Full Judgment Text & Judicial Ruling

1965 P T D 314

1965 P T D 314

[Calcutta (India)]

Before Sankar Prasad Mitra and K. C. Sen, JJ

SEWLAL DAGA

Versus

COMMISSIONER OF INCOME-TAX, CALCUTTA

Income-tax Reference No. 20 of 1960, decided on 1st August 1963.

Re-assessment-Death of assessee-Proceedings for re-assessment-Valid notice on legal representative, necessity of-Waiver of irregularity by person on whom notice is served, whether validates assessment.

The service of the requisite notice on the assessee is a condition precedent to the validity of any re-assessment made under section 34, and if a valid notice is not issued as required, the proceedings taken by the Income-tax Officer in pursuance of an invalid notice and consequent orders of re-assessment passed by him would be void and inoperative.

An assessment was made on "Chandrabhan Johurmull" in the status of an individual. He died in 1949. A notice under section 34 was issued to Sewlal Daga, the assessee's son. In the notice, the assessee was described as "Messrs Chandrablian Johurmull (Karta Sewlal Daga"". The notice do not state that it was being issued to Sewlal Daga as the legal representative of Chandrabhan Johurmull, deceased. On behalf of Sewlal Daga, it was contended before the Income-tax Authorities that the notice under section 34 was not served on him as the legal representative of the deceased, and, as such, it was ill-gal. The Appellate Tribunal found that the assessee, in compliance with the notice, filed a return showing his status as "Chandrabhan Johurmull, deceased, represented by Sewlal Daga" and as the assessee correctly understood the purpose for which the notice under section 34 was issued to him, and, in compliance with the notice, had filed a return showing himself to be the legal representative of his father, there was waiver o`' the defect in the notice, and the re-assessment was valid:

Held, that the notice which was issued and served in the instant case was obviously invalid and the proceedings before the income-tax Officer were, consequently, illegal and void. The service of notice on the assessee was a condition precedent to the assumption of jurisdiction by the Income-tax Officer under section 34. Consent cannot confer jurisdiction upon a Court if the Court has no jurisdiction and the re-assessment proceedings were invalid.

[Cases referred to].

STATEMENT OF CASE

By this application presented on 4th December 1959, the assessee requires the Appellate Tribunal to refer to the High Court certain questions of law which are said to arise out of the order of the Appellate Tribunal in I. T, A. No. 111 of 1959-60 dated 7th September 1959. Inasmuch as, in our opinion, a question of law does arise out of the aforesaid order, we hereby draw up a statement of the case and refer it to the High Court under section 66(1) of the Indian Income-tax Act.

2. The assessment year is 1946-47. The assessment was reopened under section 34 and the assessee challenged the competence of the Income-tax Officer to reopen the assessment under the said section. The original assessment was raised on Chandrabhan .1U'aurmuii in the status of an individual. Chandrabhan Johurmull died in May 1949. On the security of a fixed deposit of Rs. 25,000 standing in the name of one Lachminarain Maheswari, the assessee, Chandrabhan Johurmull, had obtained overdraft facilities. Notices under section 34 were issued to Sewlal Daga, the assessee's son. Notice was issued in the following terms:

"Messrs Chandrabhan Johurmull (karta Sewlal Daga)."

It was not mentioned therein that the notice under section 34 was issued to Sewlal Daga as the legal representative of the deceased, Chandrabhan Johurmull. It was contended by the assessee's counsel that the assessment was on the individual but the notice under section. 34 was served not on the individual but on the Hindu undivided family. Therefore, it was contended that the notice was not served on him as the legal representative of the deceased and hence it was illegal. The Appellate Tribunal found that the assessee in compliance with the said notice, filed a return showing his status as "Chandrabhan Johurmull died, represented by Shewlal Daga", that is to say, the assessee correctly understood the purpose for which notice under section 34 was issued to him and, in compliance with that notice, filed a return by showing himself as the legal representative of his deceased father. It held that it was a proper notice and it was a matter of waiver in this case which would be evident from the fact of filing the return as per law without any protest in respect of the income of his deceased father. The order of the Appellate Tribunal is made part of this case as Annexure "A".

