TMI Blog1981 (2) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, had died on 5th November, 1964, which was at least more than a year before each of the assessment orders was passed. The assessment order for the year 1962-63, which is annex. " A " to the statement of case, does not state anywhere that the assessee had died, but it does show that Shri Roshan Lal, son of the assessee, had attended along with Shri B. B. Ahuja , advocate, and the case had been discussed. The assessment order also shows that two houses had been constructed by the assessee and there was an unexplained investment. Part of this unexplained investment was added in the assessment year 1962-63, and part of it was added in the assessment year 1963-64. In the case of the assessment year 1963-64, the name of the assessee is shown as " Shri Neecha Ram through his legal representative, Shri Roshan Lal ". So, in the later year it appears that the ITO had taken note of the fact that the assessee had died. An appeal was taken to the AAC by the legal representatives, who passed a consolidated order concerning the two years. He held that the proceedings were valid till the death of Shri Neecha Ram and, thereafter, the ITO had not proceeded properly. He directed the ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same extent as the deceased. (2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1), (a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased (b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and (c) all the provisions of this Act shall apply accordingly. (3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. (4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undischarged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent. Both Shri Roshan Lal, the son of the deceased, as well as an advocate, Shri B. B. Ahuja, attended the hearing. The provisions of s. 159(2)(a) of the Act seem to indicate that the proceedings are to be continued against the legal representative. If the legal representative does not appear on his own, the ITO would have to serve him. However, the section is completely silent as to what is to happen if the legal representative appears on his own and complies with the notices. Is it that the proceedings are to be considered to be null and void ? Or is it that the proceedings have to be restarted by giving a proper notice ? It appears somewhat odd that the legal representative should continue to attend the hearing and not bring to the notice of the ITO that the assessee had died. It is noted by the AAC that the ITO had knowledge that the assessee had died, but this knowledge is derived from some other parts of the record. In any case, the omission to note that the assessee had died and the proceedings were going on against the legal representatives shows, at least in the assessment order for 1962-63, that the ITO was not fully conscious that the assessee had died. In the year 1963 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC), in which case it was observed that the assessment could not be made against a dead person because his legal personality ceases on his death. However, the judgment also points out that s. 24B of the Indian I.T. Act, 1922, had been framed to enable an assessment being framed against the legal representative, but up to a particular point. It does not follow from this judgment that in the application of s. 159, if there is an oversight then the proceedings become null and void. It appears that the proper result is that the proceedings are invalid after the death of the person whose income is to be assessed unless the proceedings are continued against the legal representative. There are three decisions which must now be noted by us which have some bearing on the questions before us. The judgment relied upon by the learned counsel for the department is CIT v. Sumantbhai C. Munshaw [1981] 128 ITR 142 (Guj). The case was almost the same on the facts as the present case. There also the legal representative had appeared before the ITO and produced the relevant books of account; the ITO in ignorance of the assessee's death framed the assessment against the dead person. On appeal to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding the procedure prescribed by s. 24B of the Indian I.T. Act, 1922, and the procedure prescribed by s. 159 of the Act of 1961, but the case does show that the proceedings could continue against the legal heirs. The question for consideration in the present case, in the light of the aforementioned judgments, is whether it would be right to say that the assessment orders were invalid in the present case. No doubt, the AAC has held that the assessment orders were improperly framed, but this is probably because of different reasons for two years. In the year 1962-63, the legal representatives were apparently not served at all in that capacity. In the year 1963-64, one of the legal representatives appeared, but there is nothing to show on the record that the other legal representatives had been served. So, it is clear that for different reasons, both the assessment orders were invalid. The problem, in this case, is not so much the invalidity of the assessment orders as the question whether a direction can be given by the AAC after holding that the assessment orders are invalid. According to the view of the Tribunal, the assessment orders are a nullity but, according to the AAC, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he other legal representatives may or may not have been represented by an advocate, it could be said that proceedings qua them were not going on and, therefore, there was an irregularity in the procedure. The basic question is whether the ITO is obliged to serve all the legal representatives before he can continue the proceedings. It would appear that he has to serve the legal representatives or at least the legal representatives must be informed or be present before he can pass a valid order. Up to that point there can be no difference of opinion. If the ITO proceeds without the estate being substantially represented, i. e., without all or most of the legal representatives being before him, then it can be said that the assessment has not been framed against the legal representatives. The AAC was, therefore, correct in holding that the proceedings were invalid. The proceedings could not be null and void because at least one of the legal representatives was present in the case of both the assessment proceedings. The assessments had to be set aside and, then, the crucial question arose whether the AAC was right in giving a direction to the ITO to frame assessments after serving the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumbent on the ITO to proceed against the legal representatives. But, if the legal representatives or some other persons continue to appear or choose to appear, then the proceedings become irregular and can be remanded by a direction that they should be properly continued. To illustrate this question further, if there is a suit pending before the court and a party dies, it may be that somewhere on the record it may be stated in a report on a summons or otherwise that the party has died, but if an advocate appears and contests the case apparently as if the party is alive, then the court will never be able to find out that the proceedings have in fact abated though an examination of the record may reveal that in fact the proceedings have abated. If in such a case the proceedings continue and a judgment is recorded without taking into consideration that the proceedings have abated, it would be a case in which the court would be entitled to set aside the proceedings and permit the other side to apply for setting aside the abatement. Indeed, if the opposite side never hears about the death and abatement till a late stage of the proceedings, then the court has full authority to set asi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
