Our family made a partial partition in the early 1980s — we divided some of the properties but stayed joint as to the rest — and the Assessing Officer has recognised it in past assessments. He is now assessing the whole income in the HUF's hands and says the partial partition never counted. Is he right?
He is right. Section 171(9) provides that where a partial partition has taken place after the 31st day of December, 1978 among the members of a Hindu undivided family hitherto assessed as undivided, no claim that it took place shall be inquired into under s.171(2), no finding shall be recorded under s.171(3), and any finding recorded to that effect — whether before or after 18 June 1980, the date of introduction of the Finance (No. 2) Bill, 1980 — shall be null and void. The family continues to be liable to be assessed under the Act as if no such partial partition had taken place. Sub-section (9) was inserted by the Finance (No. 2) Act, 1980 with effect from 1 April 1980.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 1980-04-01, reported as Income-tax Act, 1961, s.171(9), inserted by the Finance (No. 2) Act, 1980 w.e.f. 1 April 1980, as printed on the departmental Year 2025, Year 2024 (No. 1), Year 2019 (No. 1), Year 2018, Year 2011, Year 2010, Year 2009, Year 2001, Year 2000 and Year 1990 pages. It bears on section 171(9), section 171(2), section 171(3), section 171 of the Income Tax Act 1961, in Assessment & Scrutiny, Demand, Recovery & Stay and How Tax Law Is Read matters.
This is the provision that catches families who divided informally decades ago and have been filing on the footing of that division ever since. Four points decide most of these disputes. First, the cut-off is a date, not an assessment year: a partial partition on or before 31 December 1978 is untouched; one on 1 January 1979 or later is not recognised, however long ago it was and however consistently the family has acted on it. Second, the bar is not merely prospective in its effect on old orders — a finding under s.171(3) recording such a partial partition is declared null and void whether it was recorded before or after 18 June 1980, so a favourable order the family holds from an earlier year is worth nothing. Third, the liability is joint and several and it runs both ways in time: under clause (c) each member or group of members of the family immediately before the partial partition, AND the family itself, are jointly and severally liable for any tax, penalty, interest, fine or other sum payable under the Act by the family "in respect of any period, whether before or after such partial partition". Clause (d) computes the several liability by reference to the portion of joint family property allotted at the partial partition; the joint liability is not so limited. Fourth, and this is the distinction that is most often missed, sub-section (9) bites only on PARTIAL partition, which the Explanation to s.171 defines as a partition partial as regards the persons constituting the family, or the properties belonging to it, or both. A TOTAL partition can still be claimed, inquired into and recorded under s.171(2) and (3) in the ordinary way. The practical consequence is that a family that wants out of the HUF status has to go the whole way; a half-measure after 1978 leaves the family assessable exactly as before and adds every member to the recovery net.
Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them.
Read aloud by your device. Press again to stop.
As printed identically on the departmental pages read, sub-section (9) provides: "Notwithstanding anything contained in the foregoing provisions of this section, where a partial partition has taken place after the 31st day of December, 1978, among the members of a Hindu undivided family hitherto assessed as undivided,— (a) no claim that such partial partition has taken place shall be inquired into under sub-section (2) and no finding shall be recorded under sub-section (3) that such partial partition had taken place and any finding recorded under sub-section (3) to that effect whether before or after the 18th day of June, 1980, being the date of introduction of the Finance (No. 2) Bill, 1980, shall be null and void; (b) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place; (c) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition; (d) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition, and the provisions of this Act shall apply accordingly." The Explanation to s.171 defines "partial partition" as "a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both".
A partial partition among the members of a Hindu undivided family hitherto assessed as undivided, effected after 31 December 1978, is not recognised for income-tax. No claim of it is to be inquired into, no finding is to be recorded, and any finding recorded — before or after 18 June 1980 — is null and void. The family continues to be assessed as if no such partial partition had taken place, and each member or group of members immediately before the partial partition, together with the family, is jointly and severally liable for tax, penalty, interest, fine or other sum for any period before or after the partial partition, the several liability being computed by reference to the portion of joint family property allotted at that partial partition.
