1977 (11) TMI 32 - HC - Income Tax

Summary

Issues: Valid service of notice under section 34(1A) on the Hindu undivided family.

Analysis:
The High Court of Bombay delivered a judgment on a reference made by the Income-tax Appellate Tribunal regarding the validity of the service of a notice under section 34(1A) on a Hindu undivided family (HUF). The case involved the assessment year 1946-47 and the business activities of a HUF in petrol and textiles. The initial income assessments were done on the basis of the HUF status, despite claims by the family members to be assessed as a firm. Subsequently, notices were issued under section 34(1A) for escaped income, but there was a dispute regarding the validity of the service of the notice on the HUF.

The Tribunal had rejected the contention that no notice was issued for the assessment year in question, implying that the notice was indeed served on the assessee. The Court referred to a previous decision related to the same assessee for assessment years 1942-43 to 1945-46, where it was held that notices issued to the assessee as a firm rendered the reassessment in the status of HUF invalid. The Court held that the notice for the assessment year 1946-47 was issued to the assessee as a firm, not as a HUF, and therefore, the assessment in the status of HUF was deemed invalid based on the previous decision.

In conclusion, the Court answered the referred question by stating that the notice was issued to the assessee in the status of a firm, not as a HUF, making the assessment in the status of a HUF invalid. The parties were directed to bear their own costs in the case.