessed considerable property including lands
forests and other properties
The Income Tax Officer assessed the re spondent for the assessment years 1967 68 1968 69 and 1969 70 treating the members of the family included within the HUF
Before the Income Tax Officer the respondent raised a plea that there had been division of Tavazhi under a partition agreement dated 37
1958 whereby all lands except forest lands were divided among the members of the family
The respondent further claimed that the members of the Tavazhi swelled to 14 and these members effected a division in status by a registered document dated 212
She further alleged that the division of Tavazhi into 14 shares was effected by a Civil Court decree in partition suit No OS 221961 in the Court of Kozhikode
It was pointed out on behalf of the respondent that the partition suit was decreed and the properties were 477 allotted to the respective share holders
The Civil Court had appointed a commissioner to divide the property by metes and bounds in accordance to the shares of individual mem bers
The respondent further claimed that since the status of HUF was disrupted on account of the decree of partition the HUF could not be assessed to income tax instead the income derived by individual members could be considered for assessment
The Income Tax Officer rejected the respondent s claim and assessed the respondent as the head of the Tavazhi for the assessment years 1967 68 1968 69 and 1969 70 by his order dated 163
1970 273
The Income Tax Officer held that the decree of the Civil Court merely conferred right on the members of the family for separate possession of the land falling to their share after the physical parti tion and the final partition could be made on application made by _ individual members after depositing Commissioner s fee
Since the Civil Court decree was a preliminary decree and no final decree had been passed and no actual partition had been effected and no physical partition by metes and bounds had taken place in pursuance of the decree of partition the status of HUF continued for purposes of assessment
The Income Tax Officer observed that earlier the assessee was assessed having the status of HUF and since no other evi dence except the decree of the Civil Court had been produced by her to show that there has been a real partition there fore the assessee s claim for partition could not be ac cepted
The respondent filed a writ petition in the High Court under Article 226 of the Constitution for quashing the orders of the Income Tax Officer on the ground that he failed to recognise the disruption of HUF in making the assessment
A learned single of the High Court allowed the writ petition and quashed the assessment orders
On appeal at the instance of the Revenue a Division Bench of the High Court affirmed the order of the single Judge
On an applica tion made on behalf of the Revenue the High Court granted certificate under Article 133 of the Constitution
Hence these appeals
The learned single Judge held that Section 171 of the Income Tax Act does not apply to a case where the division was effected before commencement of the accounting period and the HUF having received no income during the accounting period it could not be assessed tax notwithstanding the fiction introduced by Section 171
In appeal the Division Bench held that there was no express provision in Section 171 nor was there any necessary implication arising from the provisions of the Section that the income of the family after its division must 478 be treated or deemed to be the income of the HUF inspite of disruption of joint status 
The Bench held that a HUF is a separate and distinct entity from the members constituting it and if that entity does not receive any income the members  income could not be assessed as income of the HUF
The Division Bench further held that since there had been partition in the family and Tavazhi had ceased to be HUF long before the accounting periods the provisions of the Act could not be pressed into service for the purpose of taxing the income of the individual members of the family treating them having the status of HUF with the aid of Section 17 1 of the Act
The main question which fails for consideration is as to whether the partition as effected by the agreement dated 212
1963 and also the decree of the Civil Court amount to partition under the explanation to Section 171 of the Act and further whether the Income Tax Officer acted contrary to law in holding that inspite of the partition as alleged by the respondent the status of HUF was not disrupted and that status continued for the purposes of assessment during the relevant assessment years
Under Section 171 a Hindu Family assessed as HUF is deemed for the purposes of the Act to continue as HUF except where partition is proved to have been effected in accordance with the section
The section further provides that if any person at the time of making of assessment claims that partition total or partial has taken place among the members of the HUF the Income Tax Officer is required to make an inquiry after giving notice to all the members of the family and to record findings on the question of partition
If on inquiry he comes to the finding that there has been partition individual liability of members is to be computed according to the portion of the joint family property allotted to them
What would amount to partition for the purposes of the Section is contained in the Explanation to the Section which defines partition as under Explanation In this Section a partition  means i where the property admits of a physical division a physical division of the property but a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition or ii where the property does not admit of a physical divi sion then such division as the property admits of but a 479 mere severance of status shall not be deemed to be a parti tion
