Our family divided years ago and each of us has been showing his own income since. The Assessing Officer has issued a notice to the HUF for those very years and says the HUF is still alive. Can he do that when we have actually separated?
Yes, unless and until a finding of partition has been recorded under s.171. Section 171(1) creates a fiction: a Hindu family hitherto assessed as undivided is deemed for the purposes of the Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under the section. The machinery is s.171(2) and (3) — a claim made at the time of an assessment under s.143 or s.144, an inquiry after notice to all the members, and a finding recorded by the Assessing Officer as to whether there has been a total or partial partition and the date on which it took place. Severance of status is not enough: the Explanation defines "partition" as a physical division of the property where the property admits of a physical division, and expressly provides that a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition.
Decided by the CBDT Circulars & Instructions (Not applicable — statutory text) on 1962-04-01, reported as Income-tax Act, 1961, s.171, 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, section 171(1), section 171(2), section 171(3), section 171(4), section 171(6), section 171(7), section 171(8), section 10(2), section 143, section 144 of the Income Tax Act 1961, in Assessment & Scrutiny, Demand, Recovery & Stay and How Tax Law Is Read matters.
This is the single most common reason an HUF file stays open long after the family has stopped behaving as one, and it is why a family that divided by consent, or by a memorandum, or simply by dividing the bank balances, finds itself assessed as an HUF for years afterwards. Four features of the section repay close reading. First, the fiction in sub-section (1) bites only on a family "hitherto assessed as undivided" — it is the earlier assessment in the status of an HUF that starts the clock, and the fiction is displaced only "where and in so far as" a finding has been given, so a finding for one year or one set of properties does not dissolve the fiction generally. Second, the claim under sub-section (2) is made at the time of making an assessment, so it is not a free-standing application: a family that never puts the claim before the Assessing Officer during an assessment never gets the s.171(3) order, and without the order the fiction stands. Third, the Explanation is the trap. Where the property admits of physical division, only a physical division counts; dividing the income while the source stays whole is expressly excluded. Where the property does not admit of physical division, the test relaxes to "such division as the property admits of", but a mere severance of status is still not a partition. Fourth, the liability provisions are severe and are the reason a recorded partition does not end the family's tax history: under s.171(4)(b), where the partition took place during the previous year, each member or group of members is jointly and severally liable for the tax on the income assessed up to the date of partition, in addition to any tax for which he is separately liable, and expressly "notwithstanding anything contained in clause (2) of section 10" — so the exemption for a sum received out of family income gives a member no protection against that liability. Under s.171(6), where the Assessing Officer finds after completing an assessment that the family had already effected a partition, he recovers the tax from every person who was a member before the partition, and every such person is jointly and severally liable. Sub-section (7) then computes the SEVERAL liability according to the portion of the joint family property allotted to that member at the partition — but the joint liability is not so limited. Sub-section (8) extends the whole of this machinery to penalty, interest, fine or other sum for any period up to the date of partition. Two Supreme Court decisions already in this library control the application of the Explanation and should be read with the text. Kalloomal Tapeswari Prasad (HUF) v. CIT holds that a partition valid under Hindu law is not necessarily a partition recognised by s.171, because s.171 imposes its own requirement of division; and ITO v. Smt N.K. Sarada Thampatty holds that a severance of status is not enough. A claim built on the text of s.171 alone, without those two, will not survive a well-prepared assessment.
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As printed identically on all six departmental pages read, section 171 provides: "(1) A Hindu family hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of the Hindu undivided family. (2) Where, at the time of making an assessment under section 143 or section 144, it is claimed by or on behalf of any member of a Hindu family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Assessing Officer shall make an inquiry thereinto after giving notice of the inquiry to all the members of the family. (3) On the completion of the inquiry, the Assessing Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place. (4) Where a finding of total or partial partition has been recorded by the Assessing Officer under this section, and the partition took place during the previous year,— (a) the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and (b) each member or group of members shall, in addition to any tax for which he or it may be separately liable and notwithstanding anything contained in clause (2) of section 10, be jointly and severally liable for the tax on the income so assessed. (5) Where a finding of total or partial partition has been recorded by the Assessing Officer under this section, and the partition took place after the expiry of the previous year, the total income of the previous year of the joint family shall be assessed as if no partition had taken place; and the provisions of clause (b) of sub-section (4) shall, so far as may be, apply to the case. (6) Notwithstanding anything contained in this section, if the Assessing Officer finds after completion of the assessment of a Hindu undivided family that the family has already effected a partition, whether total or partial, the Assessing Officer shall proceed to recover the tax from every person who was a member of the family before the partition, and every such person shall be jointly and severally liable for the tax on the income so assessed. (7) For the purposes of this section, the several liability of any member or group of members thereunder shall be computed according to the portion of the joint family property allotted to him or it at the partition, whether total or partial. (8) The provisions of this section shall, so far as may be, apply in relation to the levy and collection of any penalty, interest, fine or other sum in respect of any period up to date of the partition, whether total or partial, of a Hindu undivided family as they apply in relation to the levy and collection of tax in respect of any such period." The Explanation defines "partition" as "(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 division, then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition", and 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 family once assessed as undivided is deemed to continue as a Hindu undivided family for the purposes of the Act until, and except to the extent that, a finding of partition is recorded under s.171. The claim must be made at the time of an assessment under s.143 or s.144; the Assessing Officer must inquire after notice to all members and must record a finding on whether the partition was total or partial and the date it took place. "Partition" for this section means a physical division of the property where the property admits of one, and a division of income alone is expressly not a partition; where the property does not admit of physical division, such division as it admits of will do, but a mere severance of status will not. Members are jointly and severally liable for tax on income up to the date of partition under s.171(4)(b) notwithstanding s.10(2), and under s.171(6) where the partition is discovered after the assessment; the several liability alone is computed by reference to the share of joint family property allotted.
