1957 (4) TMI 65 - HC - Income Tax

Summary

Issues Involved:
1. Validity of assessment under section 34 of the Income-tax Act for the assessment year 1944-45.
2. Whether the assessment was barred by limitation.
3. Whether the assessment was valid in the absence of notices to all legal representatives of the deceased Ebenezer.
4. Whether Alfred could represent the estate of Ebenezer in the assessment proceedings.

Issue-wise Detailed Analysis:

1. Validity of assessment under section 34 of the Income-tax Act for the assessment year 1944-45:
The petitioner, Alfred, challenged the validity of the assessment under section 34 for the assessment year 1944-45, arguing that it was not made on all the legal representatives of the deceased Ebenezer. The court examined whether the Income-tax Officer could choose one legal representative when there was a known plurality of legal representatives. The court concluded that the assessment was vitiated by the failure to issue notices to all legal representatives of Ebenezer, as Alfred did not and could not represent the entire estate.

2. Whether the assessment was barred by limitation:
The petitioner initially contended that the assessment order was passed on 31st March 1953, which would have barred it by limitation. However, evidence showed that the order was passed on 26th March 1954. The court accepted the Department's contention that the order was indeed passed on 26th March 1954, thus not barred by limitation.

3. Whether the assessment was valid in the absence of notices to all legal representatives of the deceased Ebenezer:
The court highlighted that under section 24B(2) of the Income-tax Act, all legal representatives of a deceased person must be served with notices. The court found that the Income-tax Officer was aware of the existence of other legal representatives and the pending litigation (O.S. No. 121 of 1948). Despite this knowledge, the Officer failed to issue notices to all heirs, invalidating the assessment.

4. Whether Alfred could represent the estate of Ebenezer in the assessment proceedings:
The court noted that Alfred had consistently declined to represent the estate in the assessment proceedings and had informed the Income-tax Officer of other legal representatives and the pending litigation. The court concluded that Alfred was entitled to decline representation and that the Officer's belief that Alfred could represent the entire estate was not made in good faith. The court emphasized that all legal representatives must be brought on record to complete the assessment.

Conclusion:
The court found that the assessment under section 34 for the assessment year 1944-45 was invalid due to the failure to issue notices to all legal representatives. However, since Alfred had availed himself of an alternative remedy by appealing the assessment, the court directed that the rule be discharged and the petition dismissed, with no order as to costs.