TMI Blog2004 (12) TMI 24X X X X Extracts X X X X X X X X Extracts X X X X ..... nd purpose of the Act. Questions are answered in the negative, i.e., against the Revenue and in favour of the assessee - - - - - Dated:- 15-12-2004 - Judge(s) : R. K. AGRAWAL., PRAKASH KRISHNA. JUDGMENT The judgment of the court was delivered by Prakash Krishna J.- The Income-tax Appellate Tribunal, Allahabad, at the instance of the assessee has referred the following three questions of law for opinion to this court under section 256(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act". "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the notices issued under section 148 of the Income-tax Act, 1961 addressed as M/s. Shri Nath Suresh Chand Ram Naresh, karta Shri Nath, were valid notices to assess the income of the Hindu undivided family of M/s. Munnalal Motilal or Motilal Shri Nath or its successors? 2. Whether, on the facts and in the circumstances of the case, the returns filed by Suresh Chand without filling in the column relating to status were valid returns? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily, namely, Sri Nath, Suresh Chand, Smt. Kamala Devi, a widow of the late Moti Lal, Shakuntala Devi, wife of Sri Nath, Smt. Asha Rani, wife of Suresh Chand and Smt. Santosh Kumari, wife of Ram Naresh had filed their income-tax returns in their individual capacities in 1975-76. These persons also disclosed that the Hindu undivided family named and styled as M/s. Munna Lal Moti Lal through Moti Lal as karta was dissolved in the year 1967 on account of the death of Shri Moti Lal who died in April, 1967. Thereafter the Hindu undivided family business was carried on by Sri Nath as karta under the name and style of M/s. Moti Lal Sri Nath up to July 31, 1969, when the partition took place. The Income-tax Officer was of the view that the oral partition as alleged by the assessee was not recognized by the Department as no order under section 171 of the Income-tax Act was passed and, therefore, the Hindu undivided family continued to exist. He was of the opinion that the seized account books showed that there was escapement of income of the Hindu undivided family. He obtained a sanction of the Commissioner of Income-tax on December 30, 1976, under section 151 of the Act. In the proposal s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... du undivided family irrespective of the fact under what name the business is carried out in the market and the notices issued earlier under section 148 were meant for the Hindu undivided family. In case you had filed the returns for the assessment years 1968-69 to 1976-77 showing Nil income under any misconception, you are given another opportunity to file a return even now in the status of the Hindu undivided family." Thereafter Suresh Chand through his letter dated March 23, 1978, challenged the jurisdiction of the Income-tax Officer to reassess the income under section 147 of the Act, as notices under section 148, are invalid and without jurisdiction. The Income-tax Officer rejected the contention of the assessee and held that he had jurisdiction to initiate the proceedings under section 147 of the Act as it is admitted by the assessee that there was a Hindu undivided family named and styled as M/s. Munna Lal Moti Lal, which was assessed to tax under the Act. The said entity continues to exist under the Act unless a partition is recorded by the income-tax authorities under section 171 of the Act. The theory of oral partition has no relevance for income-tax purposes and suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his submission counsel has placed reliance on the following rulings: (i) ITO v. Chandi Prasad Modi [1979] 119 ITR 340 (Cal); (ii) Madanlal Chowdhury v. ITO [1979] 119 ITO 351 (Cal) (Appex.); (iii) Madan Lal Agarwal v. CIT [1983] 144 ITR 745 (All); and (iv) CIT v. Bibhuti Bhusan Mallick [1987] 165 ITR 107 (Cal). In contra, learned standing counsel for the Department, Shri Dhananjay Awasthi, supported the order of the Tribunal and submitted that in view of section 292B of the Act, the defects, if any, in the notice or its service on the assessee stands cured and the proceedings cannot be held invalid. Reliance has been placed on the following cases: (i) CIT v. Anand and Co. [1994] 207 ITR 418 (Cal); (ii) CIT v. Rajbir Singh (HUF) [1998] 233 ITR 126 (P H); and (iii) Mulchand Rampuria v. ITO [2001] 252 ITR 758 (Cal). We have given our careful consideration to the respective submissions of learned counsel for the parties. The Tribunal has held that the notice issued by the Income-tax Officer under section 148 of the Act was legal and valid. It was of the view that the existence of the Hindu undivided family of M/s. Munna Lal Moti Lal was not in dispute. The said Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income-tax Act, he cannot be in a position to know the capacity in which he may be receiving the income. In these circumstances, it is for the assessee himself to inform the Income-tax Officer as to what income and in which capacity he has received the same. In the case of Madan Lal Agarwal v. CIT [1983] 144 ITR 745 (All) it was held that these reasons will not apply to a case where the escaped income of an assessee is to be taxed. In the case of Mohammad Haneef v. CIT [1955] 27 ITR 447 (All) the notice issued under section 34 of the old Income-tax Act did not specify the status in which it had been issued to the assessee. However, the High Court construed the notice as clearly indicating the capacity in which it