 The above definition of the partition does not recognise a partition even if it is effected by a decree of court unless there is a physical division of the property and if the property is not capable of being physically divided then there should be division of the property to the extent it is possible otherwise the severance of status will not amount to partition
In considering the factum of partition for the purposes of assessment it is not permissible to ignore the special meaning assigned to partition under the explanation even if the partition is effected through a decree of the court
Ordinarily decree of a Civil Court in a partition suit is good evidence in proof of partition but under Sec tion 171 a legal fiction has been introduced according to which a preliminary decree of partition is not enough
instead there should be actual physical division of the property pursuant to final decree
by metes and bounds
The Legislature has assigned special meaning to partition under the aforesaid Explanation with a view to safeguard the interest of the Revenue
Any assessee claiming partition of HUF must prove the disruption of the status of HUF in ac cordance with the provisions of Section 171 having special regard to the Explanation
The assessee must prove that a partition effected by agreement or through court s decree was followed by actual physical division of the property
In the absence of such proof partition is not sufficient to disrupt the status of Hindu Undivided Family for the purpose of assessment of tax
Under the Hindu Law members of a joint family may agree to partition of the joint family property by private settlement agreement arbitration or through court s decree
Members of the family may also agree to share the income from the property according to their re spective share
In all such eventualities joint status of family may be disrupted but such disruption of family status is not recognised by the Legislature for purposes of Income Tax
Section 171 of the Act and the Explanation to it prescribes a special meaning to partition which is different from the general principles of Hindu Law
It contains a deeming provision under which partition of the property of HUF is accepted only if there has been actual physical division of the property in the absence of any such proof the HUF shall be deemed to continue for the purpose of assessment of tax
Any agreement between the members of the joint family effecting partition or a decree of the Court for partition cannot terminate the status of HUF unless it is shown that the joint family property was physically divided in accordance with the agreement or decree of the Court
480 On behalf of the respondent it was urged that the High Court has placed reliance on a Full Bench decision of Kerala High Court in Parameswaran Nambudiripad vs Inspecting As sistant Commissioner of Agricultural Income tax 72 ITR 664 where it was held that if the HUF was in fact not in existence during any part of an accounting period
and the HUF as such had not received any income the family could not be assessed to tax as HUF
The view taken by the Full Bench has been approved by this Court in Inspecting Assist ant Commissioner of Agricultural Income Tax and Sales Tax Special Kozhikode vs Poomuli Manekkal Parameswaran Nam boodiripad 33 I TR 108
On a careful scrutiny of the judgment of this Court we find that in that case interpreta tion of Section 29 of the Kerala Agricultural Income Tax Act 1950 as amended in 1964 was involved
Section 29 after its amendment in 1964 made provision for assessment of Agricul tural tax after partition of a Hindu Undivided Family
Under that Section there was no provision in the nature of Expla nation to Section 171 of the Income Tax Act
This Court had no occasion to interpret Section 171 instead the Court interpreted Section 29 of that Act which is quite different from Section 17 1 therefore the appellant cannot draw any support from that decision
In Kaloomal Tapeshwar Prasad vs
CIT Kanpur this Court interpreted Section 171 of the Act in detail
On an elaborate discussion the Court held that under the Hindu Law it is not necessary that the property must in every case be partitioned by metes and bounds or physically into different portions to complete a partition
Disruption of status can be brought about by any of the modes permissible under the Hindu Law and it is open to the parties to enjoy their share of property in any manner known to law according to their desire but the Income Tax Law does not accept any such partition for the purposes of assessment of tax instead it has introduced certain conditions of its own to give effect to the partition under Section 17 1 of the Act
The Court held that in order to claim disruption of HUF on the basis of partition it is necessary to show that the partition had been effected physically by metes red bounds
and in the absence of any such proof the property would continue to be treated as belonging to the HUF and its income would continue to be included in its total income treating the assesse as HUF
The High Court referred to Section 25A of the Income Tax Act 1922 and placed reliance on a number of decisions in holding that in view of the decree of Civil Court for parti tion
the HUF status had been disrupted and since there was no evidence on record to show that the HUF had received any income in the accounting year the income received by indi vidual members of the joint family could not be 481 treated to be the income of HUF
