Income Tax Appellate Tribunal - Kolkata
Income-Tax Officer vs Manindra Nath Dutta on 14 March, 1995
Equivalent citations: [1995]54ITD685(KOL)
ORDER
R. Acharya, Accountant Member
1. This is an appeal instituted by the department against the order of the CIT (Appeals) for the assessment year 1987-88 on the following grounds :
(i) That on the facts and in the circumstances of the case, the learned CIT (Appeals) erred in cancelling the assessment order made under Section 144 on 20-3-1990 for the assessment year 1987-88.
(ii) That on the facts and in the circumstances of the case, the learned CIT (Appeals) was not justified in submitting additional ground of appeal without giving reasonable opportunity to the Assessing Officer.
(iii) That on the facts and in the circumstances of the case, the learned CIT (Appeals) was not justified in deleting the addition of Rs. 1,22,500 assessed under Section 69B of the I.T. Act, 1961.
(iv) That on the facts and in the circumstances of the case, the learned CIT (Appeals) was not justified in deleting the addition of Rs. 20,000 on account of sale of gold dust.
2. The first and second grounds relate to cancellation of the assessment order made under Section 148 by the CIT (Appeals) by admitting the additional ground of appeal without giving reasonable opportunity to the Assessing Officer (AO).
3. Briefly stated, the facts of this case are that the assessee, a registered goldsmith died on 8-8-1987 and the return was filed on 13-8-1987 by the legal representative of the assessee Sri Abhijit Dutta and against the name of the assessee it was mentioned, "Manindra Nath Dutta (since deceased)". Notices under Section 143(2) and 142(1) were issued but since there is no compliance according to the AO he passed the assessment order under section 144 and assessed the total income at Rs. 2,67,500 including the value of 500 gr. of imprest gold at Rs. 1,22,500 and on account of sale of gold dust for want of explanation at Rs. 20,000. Being aggrieved by the order of the AO the legal representative preferred an appeal to the CIT (Appeals).
4. Before the C1T(A), although 13 grounds had already been raised in the original appeals, the assessee filed an additional ground of appeal that Sri Manindra Nath Dutta (Sri M.N. Dutta) died on 8-8-1987 and the return was filed by his legal heir stating within bracket at the end of the name "deceased" and since notices were served on the deceased and the assessment was made by the ITO on Sri M.N. Dutta i.e., on a dead person, the assessment made by the ITO was infructuous. The CIT(A) admitted the additional ground for the reason that it goes to the root of the assessment and in the interest of justice it requires to be admitted. Before the CIT(A) it was submitted that the assessee died on 8-8-1987 when the return itself was filed by his legal heir Smt. Dolly Dutta who happened to be his wife. The death certificate from the Corporation of Calcutta was also produced. It was further argued by the learned counsel for the assessee that the notices of hearing and subsequent assessment order passed on Sri M.N. Dutta was null and void in the eyes of law because no notice could be served on the deceased person and no order under Section 143(3)/144 can be made on a deceased person. It was further argued that the assessment should have been completed on legal heir but it is made on Sri M.N. Dutta and not on legal heir.
5. The learned CIT (A) considered the arguments of the learned counsel for the assessee and came to the conclusion that when the return was filed by the legal heir of Sri M.N. Dutta the assessment order passed by the AO on Sri M.N. Dutta is bad in the eyes of law. He also observed that the AO has not issued notice of hearing under Section 143(2) and 142(1) to Smt. Dolly Dutta, the legal heir of the deceased. He, therefore, held that the assessment made by the AO is nullity and is accordingly cancelled. Grounds 3 & 4 regarding addition of Rs. 1,22,500 under Section 69B and addition of Rs. 20,000 on account of sale of gold dust respectively were disposed of by the CIT(A) by saying that since the assessment itself is null and void the additions will automatically be deleted. Being aggrieved by the order of the CIT(A) the Revenue has preferred this appeal to the Tribunal.