Not applicable — this is a statement of statutory text taken from departmental pages, with the commencement date taken from the departmental amendment footnote and independently supported by the Supreme Court's description of the amendment in Union of India v. M.V. Valliappan.
such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place;
Upload it and we will read it, work out your deadline and draft the reply. A CA reviews before anything is filed.
Handle my notice → Ask a CA on WhatsAppHe is right. Section 171(9) provides that where a partial partition has taken place after the 31st day of December, 1978 among the members of a Hindu undivided family hitherto assessed as undivided, no claim that it took place shall be inquired into under s.171(2), no finding shall be recorded under s.171(3), and any finding recorded to that effect — whether before or after 18 June 1980, the date of introduction of the Finance (No. 2) Bill, 1980 — shall be null and void. The family continues to be liable to be assessed under the Act as if no such partial partition had taken place. Sub-section (9) was inserted by the Finance (No. 2) Act, 1980 with effect from 1 April 1980. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 171(9), section 171(2), section 171(3), section 171 of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.171(9), inserted by the Finance (No. 2) Act, 1980 w.e.f. 1 April 1980, as printed on the departmental Year 2025, Year 2024 (No. 1), Year 2019 (No. 1), Year 2018, Year 2011, Year 2010, Year 2009, Year 2001, Year 2000 and Year 1990 pages. This is the provision that catches families who divided informally decades ago and have been filing on the footing of that division ever since. Four points decide most of these disputes. First, the cut-off is a date, not an assessment year: a partial partition on or before 31 December 1978 is untouched; one on 1 January 1979 or later is not recognised, however long ago it was and however consistently the family has acted on it. Second, the bar is not merely prospective in its effect on old orders — a finding under s.171(3) recording such a partial partition is declared null and void whether it was recorded before or after 18 June 1980, so a favourable order the family holds from an earlier year is worth nothing. Third, the liability is joint and several and it runs both ways in time: under clause (c) each member or group of members of the family immediately before the partial partition, AND the family itself, are jointly and severally liable for any tax, penalty, interest, fine or other sum payable under the Act by the family "in respect of any period, whether before or after such partial partition". Clause (d) computes the several liability by reference to the portion of joint family property allotted at the partial partition; the joint liability is not so limited. Fourth, and this is the distinction that is most often missed, sub-section (9) bites only on PARTIAL partition, which the Explanation to s.171 defines as a partition partial as regards the persons constituting the family, or the properties belonging to it, or both. A TOTAL partition can still be claimed, inquired into and recorded under s.171(2) and (3) in the ordinary way. The practical consequence is that a family that wants out of the HUF status has to go the whole way; a half-measure after 1978 leaves the family assessable exactly as before and adds every member to the recovery net. If it applies to you, the first step is this: Fix the date of the division on the evidence, not on the family's recollection. Everything turns on whether it falls on or before 31 December 1978.
As printed identically on the departmental pages read, sub-section (9) provides: "Notwithstanding anything contained in the foregoing provisions of this section, where a partial partition has taken place after the 31st day of December, 1978, among the members of a Hindu undivided family hitherto assessed as undivided,— (a) no claim that such partial partition has taken place shall be inquired into under sub-section (2) and no finding shall be recorded under sub-section (3) that such partial partition had taken place and any finding recorded under sub-section (3) to that effect whether before or after the 18th day of June, 1980, being the date of introduction of the Finance (No. 2) Bill, 1980, shall be null and void; (b) such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place; (c) each member or group of members of such family immediately before such partial partition and the family shall be jointly and severally liable for any tax, penalty, interest, fine or other sum payable under this Act by the family in respect of any period, whether before or after such partial partition; (d) the several liability of any member or group of members aforesaid shall be computed according to the portion of the joint family property allotted to him or it at such partial partition, and the provisions of this Act shall apply accordingly." The Explanation to s.171 defines "partial partition" as "a partition which is partial as regards the persons constituting the Hindu undivided family, or the properties belonging to the Hindu undivided family, or both". The matter was decided on 1980-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A partial partition among the members of a Hindu undivided family hitherto assessed as undivided, effected after 31 December 1978, is not recognised for income-tax. No claim of it is to be inquired into, no finding is to be recorded, and any finding recorded — before or after 18 June 1980 — is null and void. The family continues to be assessed as if no such partial partition had taken place, and each member or group of members immediately before the partial partition, together with the family, is jointly and severally liable for tax, penalty, interest, fine or other sum for any period before or after the partial partition, the several liability being computed by reference to the portion of joint family property allotted at that partial partition.
