Punjab-Haryana High Court
Commissioner Of Income-Tax vs Hukam Singh And Ors. on 7 January, 2005
Equivalent citations: [2005]276ITR347(P&H)
Author: Jasbir Singh
Bench: Jasbir Singh
JUDGMENT G.S. Singhvi, J.
1. On an application filed by the petitioner, the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, "the Tribunal"), has referred the following question of law for the opinion of this court :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law upholding the decision of the Commissioner of Income-tax (Appeals) who had declared the reassessment proceedings as invalid on the ground that these had not been initiated against all the legal heirs of the deceased respondent ?"
2. Puran Singh (predecessor of non-petitioners) was an income-tax/ wealth-tax/gift-tax, assessee. He had 232 acres of land in village Dhumsi, District Kurukshetra. He transferred a major portion of his land to his six sons through partition, etc., and at the time of death in January, 1998, he had only about 27 acres of agricultural land. His taxable income included a share in the profits of a firm of commission agents, namely, M/s. Puran Singh Hukam Singh. For the assessment years 1979-80, 1985-86 and 1986-87, the Assessing Officer completed the assessment under Section 143(1) of the Income-tax Act, 1961 (for short, "the Act"). Later on, he received information that Puran Singh had large deposits in banks which had not been properly explained. He then initiated reassessment proceedings for all these years and issued notices dated March 10, 1988, under Section 148 of the Act. Notice for the year 1979-80 was issued with the prior approval of the Central Board of Direct Taxes. The notices were duly served on Sarv Shri Hukam Singh, Mann Singh, Paul Singh and Ajmer Singh, all the legal heirs of the late Shri Puran Singh. Hukum Singh contested the notices. By orders dated March 20, 1989, the Assessing Officer reassessed the income of the late Shri Puran Singh for the assessment years 1985-86 and 1986-87. By another order dated March 22, 1990, he assessed the income of the late Shri Puran Singh for the assessment year 1979-80. The appeals filed by Hukum Singh and three others were allowed by the Commissioner of Income-tax (Appeals) Karnal (for short, "CIT(A)"), on the ground that notices of reassessment proceedings had not been given to two of the legal heirs of the late Shri Puran Singh. Further appeals filed by the Revenue were dismissed by the Tribunal vide its order dated July 3, 1998. Paragraph 5 of that order reads as under :
"5. After hearing both the parties--the learned Departmental Representative in support of the assessment order and learned counsel for the respondents through written submissions in support of the consolidated order of the Commissioner of Income-tax (Appeals) we are of the view that no interference is warranted in the consolidated order passed by the Commissioner of Income-tax (Appeals). The learned Departmental Representative in her arguments placed reliance on the decisions reported in Daya Ram v. Shyam Sundari, AIR 1965 SC 1049 ; V. Ramanathan v. CIT [1963] 49 ITR 881 (Mad); CIT v. Sumantbhai C. Munshaw [1981] 128 ITR 142 (Guj) and Chooharmal Wadhuram v. CIT [1971] 80 ITR 360 (Guj), contending that the respondents had not raised any objection during the course of the assessment proceedings about the legal heirs. It was further stated that fresh evidence had been admitted by the Commissioner of Income-tax (Appeals) without confronting the Assessing Officer and the last argument was to the effect that it could not be a case of one or more legal heirs representing all of them.
On the facts of the present case, we find no merit in the aforesaid submissions as there is no material on record adverted to by the learned Departmental Representative which would show that the four legal heirs brought on record by the Income-tax Officer represented all the legal heirs, i.e., six in number. Then again there is nothing to show that the Income-tax Officer made any enquiries during the years under consideration to ascertain the number of legal heirs whereas the Commissioner of Income-tax (Appeals) in his consolidated order referred to substantial evidence and material on record which showed that the Department had already been informed and it was aware that there were six legal heirs in respect of the deceased and not four. In this view of the matter, the decisions relied upon by the Departmental Representative would not apply as these pertained to certain exceptional cases where service on one of the legal representatives was considered sufficient. We also do not find any merit in the argument of the learned Departmental Representative that no objection was raised during the course of the assessment proceedings. In our opinion, this is a legal issue and can be raised at any stage of the proceedings. In the final analysis, we uphold the consolidated order of the Commissioner of Income-tax (Appeals)."
3. We have heard Shri Rajesh Bindal, learned counsel for the petitioner and perused the record.
4. In CIT v. Jai Prakash Singh [1996] 219 ITR 737, the Supreme Court considered a question similar to the one referred by the Tribunal and held (headnote) :
"An omission to serve or any defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where such liability is created by distinct substantive provisions (charging sections). Any such omission, or defect may render the order irregular--depending upon the nature of the provision not complied with--but certainly not void or illegal."
5. The facts of that case were that the assessee had not filed returns for the assessment years 1965-66 to 1967-68. He died on April 16, 1967, leaving behind ten legal heirs. His eldest son, Jai Prakash Singh filed returns for the three assessment years on March 17, 1970, November 12, 1970, and October 27, 1971, respectively. After scrutiny, the Assessing Officer issued notices under Sections 142(1) and 143(2) of the Act to Jai Prakash Singh. He produced documents, accounts and other material without raising any objection regarding non-issuance of notices to other legal representatives. However, in appeal, he questioned the legality of the assessment proceedings by contending that the Assessing Officer could not have finalised the assessment without giving notices to other legal heirs of the assessee. The Appellate Assistant Commissioner rejected this contention. He held that the action of the Assessing Officer to complete the assessment without serving notices upon all the legal representatives was only an irregularity. He accordingly remitted the matter to the Assessing Officer for making fresh assessment after giving notices to all the legal representatives. That order was confirmed by the Tribunal. However, on a reference, the High Court declared the assessment to be a nullity on the ground that all the legal representatives of the deceased-assessee had not been served. Their Lordships of the Supreme Court allowed the appeal of the Revenue and observed (headnote) :
"The Tribunal was correct in holding that non-service of notice under Section 143(2) of the Income-tax Act, 1961, to nine out of the ten legal representatives of the deceased S did not invalidate the assessment orders of the Income-tax Officer relating to the assessment years 1965-66, 1966-67 and 1967-68 and that it was at best an irregularity for which the Appellate Assistant Commissioner was justified in setting aside the assessments and it was not a case fit for cancellation of the assessments."
6. The same view has been expressed by different Highs Courts in Vijay Sarin v. ITO [1993] 202 ITR 249 (Delhi) ; CIT v. Chandra Mohan Verma [2000] 244 ITR 430 (All) and CIT v. Smt. Pushpa Devi [2001] 250 ITR 495 (Raj).
7. The facts of the case in hand show that the notice of reassessment proceedings was served on four sons of the late Shri Puran Singh. One of them, namely, Hukum Singh, filed the returns without raising any objection. He pursued the matter till the passing of the orders dated March 20, 1989, and March 22, 1990. At no stage, he objected to reassessment proceedings on the ground that two of the legal representatives of the late Shri Puran Singh had not been given notice. In this view of the matter, it must be held that the non-petitioners did not have the locus standi to question the orders of reassessment on the ground of lack of notice to other legal representatives and the appellate authority gravely erred in quashing the reassessment orders only on the ground that the notice had not been given to the remaining legal representatives. For the same reason, the order passed by the Tribunal is liable to be declared as vitiated by an error of law.
8. We further hold that non-issuance of notice to some of the legal heirs of the late Shri Puran Singh was merely an irregularity and the same did not affect the validity of the reassessment orders.
9. In the result, the question referred by the Tribunal is answered in favour of the Revenue and against the assessee.