6. The learned departmental representative submitted that the CIT(A) was not justified in cancelling the assessment order because the return was filed by the legal representative of the assessee and in the return itself it was written against the name of the assessee that Sri M.N. Dutta is deceased. He further argued that just because the words or phrase, "legal representative" was not written in the assessment order and in notices the assessment order cannot be declared to be null and void in view of the provisions envisaged under Section 292B of the IT Act, 1961. According to the learned D.R. the CIT(A) should have set aside the assessment for making the same de novo. In order to support his contention the learned D.R. placed reliance on the decision of the Calcutta High Court in the case of CIT v. Anand & Co. [1994] 207 ITR 418.
7. The learned counsel for the assessee on the other hand repeated the same arguments as were put forth before the CIT(A) and submitted that the CIT(A) was justified in cancelling the assessment as it was made on Sri M.N. Dutta and notices were also issued to him and not to the legal representative.
8. We have carefully considered the rival contentions, the relevant facts and material placed on the record. We find that the CIT(A) has not decided the important grounds of appeal Nos. 2 & 3 regarding best judgment assessment under Section 144 in spite of the facts that the assessee's representative appeared before the AO on the following dates as it is evident from the statement of facts filed before the CIT(A):
(i) 15-2-1990;
(ii) 23-2-1990;
(iii) 5-3-1990;
(iv) 9-3-1990;
(v) 23-3-1990; &
(vi) A letter dated 26-3-1990 sent by registered post are being refused to be accepted.
These facts are very much relevant and important to prove that notices issued to the assessee were duly served upon the legal representative and the legal representative responded to and complied with those notices by attending the assessment proceedings on the above dates and by sending letter dated 26-3-1990 by registered post.
9. We find that the CIT(A) has admitted the additional ground without giving any opportunity to the AO and without expressing his satisfaction that the omission of that ground from the form of appeal was not wilful or unreasonable in terms of Section 250(5) of the Act. In our opinion, the omission of the additional ground from the form of the appeal can be said to be wilful or unreasonable because the legal representative who has filed the appeal was aware of the fact that the return is filed in the name of Sri M.N. Dutta (decd.) by the legal representative and the assessment is to be made through the legal representative only. In our opinion, therefore, the admission of additional ground itself is illegal and cannot be sustained.
10. While it is admitted by the assessee as well as by the CIT(A) that the return is filed by the legal heir of Sri M.N. Dutta stating therein at the end of the name "deceased", there is no question of issuing notice of hearing to the deceased person but they were the notices issued to the assessee Sri M.N. Dutta through legal representatives. Moreover, these notices are received by the legal representative and are complied with by him. Since this fact that the return is filed by the legal heir in the case of the deceased assessee, is admitted by the assessee as well as the CIT(A) and notices are complied with by the legal representative, the provisions of Section 159 are clearly applicable. As Sri M.N. Dutta died on 8-8-1987 his legal heir is liable to pay the tax in the like manner and to the same extent as the deceased on the assessment of income of the deceased made through the legal representatives. According to Section 159(3) the legal representative of the assessee deceased should be treated as an assessee for the purpose of this Act. Since the CIT(A) has completely ignored the provisions of Section 159, his order cannot be sustained in the eyes of law on merit as well.
11. It appears that the CIT(A) has also completely missed the provisions of Section 292B wherein it is very clearly mentioned that no assessment, no notice, no return of income, summons or other proceedings furnished or made or issued or taken or purported to have been furnished or made or issued or taken, shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceedings if such return of income, assessment notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act. In view of this provision of Section 292B the mistake, defect or omission in the assessment or in the notices, cannot render the assessment and notices to be invalid by reason of the mistake, defect or omission that the name of the legal representative was not written or mentioned. In this view of the matter also the CIT(A) could not have declared the assessment and notices to be invalid and could not have legally cancelled the assessment order.
12. Our view gets strong support from the Calcutta High Court decision in the case of Anand & Co. (supra) and the Hon'ble High Court's observation at page 426 which is very much pertinent and relevant is as under:
In our view, the Revenue authorities, even if not genial and concession-oriented, must act uninfluenced by procedural technicalities in guarding the public exchequer as well as the taxpayer against undue jeopardy by inflexible interpretation of the procedural laws except where the law puts absolute fetters without leaving any scope for relaxation. It is not that the Legislature is not conscious of the salutary need of such an approach. It is precisely from that awareness that the provisions of Section 292B were introduced and grafted as part of the statute, enjoying that procedural rigidity should not stand in the way of substance of the procedure.
