1977 (3) TMI 24 - HC - Income Tax

Summary

Issues Involved:
1. Validity of assessment orders due to non-service of notice u/s 143(2) to all legal representatives.
2. Whether the Appellate Assistant Commissioner should have annulled the assessments instead of setting them aside.

Summary:

Issue 1: Validity of Assessment Orders Due to Non-Service of Notice u/s 143(2)
The Tribunal was asked to decide if the non-service of notice u/s 143(2) to nine out of ten legal representatives of the deceased, B. N. Singh, invalidated the assessment orders for the years 1965-66, 1966-67, and 1967-68. The Tribunal held that this was merely an irregularity and not a ground for invalidation, justifying the Appellate Assistant Commissioner's decision to set aside the assessments rather than cancel them.

Issue 2: Annulment vs. Setting Aside of Assessments
The Appellate Assistant Commissioner had set aside the assessments and directed the Income-tax Officer to serve notices on all legal representatives before completing the assessments. The assessee contended that the assessments should have been annulled due to the non-service of notices to all legal representatives. The High Court held that serving notice on only one legal representative did not constitute valid service on the estate of the deceased. The assessments were thus null and void due to the violation of statutory principles of natural justice. The Court concluded that the Appellate Assistant Commissioner and the Tribunal should have annulled the assessments instead of setting them aside.

Conclusion:
The High Court answered the referred question of law in the negative, holding that the Tribunal was wrong in its decision. The non-service of notice u/s 143(2) to nine out of ten legal representatives invalidated the assessment orders. The Appellate Assistant Commissioner should have annulled the assessments. The question of law was answered against the department, with no order as to costs.