Not applicable — this is a statement of statutory text taken from departmental pages. No judicial reasoning is involved.
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
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Handle my notice → Ask a CA on WhatsAppYes, unless and until a finding of partition has been recorded under s.171. Section 171(1) creates a fiction: a Hindu family hitherto assessed as undivided is deemed for the purposes of the Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under the section. The machinery is s.171(2) and (3) — a claim made at the time of an assessment under s.143 or s.144, an inquiry after notice to all the members, and a finding recorded by the Assessing Officer as to whether there has been a total or partial partition and the date on which it took place. Severance of status is not enough: the Explanation defines "partition" as a physical division of the property where the property admits of a physical division, and expressly provides that a physical division of the income without a physical division of the property producing the income shall not be deemed to be a partition. This was decided by the CBDT Circulars & Instructions (Not applicable — statutory text) and bears on section 171, section 171(1), section 171(2), section 171(3), section 171(4), section 171(6), section 171(7), section 171(8), section 10(2), section 143, section 144 of the Income Tax Act 1961. It is reported as Income-tax Act, 1961, s.171, 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 single most common reason an HUF file stays open long after the family has stopped behaving as one, and it is why a family that divided by consent, or by a memorandum, or simply by dividing the bank balances, finds itself assessed as an HUF for years afterwards. Four features of the section repay close reading. First, the fiction in sub-section (1) bites only on a family "hitherto assessed as undivided" — it is the earlier assessment in the status of an HUF that starts the clock, and the fiction is displaced only "where and in so far as" a finding has been given, so a finding for one year or one set of properties does not dissolve the fiction generally. Second, the claim under sub-section (2) is made at the time of making an assessment, so it is not a free-standing application: a family that never puts the claim before the Assessing Officer during an assessment never gets the s.171(3) order, and without the order the fiction stands. Third, the Explanation is the trap. Where the property admits of physical division, only a physical division counts; dividing the income while the source stays whole is expressly excluded. Where the property does not admit of physical division, the test relaxes to "such division as the property admits of", but a mere severance of status is still not a partition. Fourth, the liability provisions are severe and are the reason a recorded partition does not end the family's tax history: under s.171(4)(b), where the partition took place during the previous year, each member or group of members is jointly and severally liable for the tax on the income assessed up to the date of partition, in addition to any tax for which he is separately liable, and expressly "notwithstanding anything contained in clause (2) of section 10" — so the exemption for a sum received out of family income gives a member no protection against that liability. Under s.171(6), where the Assessing Officer finds after completing an assessment that the family had already effected a partition, he recovers the tax from every person who was a member before the partition, and every such person is jointly and severally liable. Sub-section (7) then computes the SEVERAL liability according to the portion of the joint family property allotted to that member at the partition — but the joint liability is not so limited. Sub-section (8) extends the whole of this machinery to penalty, interest, fine or other sum for any period up to the date of partition. Two Supreme Court decisions already in this library control the application of the Explanation and should be read with the text. Kalloomal Tapeswari Prasad (HUF) v. CIT holds that a partition valid under Hindu law is not necessarily a partition recognised by s.171, because s.171 imposes its own requirement of division; and ITO v. Smt N.K. Sarada Thampatty holds that a severance of status is not enough. A claim built on the text of s.171 alone, without those two, will not survive a well-prepared assessment. If it applies to you, the first step is this: Establish first whether the family has ever been assessed as undivided. The fiction in s.171(1) operates only on a family "hitherto assessed as undivided"; say so in terms in your reply if it has not been.
