Case Note & Summary
The Supreme Court decided appeals by the Revenue against a Gauhati High Court judgment in an income tax matter. The dispute concerned the validity of income tax assessments made against the legal representatives of one B.N. Singh, who died on April 16, 1967, leaving behind ten legal representatives comprising three widows, four sons and three daughters. B.N. Singh had extensive business interests but had not filed income tax returns for the assessment years 1965-66, 1966-67 and 1967-68. The eldest son, Jai Prakash Singh, voluntarily filed returns for these three years on March 17, 1970, November 12, 1970 and October 27, 1971 respectively under Section 139(4) of the Income Tax Act, 1961, signing the returns alone. The returns disclosed the income received by late B.N. Singh from all his business interests and properties. The names of all legal representatives had been intimated to the Income Tax Officer shortly after the death. The Income Tax Officer issued notices under Sections 142(1) and 143(2) to Jai Prakash Singh, who complied and produced relevant documents and books of account. No objection was raised before the Income Tax Officer that notices should have been issued to all legal representatives. Assessment orders were made in the status of individual, naming all ten legal representatives as legal representatives of late B.N. Singh. Jai Prakash Singh appealed to the Appellate Assistant Commissioner, contending for the first time that because all legal representatives were not given notice, the assessments were illegal and void. The Appellate Assistant Commissioner rejected the contention, holding that completing assessment without serving notices on all legal representatives was only an irregularity, and set aside the assessment orders remitting the matter for fresh assessments after notice to all. The Tribunal affirmed this view. On a reference, the Gauhati High Court held that in the absence of service of notice on all legal representatives, the assessment made upon them was a nullity and not a mere irregularity, and set aside the remand order. The Revenue appealed to the Supreme Court. The legal issue was whether the non-service of notice under Section 143(2) on nine out of ten legal representatives invalidated the assessments or was a curable irregularity. Revenue counsel argued that the assessments were not null and void because returns had been voluntarily filed by one legal representative, no objection was raised before the assessing officer, and the defect was curable by remand. Assessee counsel argued that assessment without notice to all legal representatives violated natural justice and was null and void. The Supreme Court referred to definitions of assessee and legal representative in Sections 2(7) and 2(29) of the Income Tax Act, 1961, and Section 159 of the Act, and to the Federal Court decision in Chatturam and Others v. Commissioner of Income Tax, Bihar, which held that liability to pay tax arises from charging sections and that notice is only a machinery provision. The Court observed that in the present case, one legal representative had voluntarily filed returns, participated in proceedings, and no objection was raised, so the absence of notice to all legal representatives rendered the assessment at worst defective or irregular, not null and void. The Supreme Court accordingly set aside the High Court judgment, held that the assessments were not null and void, and restored the order of the Appellate Assistant Commissioner and Tribunal remitting the matter for fresh assessment after notice to all legal representatives.
Headnote
A) Income Tax - Assessment Proceedings - Non-service of Notice on Legal Representatives - Income Tax Act, 1961 Sections 143(2), 159, 2(7), 2(29) - Assessment made without serving notice under Section 143(2) on all legal representatives of deceased assessee, where one legal representative voluntarily filed returns, appeared, produced books of account and raised no objection before assessing officer, is not null and void but at worst defective or irregular proceedings curable by remand to Income Tax Officer for fresh assessment after notice to all legal representatives. Held that the High Court erred in treating such assessments as nullity. B) Income Tax - Liability to Pay Tax - Charging vs Machinery Provisions - Indian Income-tax Act, 1922 Sections 3, 4, 22 and Income Tax Act, 1961 analogous provisions - Liability to pay income tax arises from the charging sections and not from the issue or service of notice under the machinery provisions; a voluntary return filed by one legal representative confers jurisdiction on the assessing officer to complete assessment. Held that the issue or receipt of notice is not the foundation of jurisdiction to assess or of liability to pay tax.
Issue of Consideration
Whether non-service of notice under Section 143(2) of the Income-tax Act, 1961 against nine out of ten legal representatives of the deceased assessee invalidated the assessment orders or was merely an irregularity curable by remission.
Final Decision
Appeals allowed; Gauhati High Court judgment set aside; the reference question answered in favour of the Revenue, holding that non-service of notice under Section 143(2) on all legal representatives did not invalidate the assessment orders and was at best an irregularity curable by remission to the Income Tax Officer for fresh assessment after notice to all legal representatives.
Law Points
- Non-service of notice under Section 143(2) on all legal representatives does not render assessment null and void if one legal representative voluntarily filed returns and participated
- liability to pay tax arises from charging sections not from notice
- notice is machinery provision
- defect curable by remand
- principles of natural justice not violated when representative participated
