Back
2022 Supreme(Mad) 2997
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
R. VIJAYAKUMAR, J.
N. Kamala - Appellant
Versus
The Post Master, Head Post Office, Thanjavur & Another - Respondent
W.P.(MD). No. 1810 of 2010 & MP(MD). No. 1 of 2010
Decided On : 21-07-2022
For the Petitioner:Ram Sundar Vijayaraj, M/s. Veera Associates, Advocates. For the Respondents:G. Rajaraman, Advocate.
The main legal point established in the judgment is that when a smaller HUF and the bigger HUF are two different entities and are assessed to income tax differently, there is no illegality in opening two different PPF accounts in their names.
Headnote:
PPF Accounts - Hindu Undivided Family - Income Tax Act, 1995 - PPF Scheme Clauses 3, 4, 7, 19, 25 - The court held that the petitioner's late husband was entitled to open two separate PPF accounts, one in the name of smaller HUF and another in the name of bigger HUF. The court found that the limitation prescribed under Clause 7 of the PPF Scheme is only with the object of preventing misuse of PPF account to claim income tax exemption. The court also emphasized that when a smaller HUF and the bigger HUF are two different entities and are assessed to income tax differently, there is no illegality in opening two different PPF accounts in their names. The court set aside the impugned order and directed the respondents to disburse the entire subscription amount along with accrued interest for PPF Account Nos. 1161 and 1157 in favor of the writ petitioner within a period of 12 weeks from the date of receipt of a copy of this order.
Fact of the Case:
The petitioner challenged an order closing her late husband's PPF account without interest, claiming it was an irregular account. The petitioner argued that her husband, a member of both a smaller and a bigger Hindu Undivided Family, was legally entitled to open two separate PPF accounts, one in the name of the smaller HUF and another in the name of the bigger HUF.
Finding of the Court:
The court found that the petitioner's late husband was entitled to open two separate PPF accounts, one in the name of smaller HUF and another in the name of bigger HUF. The court set aside the impugned order and directed the respondents to disburse the entire subscription amount along with accrued interest for PPF Account Nos. 1161 and 1157 in favor of the writ petitioner within a period of 12 weeks from the date of receipt of a copy of this order.
Issues: The main issue was whether the petitioner's late husband was entitled to open two separate PPF accounts, one in the name of smaller HUF and another in the name of bigger HUF, and whether the impugned order closing the PPF account without interest was legally sustainable.
Ratio Decidendi: The court held that when a smaller HUF and the bigger HUF are two different entities and are assessed to income tax differently, there is no illegality in opening two different PPF accounts in their names. The court emphasized that the limitation prescribed under Clause 7 of the PPF Scheme is only with the object of preventing misuse of PPF account to claim income tax exemption.
Final Decision: The court set aside the impugned order and directed the respondents to disburse the entire subscription amount along with accrued interest for PPF Account Nos. 1161 and 1157 in favor of the writ petitioner within a period of 12 weeks from the date of receipt of a copy of this order.
JUDGMENT
(Prayer: This Petition filed under Article 226 of the Constitution of India, to issue a Writ of Certiorarified Mandmus, calling for records relating to the impugned sanction order issued by the first respondent in LA1/SBC-20/09-10 dated 21.05.2009 and quash the same and direct the respondents to pay the entire accrued amount in the KMB PPF A/c.No.1161 as per the entries with subsequent interest.)
1. The present writ petition has been filed challenging an order passed by the first respondent herein under which the PPF account operated by the writ petitioner's husband was closed without any interest on the ground that it is an irregular account.
2. The petitioner in her affidavit has contended that her husband late.M.Narayanan belonged to a business family and he was engaged in the business of Timber and Tiles under the name and style of 'V.Mahadeva Iyer and Sons'. The said M.Narayanan had started his own business in the year 1969. In the same year, there was a partition and a separate Hindu undivided family smaller status was created for the said M.Narayanan after verification of the Assessing Officer of the Income Tax Department as contemplated under Section 171 of the Income Tax Act, 1995.
3. According to the petitioner, her husband M.Narayanan was assessed under three heads namely (i). M.Narayanan as an individual with PAN.No.HHBPN2271R, (ii).M.Narayanan as a member of Bigger HUF constituting his father and brothers with PAN.No.AABHN7227H,(iii). M.Narayanan as Karta of the smaller HUF PAN.No.AADHN1267R. According to the petitioner, her husband was filing returns under the three heads till 2007.
4. The petitioner further submitted that her husband has opened three PPF accounts on 24.03.1994 at the Post Office at T.Nagar, Chennai. The three newly opened PPF accounts were allotted the following numbers:
(i). M.Narayanan as an individual PPF No.1182-New No.1160.
(ii). M.Narayanan as Karta of smaller (HUF) PPF.No.1183- New No. 1161.
(iii). M.Narayanan as a member of bigger (HUF) PPF No.1184-New No.1157.
These three PPF accounts were transferred to the Head Post Office at Kumbakonam in the year 2000. The first respondent had accepted the transfer and allotted to new PPF numbers for all the three accounts.
5. According to the petitioner, the petitioner's husband continued to contribute to the PPF accounts and the same was accepted as exemption from Tax by the Income Tax Department. The contributions were made to the above said PPF accounts without any break from 24.03.1994 till 2007. The petitioner's husband had passed away on 17.02.2008. After the death of the petitioner's husband, her son N.Raman who was shown as nominee of PPF No.1160 claimed the amount and the same was settled by the first respondent herein. The petitioner claimed the amount for PPF Account Nos.1161 and 1157 as per the Will of late M.Narayanan dated 16.12.2007. The first respondent had cleared the amount relating to PPF No.1157 in favour of the writ petitioner. However due to audit objection, the amount now deposited in PPF Account No.1167 namely for smaller HUF represented by M.Narayanan was not disbursed.
6. According to the petitioner, smaller HUF and bigger HUF are recognised under the Income Tax Department. Both Hindu undivided families are two different persons and they are assessed to income tax independently. Hence, her husband Narayanan was legally entitled to open two separate PPF accounts, one in the name of smaller HUF and another in the name of bigger HUF. However by way of the impugned order dated 21.05.2009, the first respondent had contended that the interest accrued to PPF account No.1161 will not be paid since it is an irregular account. In the impugned order, it has been further stated that the interest amount that was already paid for the said irregular account will be deducted from the payment due to PPF Account No. 1157. The said order is impugned in the present writ petition.
7. The learned counsel appearing for the petitione