As printed identically on all six departmental pages read, section 171 provides: "(1) A Hindu family hitherto assessed as undivided shall be deemed for the purposes of this Act to continue to be a Hindu undivided family, except where and in so far as a finding of partition has been given under this section in respect of the Hindu undivided family. (2) Where, at the time of making an assessment under section 143 or section 144, it is claimed by or on behalf of any member of a Hindu family assessed as undivided that a partition, whether total or partial, has taken place among the members of such family, the Assessing Officer shall make an inquiry thereinto after giving notice of the inquiry to all the members of the family. (3) On the completion of the inquiry, the Assessing Officer shall record a finding as to whether there has been a total or partial partition of the joint family property, and, if there has been such a partition, the date on which it has taken place. (4) Where a finding of total or partial partition has been recorded by the Assessing Officer under this section, and the partition took place during the previous year,— (a) the total income of the joint family in respect of the period up to the date of partition shall be assessed as if no partition had taken place; and (b) each member or group of members shall, in addition to any tax for which he or it may be separately liable and notwithstanding anything contained in clause (2) of section 10, be jointly and severally liable for the tax on the income so assessed. (5) Where a finding of total or partial partition has been recorded by the Assessing Officer under this section, and the partition took place after the expiry of the previous year, the total income of the previous year of the joint family shall be assessed as if no partition had taken place; and the provisions of clause (b) of sub-section (4) shall, so far as may be, apply to the case. (6) Notwithstanding anything contained in this section, if the Assessing Officer finds after completion of the assessment of a Hindu undivided family that the family has already effected a partition, whether total or partial, the Assessing Officer shall proceed to recover the tax from every person who was a member of the family before the partition, and every such person shall be jointly and severally liable for the tax on the income so assessed. (7) For the purposes of this section, the several liability of any member or group of members thereunder shall be computed according to the portion of the joint family property allotted to him or it at the partition, whether total or partial. (8) The provisions of this section shall, so far as may be, apply in relation to the levy and collection of any penalty, interest, fine or other sum in respect of any period up to date of the partition, whether total or partial, of a Hindu undivided family as they apply in relation to the levy and collection of tax in respect of any such period." The Explanation defines "partition" as "(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 division, then such division as the property admits of, but a mere severance of status shall not be deemed to be a partition", and 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 1962-04-01 by the CBDT Circulars & Instructions (Not applicable — statutory text). On those facts the CBDT Circulars & Instructions held as follows. A family once assessed as undivided is deemed to continue as a Hindu undivided family for the purposes of the Act until, and except to the extent that, a finding of partition is recorded under s.171. The claim must be made at the time of an assessment under s.143 or s.144; the Assessing Officer must inquire after notice to all members and must record a finding on whether the partition was total or partial and the date it took place. "Partition" for this section means a physical division of the property where the property admits of one, and a division of income alone is expressly not a partition; where the property does not admit of physical division, such division as it admits of will do, but a mere severance of status will not. Members are jointly and severally liable for tax on income up to the date of partition under s.171(4)(b) notwithstanding s.10(2), and under s.171(6) where the partition is discovered after the assessment; the several liability alone is computed by reference to the share of joint family property allotted.
Not applicable — this is a statement of statutory text taken from departmental pages. No judicial reasoning is involved. In the words reproduced by the source cited on this page: "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"
It was decided by the CBDT Circulars & Instructions on 1962-04-01 and is reported as Income-tax Act, 1961, s.171, 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, section 171(1), section 171(2), section 171(3), section 171(4), section 171(6), section 171(7), section 171(8), section 10(2), section 143, section 144, 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 family once assessed as undivided is deemed to continue as a Hindu undivided family for the purposes of the Act until, and except to the extent that, a finding of partition is recorded under s.171. The claim must be made at the time of an assessment under s.143 or s.144; the Assessing Officer must inquire after notice to all members and must record a finding on whether the partition was total or partial and the date it took place. "Partition" for this section means a physical division of the property where the property admits of one, and a division of income alone is expressly not a partition; where the property does not admit of physical division, such division as it admits of will do, but a mere severance of status will not. Members are jointly and severally liable for tax on income up to the date of partition under s.171(4)(b) notwithstanding s.10(2), and under s.171(6) where the partition is discovered after the assessment; the several liability alone is computed by reference to the share of joint family property allotted. It arises in Assessment & Scrutiny, Demand, Recovery & Stay and How Tax Law Is Read matters, on section 171, section 171(1), section 171(2), section 171(3), section 171(4), section 171(6), section 171(7), section 171(8), section 10(2), section 143, section 144 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. Put the partition claim on record during an assessment proceeding under s.143 or s.144 — that is what sub-section (2) contemplates — and ask in writing for an inquiry with notice to every member. Ask expressly for a finding under s.171(3) recording whether the partition is total or partial AND the date on which it took place. Without that recorded date the fiction continues and later years remain exposed. Test your partition against the Explanation before you assert it. If the property admits of physical division, show the physical division. If it does not, show the division the property does admit of, and be ready to explain why a physical division was impossible. Do not offer a division of income as a partition where the income-producing property itself has not been divided; the Explanation excludes it in terms. Where a partition has been recorded, price the joint and several liability under s.171(4)(b) and s.171(6) into the family settlement, and remember that s.171(8) carries penalty and interest with it. Note that s.171(7) limits only the SEVERAL liability to the share of joint family property allotted; it does not cap the joint liability.