Not applicable — this is a statement of statutory text taken from departmental pages, with the commencement date taken from the departmental amendment footnote and independently supported by the Supreme Court's description of the amendment in Union of India v. M.V. Valliappan. In the words reproduced by the source cited on this page: "such family shall continue to be liable to be assessed under this Act as if no such partial partition had taken place;"
It was decided by the CBDT Circulars & Instructions on 1980-04-01 and is reported as Income-tax Act, 1961, s.171(9), inserted by the Finance (No. 2) Act, 1980 w.e.f. 1 April 1980, as printed on the departmental Year 2025, Year 2024 (No. 1), Year 2019 (No. 1), Year 2018, Year 2011, Year 2010, Year 2009, Year 2001, Year 2000 and Year 1990 pages. Binding on the department, not on the assessee or the courts. An assessee may rely on a circular that is beneficial to them. A CBDT circular or instruction binds officers of the department but not the assessee and not the courts. Where a circular helps you, you may hold the department to it. Where it hurts you, it cannot override the Act or a judgment. On section 171(9), section 171(2), section 171(3), section 171, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. A partial partition among the members of a Hindu undivided family hitherto assessed as undivided, effected after 31 December 1978, is not recognised for income-tax. No claim of it is to be inquired into, no finding is to be recorded, and any finding recorded — before or after 18 June 1980 — is null and void. The family continues to be assessed as if no such partial partition had taken place, and each member or group of members immediately before the partial partition, together with the family, is jointly and severally liable for tax, penalty, interest, fine or other sum for any period before or after the partial partition, the several liability being computed by reference to the portion of joint family property allotted at that partial partition. It arises in Assessment & Scrutiny, Demand, Recovery & Stay and How Tax Law Is Read matters, on section 171(9), section 171(2), section 171(3), section 171 of the Income Tax Act 1961, and was decided by Not applicable — statutory text. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. If the division is a partial partition after that date, stop arguing recognition and re-plan: only a total partition can now be recorded under s.171(3). Do not rely on an old s.171(3) order recognising a post-1978 partial partition. Clause (a) declares such a finding null and void whether it was recorded before or after 18 June 1980. Test whether what happened was in truth partial. If every member and every asset went out, it is a total partition and s.171(9) does not apply at all. Where s.171(9) applies, work out each member's exposure under clause (c) — it covers tax, penalty, interest, fine or other sum, for periods both before and after the partial partition — and under clause (d) for the several liability. Do not run a constitutional challenge to s.171(9). A Constitution Bench upheld it in Union of India v. M.V. Valliappan on 27 July 1999.