The High Court placed reliance on the Privy Council decision in Sunder Singh Majithia vs Commissioner of Income Tax and a number of other decisions also in holding that the legal fiction introduced under Section 171 of the Act could not be extended to create tax liability on the HUF even after disruption of its status pursuant to the Civil Court s decree for partition
We do not consider it neces sary to discuss those decisions as the purpose and object of Section 171 and the extent of the legal fiction intro duced by it has already been considered by this Court in Kaloomal s case
The view taken by the High Court under the impugned judgment is not sustainable in law as it is con trary to that decision
In Shankar Narayanan vs Income Tax Officer 153 I TR 562 a learned Judge of the Kerala High Court while considering the interpretation of Section 171 held that the view taken by the High Court in the Judgment trader appeal Income Tax Officer Assessment V Calicut vs Smt
NK Sarada Thampatty ceased to be good law in view of the decision of this Court in Kaloomal s case
In the instant case since there was no dispute that prior to the assessment year 1967 68 the assessment was made against the HUF of which the respondent was a member
The respondent for the first time raised the plea of partition and disruption of HUF in the proceedings for the assessment years 1967 68 1968 69 and 1969 70
There was no dispute before the income Tax Officer that there had been no physi cal division of the properties by metes and bounds there fore the Income Tax Officer was justified in holding that the status of HUF had not been disrupted and the income derived from the properties for the purposes of assessment continued to be impressed with the HUF character
The High Court in our opinion committed error in quashing the order of the Income Tax Officer
In the result we allow the appeals and set aside the order of the High Court and dis miss the writ petition filed by the respondent
There will be no order as to costs
VP Appeals allowed


Summary:
The appellant while working as Inspector Food and Supplies was found to have purchased sub standard wheat and hence chargesheeted for misconduct
He submitted his expla nation
Though Rules 8 and 9 of Punjab Civil Services Punishment and Appeal Rules 1970 envisage the procedure to conduct an enquiry into the misconduct the disciplinary authority only on considering the explanation found that that the appellant committed a minor misconduct
According ly an order was passed for stoppage of two increments with cumulative effect
Appellant filed a suit for declaration that the said order imposed a major penalty which was ille gal in the absence of an enquiry under Rules 8 and 9
The Trial Court granted a decree invalidating the said order
On appeal the District Court confirmed the decree
However on second appeal the High Court held that the penalty imposed was a minor penalty within the meaning of Rules 5iv of the Rules obviating the need to make regular enquiry
Aggrieved the appellant has preferred this appeal by special leave
Allowing the appeal HELD 1
Withholding of increments of pay simpliciter without any hedge over it certainly comes within the meaning of Rule 5iv of the Punjab Civil Services Punishment and Appeal Rules
But when penalty was imposed withholding two increments ie for two years with cumulative effect it would indisputably mean that the two increments earned by the employee was cut off as a measure of penalty for ever in his upward march of earning higher scale of pay
In other words the clock is put back to a lower stage in the time scale of pay and on expiry of two years the clock starts working from that stage afresh
The insi 427 dious effect of the impugned order by necessary implication is that the appellant employee is reduced in his time scale by two places and it is in perpetuity during the rest of the tenure of his service with a direction that two years  increments would not be counted in his time scale of pay as a measure of penalty
Rule 5iv does not empower the disciplinary authori ty to impose penalty of withholding increments of pay with cumulative effect except after holding inquiry and following the prescribed procedure
Then the order would be without jurisdiction or authority of law and it would be per se void
Considering from this angle the impugned order would come within the meaning of Rule 5v of the Rules and the imposition of major penalty without enquiry is per se ille gal
Sarwan Singh vs State of Punjab  Ors ILR  overruled
Rules 8 and 9 admittedly envisage on denial of the charge by the delinquent officer to conduct an enquiry giving reasonable opportunity to the presenting officer as well as the delinquent officer to lead evidence in support of the charge and in rebuttal thereof giving adequate opportunity to the delinquent officer to cross examine the witnesses produced by the Department and to examine witness es if intended on his behalf and to place his version consideration thereof by the enquiry officer if the disci plinary authority himself is not the enquiry officer
A report of the enquiry in that behalf is to be placed before the disciplinary authority who then would consider it in the manner prescribed and pass an appropriate order as per the procedure in vogue under the Rules
The gamut of this proce dure was not gone through
Therefore the issuance of the notice and consideration of the explanations not a procedure in accordance with Rules 8 and 9 4
The Trial Court rightly granted the decree and it is restored
The judgment and the decree of the High Court is vitiated by manifest illegality and is set aside
At this distance of time it is not expedient to direct an enquiry under Rules 8 and 9 of the Rules