Income Tax Appellate Tribunal - Jodhpur
Assistant Commissioner Of Income Tax vs Late Mangi Lal Through L/H Badri Prasad ... on 7 January, 2004
Equivalent citations: (2004)83TTJ(JODH)590
ORDER
Hari Om Maratha, J.M.
1. This appeal has been filed by the Department for asst. yr. 1988-89 and is directed against the order of CIT(A), Jodhpur dt. 26th Feb., 1993.
2. There was a search operation and as a sequence of the same, a notice under Section 148 was served through registered a/d. Certain other letters in regard to certain enquiries as also certain notices were issued subsequently in the name of legal heirs which included Shri Badri Prasad Bhatia, Laxmi Narain Bhatia and Smt. Leela Devi. One Shri Mangi Lal Bhatia expired on 23rd April, 1989 and there were seven legal heirs of the deceased which are given as under :
1. Smt. Leela Devi Wife
2. Shri Badri Prasad Bhatia Son
3. Shri Lalit Bhatia Son
4. Smt. Laxmi Devi Daughter
5. Smt. Savitri Devi Daughter
6. Smt. Durga Devi Daughter
7. Smt. Sharda Devi Daughter
3. After the notices were sent under Section 148 of the IT Act, 1961 (hereinafter referred to as the Act), various additions were made. This appellant has raised a legal objection to the validity of impugned assessment by stating that the notice under Section 148 was issued in the name of one of the legal heirs only and there were other legal heirs also and according to the learned Authorised Representative, such an initiation of proceedings under Section 148 was bad in law in as much as the notice was not issued to all the legal heirs as required under the provisions of law and consequently the assessment so completed on the basis of certain notices issued under Section 148 is ab initio void. But the learned CIT(A), after carefully examining the issue at length, held that the legal objection of the assessee in regard to the illegality of the notice vis-a-vis, the notice issued under Section 148 was such that the assessment is ab initio void and stands annulled. Now the Department has assailed the finding of the learned CIT(A) before us.
4. We have heard the rival submissions and have also perused the evidence on record as well as the provisions of law.
5. The learned Departmental Representative Shri K.P. Meena has submitted that the learned CIT(A) has erred in annulling the assessment made by the AO by holding that the notice under Section 148 was ab initio void on the ground that as it was addressed to only one of the legal heir of the deceased. According to the learned Departmental Representative, the CIT(A) has ignored the fact that Shri Badri Prasad who is one of the legal heirs had duly complied with the notices issued under Sections 148 and 142(1)/143(2) and there was no request nor any objection by other legal heirs, or for that matter by the said Shri Badri Prasad Bhatia during the assessment proceedings for the issuance of notices to each and every legal heir separately. So, the learned Departmental Representative has justified the assessment proceedings carried out under Section 148 of the Act.
6. The learned Departmental Representative has heavily relied on the Hon'ble Supreme Court decision in the case of CIT v. Jai Prakash Singh (1996) 219 ITR 737 (SC) in which it was held that if the return was filed voluntarily by one out of 10 legal heirs disclosing entire income and the legal heirs complied with the notices under Sections 142(1) and 143(2) and thereafter assessment was completed and in case the legal heirs raising the objection for the first time in appeal that notice had not been issued to other legal heirs, the assessment was irregular and not null and void and it was further held as under :
"Non-service of notice under Section 143(2) of the Act to 9 out of 10 legal representatives of the deceased S did not invalidate the assessment orders of the ITO relating to the asst. yrs. 1965-66, 1966-67 and 1967-68 and that it was at best an irregularity for which the AAC was justified in setting aside the assessments and it was not a case fit for cancellation of the assessments."
7. The Hon'ble Supreme Court rendered this decision after elaborately discussing the provisions of various sections, and definitions including the definition of the assessee, legal heir, inter alia. This is a fact that this decision was rendered in the context of notices sent under the provisions of Sections 142(1) and 143(2) of the Act.
8. The learned Authorised Representative Shri U.C. Jain has taken objection to this argument of the learned Authorised Representative by submitting that the decision referred to (supra) of the Hon'ble apex Court does not apply to the facts of this case at all because the notices sent in Jai Prakash's case (supra) were only notices which were meant for taking up assessment proceedings ordinarily, but in this case, the proceedings of re-assessment are being carried out which are entirely on different footing.
9. In the case of Jai Prakash Singh (supra), one of the legal heirs filed the voluntary return under the provisions of Section 139(1)/139(4) whereas in the case of the appellant, the jurisdiction to assess the deceased was created by issue of notice under Section 148 of the Act. The Hon'ble Supreme Court at p. 744 has approved the observation made in Chatturam and Ors. v. CIT (1947) 15 ITR 302 (FC) as under :
"The income-tax assessment proceedings commence with the issue of a notice. The issue or receipt of a notice is not, however, the foundation of the jurisdiction of the ITO to make the assessment or of the liability of the assessee to pay the tax. It may be urged that the issue and service of a notice under Section 22(1) or (2) may affect the liability under the penal clauses which provide for failure to act as required by the notice. The jurisdiction to assess and the liability to pay the tax, however, are not conditional on the validity of the notice. Suppose a person, even before a notice is published in the papers under Section 22(1) or before he receives a notice under Section 22(1) of the IT Act gets a form of return from the ITO and submits his return, it will be futile to contend that the ITO is not entitled to assess the party or that the party is not liable to pay any tax because a notice had not been issued to him. The liability to pay the tax is founded on Sections 3 and 4 of the IT Act, which are the charging sections. Section 22, etc. are the machinery sections to determine the amount of tax."
10. The other factor which is relevant for disposal of this appeal is that if this irregularity is cured as on today, the AO is not competent to issue notice under Section 148 to other legal heirs because of the provisions of Section 149 of the Act, and as such, by no means estate can be represented on the basis of notice issued under Section 148 on 21st Feb., 1990 to Shri Badri Prasad Bhatia who is also stated to have expired long back. In these circumstances and facts of this case, we are of the considered view that the assumption of jurisdiction by the learned AO under Section 147/148 of the Act is bad in law. The defect of not sending notices to all the legal representatives is not curable under this Act. We concur with the findings of the learned CIT(A) in this regard. The issue of notice under Sections 142(1) and 142(2) is entirely on the different footing. The processing of the returns under Section 143(3) simpliciter and the one processed under Section 148 of the Act after assuming jurisdiction to initiate reassessment proceedings are totally different. The assumption of jurisdiction is a very important step under the Act, which is based on certain happenings; whereas the proceedings under Section 142(1)/142(2) are quite procedural and ordinary. The proceedings under Section 147/148 of the Act affect the rights of the assessee. There is no infirmity in the findings of the learned CIT(A). The Department is to fail in this appeal on this count.
11. In the result, the appeal of the Department is dismissed.