Still good law. The constitutional validity of s.171(9) was upheld by a five-Judge Bench of the Supreme Court in Union of India v. M.V. Valliappan, decided 27 July 1999, which allowed the Revenue's appeals and set aside the Madras and Karnataka High Court judgments striking the sub-section down. Ten departmental editions spanning Year 1990 to Year 2025 print sub-section (9) identically, and it was transcribed for this entry from editions stamped Year 2024 (No. 1) and Year 2025, so this is a reading of a current edition. I did not carry out any citator check beyond reading Valliappan itself. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
Sub-section (9) was transcribed this pass from six departmental pages, each printing the Act name "Income-tax Act, 1961" and the section heading "Assessment after partition of a Hindu undivided family" with a "Year:" stamp: /w/section-171 (Year: 2000), /w/section-171-1 (Year: 2009), /w/section-171-2 (Year: 2001), /w/section-171-3 (Year: 2010), /w/section-171-5 (Year: 1990) and /w/section-171-6 (Year: 2011). All six carry the same words. The commencement is taken from footnote 44 on the Year 2001 page, "Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1980", and is independently supported by the Supreme Court in Union of India v. M.V. Valliappan, which records that "The Amending Bill was introduced in June, 1980 and is given effect to from the assessment year 1980-81" (para 14, read at https://indiankanoon.org/docfragment/1156980/). The Year 1990 page prints "forgoing" for "foregoing" and "Finance (No.2) Bill" without a space; the other five print "foregoing" and "Finance (No. 2) Bill". That is the only textual variation I found across the six editions and it is plainly a typographical one. CURRENCY OF THE TEXT: sub-section (9) as set out in this entry has been confirmed against CURRENT departmental editions — https://www.incometaxindia.gov.in/w/section-171-62 (Year: 2024 (No. 1)), which prints clauses (a) to (d) in full; https://www.incometaxindia.gov.in/w/section-171-64 (Year: 2025) and /w/section-171-65 (Year: 2018), which print clause (a); and /w/section-171-66 (Year: 2019 (No. 1)), which prints the whole of sub-section (9) and the Explanation definition of "partial partition". Every one prints the Act name "Income-tax Act, 1961" and the heading "Assessment after partition of a Hindu undivided family". With the six older editions that is ten editions from Year 1990 to Year 2025 in identical words. 'decided_on' is the commencement date of sub-section (9), namely 1 April 1980, taken from departmental footnote 44 ("Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1980") and corroborated by the Supreme Court in Union of India v. M.V. Valliappan at para 14 ("The Amending Bill was introduced in June, 1980 and is given effect to from the assessment year 1980-81"). It is not a decision date. 'bench' and 'favours' are inapplicable to a statutory entry. WHY A 1978 CUT-OFF IN A 1980 AMENDMENT — this is not a mistake and is not retrospective in the sense that word usually carries. Sub-section (9) was inserted with effect from 1 April 1980 (assessment year 1980-81) but it chose, as the event it de-recognises, a partial partition effected after 31 December 1978 — a date more than a year earlier — so that families could not defeat the amendment by dividing between the announcement and the commencement. The Supreme Court held that choice valid in Union of India v. M.V. Valliappan at para 14, which I read verbatim: "Secondly, cut off date of 31st December, 1978 cannot be said to be arbitrary. The Amending Bill was introduced in June, 1980 and is given effect to from the assessment year 1980-81." The Court there also records the object of the amendment as stated in the Amending Act: "multiple Hindu undivided families were created by effecting partial partitions as regards persons constituting the joint family or as regards the properties belonging to the joint family or both, which resulted in tax reduction or evasion and with a view to curbing this creation of multiple Hindu undivided families by making partial partitions, it was proposed to de-recognise partial partitions of HUF effected after 31st December, 1978 for the tax purposes." Read together, the 1978 date is the operative cut-off and 1 April 1980 is the date from which the machinery applies; both are correct as stated in this entry. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
A partial partition among the members of a Hindu undivided family hitherto assessed as undivided, effected after 31 December 1978, is not recognised for income-tax. No claim of it is to be inquired into, no finding is to be recorded, and any finding recorded — before or after 18 June 1980 — is null and void. The family continues to be assessed as if no such partial partition had taken place, and each member or group of members immediately before the partial partition, together with the family, is jointly and severally liable for tax, penalty, interest, fine or other sum for any period before or after the partial partition, the several liability being computed by reference to the portion of joint family property allotted at that partial partition.
Every entry in this library links to where it was found, so you can check it yourself rather than take our word for it.
Our family divided the income but not the properties. Is that a partition the department must accept?
Our family partitioned by agreement and a civil court passed a partition decree. Can the department still assess us as a Hindu undivided family?
The assessing officer ignored my partition claim and assessed the family anyway. If the Tribunal finds that illegal, can it simply cancel the assessment and stop there?
My father died and I am now the only male member of our family, with my mother and unmarried sisters. Must the family income be assessed on me as an individual?