Still good law. Ten departmental editions spanning Year 1990 to Year 2025 print section 171 identically, and the section as stated in this entry was transcribed from the Year 2025 edition at /w/section-171-64, so this is a reading of a current edition and not an inference from stability alone. The only amendment footnote readable against the section named the Finance (No. 2) Act, 1980, w.e.f. 1 April 1980, and attached to sub-section (9) alone. I did not carry out a survey of judicial treatment of s.171 generally; this entry states the statutory text and its structure only. 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.
The whole of s.171 was transcribed this pass from six separate departmental pages, each of which printed the Act name "Income-tax Act, 1961" and the section heading "Assessment after partition of a Hindu undivided family" alongside a "Year:" stamp: https://www.incometaxindia.gov.in/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 print the operative words identically. The only amendment footnote I could read against the section was on the Year 2001 page, footnote 44, "Inserted by the Finance (No. 2) Act, 1980, w.e.f. 1-4-1980", attached to sub-section (9). CURRENCY OF THE TEXT: the whole of section 171 as set out in this entry has been confirmed against a CURRENT departmental edition — https://www.incometaxindia.gov.in/w/section-171-64, printing the Act name "Income-tax Act, 1961", the heading "Assessment after partition of a Hindu undivided family" and the stamp "Year: 2025" — from which sub-sections (1), (4)(a) and (b), (5), (6), (7), (8) and (9)(a) and the whole Explanation were transcribed, each sub-section under its own label. Three further recent editions were also read and are identical on the operative words: /w/section-171-62 (Year: 2024 (No. 1)), /w/section-171-66 (Year: 2019 (No. 1)) and /w/section-171-65 (Year: 2018). Together with the six older editions (Year 1990 to Year 2011) that makes ten editions spanning 1990 to 2025 printing this section in the same words. One textual note: the Year 2025 page prints sub-section (8) as "in respect of any period up to the date of the partition", where the older pages print "up to date of the partition"; the older reading is a scan artefact and the Year 2025 wording should be preferred. SUFFIX WARNING for a later pass: the numeric suffixes on the s.171 pages do NOT track vintage. Established this build: unsuffixed = Year 2000, -1 = Year 2009, -2 = Year 2001, -3 = Year 2010, -5 = Year 1990, -6 = Year 2011, -62 = Year 2024 (No. 1), -64 = Year 2025, -65 = Year 2018, -66 = Year 2019 (No. 1). WRONG-INSTRUMENT WARNING, found on this build and not previously recorded: https://www.incometaxindia.gov.in/w/section-171-67 serves section 171 of the FINANCE ACT, 2017, heading "Amendment of Act 12 of 2003" (amendments to the Competition Act, 2002), Year stamp 2017 — not the Income-tax Act at all. Demanding the Act name is what caught it. WRONG-INSTRUMENT WARNING found this pass and not in the brief: https://www.incometaxindia.gov.in/w/section-6 — the bare, unsuffixed URL — serves section 6 of the ACTUARIES ACT, 2006 ("Entry of names in register"), not the Income-tax Act. Demanding the Act name is what caught it. 'decided_on' is the commencement date of section 171, namely 1 April 1962, the date on which the Income-tax Act, 1961 came into force under s.1(3) of that Act as printed on https://www.incometaxindia.gov.in/w/section-1-62 (Act name "Income-tax Act, 1961"; heading "Short title, extent and commencement"; Year: 2023). It is not a decision date. 'bench' and 'favours' are inapplicable to a statutory 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 family once assessed as undivided is deemed to continue as a Hindu undivided family for the purposes of the Act until, and except to the extent that, a finding of partition is recorded under s.171. The claim must be made at the time of an assessment under s.143 or s.144; the Assessing Officer must inquire after notice to all members and must record a finding on whether the partition was total or partial and the date it took place. "Partition" for this section means a physical division of the property where the property admits of one, and a division of income alone is expressly not a partition; where the property does not admit of physical division, such division as it admits of will do, but a mere severance of status will not. Members are jointly and severally liable for tax on income up to the date of partition under s.171(4)(b) notwithstanding s.10(2), and under s.171(6) where the partition is discovered after the assessment; the several liability alone is computed by reference to the share of joint family property allotted.
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The provision can be read two ways. Which reading wins?
Can the Assessing Officer estimate income on departmental material the assessee has never been shown?
Once the books are rightly rejected, how much guesswork is the Assessing Officer allowed in a best judgment assessment?
Our family divided the income but not the properties. Is that a partition the department must accept?