has been issued to the assessee and held that in these circumstances it could not be said that the notice was vitiated merely because it did not specify the status in which it had been issued to the assessee. Much water has flowed since then and the Supreme Court in the case of CIT v. K. Adinarayana Murty [1967] 65 ITR 607 has held that the reassessment notice should specify the correct assessment year and should be issued to a particular assessee. The correct status of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ement of any income. The Income-tax Officer in reply to the letters of Suresh Chand accepted the position that M/s. Munna Lal Moti Lal is assessed to the income-tax in the status of the Hindu undivided family. He insisted that the business continues to be that of Hindu undivided family as the partition claimed by the coparceners has not been recognized by the Department by passing an order under section 171(3) of the Income-tax Act. Therefore, the Department was aware about the Hindu undivided family styied as M/s. Munna Lal Moti Lal and the alleged escaped income of that Hindu undivided family was being sought to be assessed under section 147 of the Act but no attempt was made by the Department to issue a notice for reassessment in the name of M/s. Munna Lal Moti Lal. The question now arises whether a notice not correctly addressed to the assessee is a valid notice within the meaning of sections 147 and 148 of the Act or not. This court in the case of Madan Lal Agarwal v. CIT [1983] 144 ITR 745 has held that a vague notice is an invalid notice and in such a case the vagueness cannot be removed by reference to other documents on the record. The notice was intended to be issued to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the present case, it is crystal clear that the Department is seeking to reassess the income of Munna Lal Moti Lal Hindu undivided family, under section 147 of the Act. It is further established that no notice was issued to Munna Lal Moti Lal Hindu undivided family under section 148 of the Act. The reassessment notice was issued in the name of Sri Nath Suresh Chand Ram Naresh and a different GIR number other than that of M/s. Munna Lal Moti Lal was given. Meaning thereby, the Department intended to issue reassessment notice not to M/s. Munna Lal Moti Lal Hindu undivided family, but to some different person. The notice was vague. It was addressed to Sri Nath Suresh Chand Ram Naresh. There was no Hindu undivided family named as Sri Nath Suresh Chand Ram Naresh. This defect in the notice was also pointed out by the assessee through the letter/reply dated April 3, 1977, and the letter dated March 16, 1978, of the Income-tax Officer would not cure the defect in the notice as no notice in the name of Munna Lal Moti Lal Hindu undivided family was issued under section 148 of the Act which is a jurisdictional notice. It is settled law that service of a valid notice under section 148 is th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiating proceedings for making an assessment under section 147 and any defect in that notice cannot be cured by any thing done by the Income-tax Officer subsequently. A vague notice is an invalid notice and in such a case vagueness cannot be removed by reference to the other documents on the record. If a notice itself is otherwise bad in law, the invalidity thereof cannot be cured by any act of the assessee to whom the said notice is issued. In view of the above, we hold that no valid notice was served on the assessee to reassess the income of M/s. Munna Lal Moti Lal, Hindu undivided family, the notice being vague is invalid and, therefore, all the consequent proceedings are null and void. At this stage, it is apt to consider the rulings relied upon by the learned standing counsel for the Revenue. (1) CIT v. Anand and Co. [1994] 207 ITR 418 (Cal). Briefly the facts of this case are that a notice under section 148 of the Act for reassessment was issued. In the said notice the validity of the mode of issuance of notice under section 148 of the Act was not at all the subject-matter of the case. The allegation of the assessee was that the notice did not contain the distinct si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing to be gone into by the court hearing the question of validity of issuance of fresh assessment notice under section 148 of the Act. In view of the above discussion none of the authorities relied upon by learned standing counsel have any application to the facts of the present case. Learned standing counsel cited the above rulings little realizing that these rulings do not have any application to the facts of the present case or to the question of law involved therein. The upshot of the above discussion is that the Tribunal was not right in holding that the notice issued under section 148 of the Act addressed as Sri Nath Suresh Chand Ram Naresh karta Sri Nath were valid notices, to assess the income of the Hindu undivided family of M/s. Munna Lal Moti Lal or Moti Lal Sri Nath or its successors. No argument was advanced by learned counsel for the assessee on question No. 2, therefore, it is returned unanswered. Now we take up question No. 3 for consideration. Section 292B of the Act reads as follows: "292B. Return of income, etc., not to be invalid on certain grounds.- No return of income, assessment, notice, summons or other proceeding furnished or made or issued or tak ..... X X X X Extracts X X X X X X X X Extracts X X X X
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