This clearly shows that the provisions of Section 292B is meant to meet the situation like one present before us in the instant case, as the return of income, notices and assessment are in substance and effect in conformity with the provisions of Section 159 and also according to the intent and purpose of this Act, In our opinion, therefore, the provisions of Section 292B fully cover and cure the defects or omissions in assessment as well as in notices which are purely technical objections, without substance coming in the way of the validity of the assessment.
13. Our view also gets support from the decision of the Punjab & Haryana High Court in the case of Swaran Kanta v. CIT[1989] 176ITR 291 at pp. 293 & 295. In that case the assessee died in the course of assessment proceedings and the assessment was completed by impleading the legal representative of the assessee-deceased but in the assessment order the name of the deceased was shown instead of the legal heir. The assessment was annulled by the first appellate authority after accepting the contention of the legal representative that the assessment was null and void and the same was made en a dead person. On further appeal the Tribunal held that since the legal representative was impleaded and heard, the mention of the name of the deceased in the assessment order was a clerical error which had no adverse effect on the proceedings within the meaning of Section 292B and hence, the assessment was valid. The Tribunal's decision was upheld by the Punjab and Haryana High Court. Similar and identical are the facts and circumstances of the instant case and, therefore, the present case is fully and squarely covered by the decision of the Punjab & Haryana High Court in the case of Swaran Kanta (supra).
14. Considering all the facts and circumstances of the case and for the reasons mentioned above, we hold that the CIT(A) was not justified in admitting additional ground and in cancelling the assessment order on the ground that the assessment order passed by the AO on Sri M.N. Dutta is bad in the eyes of law and that the AO has not issued notices to the legal heir of the deceased. In view of this, the order of the CIT(A) to that extent is vacated and the assessment order is restored. Thus, ground Nos. 1 & 2 of the department succeed.
15. Grounds 3 & 4 relate to the deletion of addition of Rs. 1,22,500 made under Section 69B and deletion of Rs. 20,000 on account of sale of gold dust respectively. The AO found that although the assessee has disclosed the income from making charges received from re-making of gold ornaments, imprest gold as required for running the business has not been accounted for in the accounts filed along with the return. He, therefore, rejected the final accounts for want of explanation and added Rs. 1,22,500 under Section 69B being the value of 500 gr. of gold as per order in the case of Sri Sukumar Dutta for the assessment year 1987-88. Likewise, on account of sale of gold dust for which no explanation was furnished the AO estimated the concealed income having regard to the extent of business done at Rs. 20,000 and added the same to the total income of the assessee.
16. The matters were taken up in appeal and the CIT(A) deleted both the additions on the ground that he has held in the case of Sri Sukumar Dutta that there was no warrant of addition of Rs. 1,22,500 under Section 69B in the case of goldsmith that too when the assessment year is not the first year of business and on that ground no addition is sustainable in this case also. He further held that since the assessment is null and void as such this relief is automatically included in the appeal. On the same ground he deleted the addition of Rs. 20,000 on account of sale of gold dust.
17. We have heard both the parties and have considered all the facts and material placed on the record. We have also gone through the Tribunal's decision in the case of Sri Sukumar Dutta [IT Appeal No. 3076 (Cal.) of 1991 dated 7-3-1995]. We notice that while deleting these additions the CIT( A) has given one of two reasons that since the assessment itself is null and void the additions are automatically deleted. The deletion of additions by CIT(A) on this ground cannot be approved as his order cancelling the assessment order itself is vacated by us while deciding the ground Nos. 1 & 2. However, it is observed that the CIT(A) has deleted these additions also on the ground that no additions were called for as held in the case of Sri Sukumar Dutta (supra). According to him, no addition is called for under Section 69B when the assessment year is not the first year of business and no addition was warranted on account of estimated sale of gold dust. On perusal of ITAT's order in the case of Sri Sukumar Dutta (supra) we find that the Tribunal has deleted both the similar additions by giving elaborate reasons. Since the facts are identical and since these additions were deleted by the CIT(A) for the same reasons as given in he case of Sri Sukumar Dutta (supra) follows the decision of the Tribunal and uphold the order of the CIT(A) on this count and for this reason ground Nos. 3 & 4 fail and are rejected.
18. In the result, the departmental appeal is partly allowed.