3. From the above facts and circumstances, the following question of law arises:

"Whether the notice under section 34 was issued according to law and whether the assessment had been properly made in pursuance to the said notice under section 34 of the Indian Income-tax Act?? ??????????? 4. Questions Nos. 3 and 4 raised by the assessee are all questions of fact and we refuse to refer any of these, questions.

5. On the final date of hearing, the assessee did not present himself. The Commissioner of Income-tax has no suggestion. The draft is finalised.

S. Ray with Sohan L. Saraf for the Assessee.

B. L. Pal with Dr. D. Pal for the Commissioner.

JUDGMENT

S. P. MITRA, J.-This is a reference under section 66(1) of the Indian Income-tax Act, 1922. The assessment year is 1946-47. The assessment was reopened under section 34. The original assessment was on Chandrabhan Johurmull in the status of an individual. He died in May 1949. On the security of a fixed deposit of Rs. 25,000 standing in the name of one Luchminarain Maheswari, the assessee, Chandrabhan Johurmull, had obtained overdraft facilities.

A notice under section 34 was issued to Sewlal Daga, the assessee's son. In the notice, the assessee was described as "Messrs Chandrabhan Johurmull (karta Sewlal Daga)". The notice did not state that it was being issued to Sewlal Daga as the legal representative of Chandrabhan Johurmull, deceased. On behalf of Sewlal Daga, it was contended before the income-tax authorities that the notice under section 34 was not served on him as the legal representative of the deceased, and, ' as such, it was illegal.

The Appellate Tribunal found that the assessee, in compliance with the notice, filed a return showing his status as "Chandrabhan Johurmull, deceased, represented by Sewlal Daga". According to the Tribunal, the assessee correctly understood the purpose for which the notice under section 34 was issued to him, and, in compliance with the notice, filed a return by showing himself to be the legal representative of his father. The Tribunal was of opinion that this was a case of waiver of the defect in the notice. It has taken note of the decision of the Bombay High Court in Commissioner of Income-tax v. Ramsukh Motilal ((1955) 27 I T R 54) as also that of the Court in Tarak Nath Bagchi v. Commissioner of Income-tax ((1946) 14 I T R 319). It has followed the decision of this Court, and stated that the irregularities in a notice issued under section 34 could be waived by a party. The waiver in this case is evident by the filing of a return according to law without any protest in respect of the income concerned.

The following question of law has been referred to us for our opinion:

"Whether the notice under section 34 was issued according to law and whether the assessment had been properly made in pursuance of the said notice under section 34 of the Indian Income-tax Act?"

The order of the Tribunal was passed, when there was a difference of opinion between the Bombay High Court and this Court, and the Tribunal was bound to follow the decision of this Court. But the controversy has now been set at rest by the observations of the Supreme Court in Y. Narayana Chetty v. Income-tax Officer, Nellore ((1959) 35 I T R 388), At page 392, Gajendragadkar, J. states as follows:

"The argument is that the service of the requisite notice on the assessee is a condition precedent to the validity of any re-assessment made under section 34; and if a valid notice is not issued as required, the proceedings taken by the Income-tax Officer in pursuance of an invalid notice and consequent orders of re-assessment passed by him would be void and inoperative. In our opinion, this contention is well founded. The notice prescribed by section 34 cannot be regarded as a mere procedural requirement; it is only if the said notice is served on the assessee as required that the Income-tax Officer would be justified in taking proceedings against him. If no notice is issued or if the notice issued is shown to be invalid, then the validity of the proceedings taken by the Income-tax Officer without a notice or in pursuance of an invalid notice would be illegal and void."

In view of these clear observations by the Supreme Court, I do not think there is any scope for any further argument in this matter. The notice which was issued and served in the instant case was obviously invalid and the proceedings before the Income-tax Officer were, consequently, illegal and void. The service of notice on the assessee was a condition precedent to the assumption of jurisdiction by the Income-tax Officer under section 34. No consent can confer jurisdiction upon a Court if the Court has no jurisdiction. The failure to give the requisite notice deprives the Income-tax Officer of his jurisdiction to assess under section 34.

The answer to the question framed is, therefore, in the negative.

The respondent will pay to the applicant the costs of this reference. Certified for counsel.

SEN, J.-I agree.

Question answered in the negative.

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