TMI Blog1974 (3) TMI 12X X X X Extracts X X X X X X X X Extracts X X X X ..... sued in respect of the assessment, years 1958-59 to 1961-62 and on March 7, 1963, notices under section 148 of the Income-tax Act, 1961, were issued for the year 1957-58. All the said notices were addressed to Mahabir Prasad Poddar as such without indicating as to in what capacity the said notices were issued. For one relevant year, however, that is to say, for the assessment year 1957-58, sanction had to be obtained from the Commissioner of Income-tax for reopening of the assessment and it is undisputed that such sanction was obtained for that year for being addressed to Mahabir Prasad Poddar as an individual. In response to the aforesaid notices returns were filed by the said Mahabir Prasad Poddar as individual and income was shown to have been derived from certain businesses. In the said returns no claim was made that the businesses in question belonged to any Hindu undivided family. As mentioned hereinbefore, prior to the issuance of the aforesaid notices, Mahabir Prasad Poddar was examined under section 131(2) of the Income-tax Act, 1961, and in the said examination also Mahabir Prasad Poddar did not claim that the businesses and the income belonged to any Hindu undivided fami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellate Assistant Commissioner. It was held by the said Appellate Assistant Commissioner that the Income-tax Officer was justified in completing the assessment in the status of the Hindu undivided family for all the assessment years in question. It has been stated in paragraph 9 of the petition to this court that no appeal bad been preferred from the decision of the Appellate Assistant Commissioner. On March 18, 1969, Mahabir Prasad Poddar made this application in this court under article 226 of the Constitution describing himself as for self and as karta of the Hindu undivided family. A rule nisi was issued. Thereafter, the application came up for hearing before K. L. Roy J. and by a judgment delivered and order passed on December 4, 1970, Mahabir Prosad Poddar v. Income-tax Officer, the learned judge has dismissed this application and discharged the rule nisi. This appeal has been preferred from the aforesaid judgment and order of K. L. Roy J. dated December 4, 1970. Counsel for the assessee contended before us that in a case of reopening unless the jurisdiction was assumed by serving a proper and valid notice of reopening either under section 34 of the old Act or section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssary to decide two questions in disposing of this appeal firstly, whether the petitioner is entitled to maintain this application under article 226 of the Constitution in view of the conduct and facts and circumstances of this case, and, secondly, whether in the facts and circumstances of the case the reassessment was without jurisdiction. So far as the first question is concerned it is undisputed that a very large sum of money has escaped assessment. It is not the case of the appellant that either the Hindu undivided family or Mahabir Prasad in his individual capacity ever disclosed or brought to the notice of the revenue department this sum of money. It was also not disputed in this court that tax has escaped assessment on this sum of money. It has to be emphasised that when Mahabir Prasad received the notice and thereafter in his return originally filed and in his examination under section 131(2) of the Act, he did not state that there was any Hindu undivided family or that the said Hindu undivided family had any interest in the said money. On the contrary, his stand was that the income and the businesses connected therewith were his individual assets. Thereafter, he filed a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o further appeal from the decision of the Appellate Assistant Commissioner to the Tribunal. Nearly a year and a half thereafter, this application was moved in this court under article 226 of the Constitution and a rule nisi obtained. There is in the petition no explanation whatsoever as to why no action was taken for this long period after the assessment order or after the order of the Appellate Assistant Commissioner, in moving the application under article 226 of the Constitution. It was in this application under article 226 of the Constitution for the first time another stand was taken, namely, that there being no notice on the Hindu undivided family under section 148 of the Income-tax Act, 1961, the assessment on the Hindu undivided family was wholly without jurisdiction. Such an assessee, who has invited the department to make the assessment and as such cannot be aggrieved by the order of the authorities because the order was passed on the invitation of the petitioner, cannot, in our opinion, take recourse to article 226 of the Constitution. It has further to be borne in mind that the appellant in this case has an alternative remedy within the Income-tax Act; he has resorted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, whether in the facts and in the circumstances of the case such notice can be deemed to have been given. On this aspect it is important to remember that this was the first assessment only in the sense that there was no prior assessment of Mahabir Prasad either as an individual or as member or karta of any Hindu undivided family. As mentioned hereinbefore a large sum of money was found and thereafter after investigation notices were given addressed to Mahabir Prasad to come and explain the position. In response to this it was stated by him that the amount represented his personal income and the income of his business spread over for a number of years and pursuant thereto notices under section 148 had been served addressed to Mahabir Prasad without indicating in what particular capacity such notices were issued. Section 148 stipulates that before making the assessment or reassessment under section 147 the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-section (2) of section 139. Section 139, sub-section (2), does not provide that notice should be addressed to an assessee indicating in w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 148, such a notice was liable to be quashed and was bad. In this case, however, as mentioned hereinbefore, the facts were entirely different. Counsel for the assessee relied very strongly on the decision of the Supreme Court in the case of Commissioner of Income-tax, Andhra Pradesh v. K. Adinarayana Murthy. There the assessee was a Hindu undivided family. Subsequent to the original assessment, which was an assessment on the Hindu undivided family, the Income-tax Officer had received information that the assessee had done some procurement business arid earned large profits which had escaped assessment for the assessment year 1949-50. Since for the assessment year 1954-55, the Income-tax Officer had taken the status of the assessee to be that of an "individual", he issued a notice under section 34 of the Income-tax Act on 22nd March, 1957, to reopen the assessment for the assessment year 1949-50 in the status of an "individual", having taken the sanction of the Commissioner to make the reassessment in that status. Pending the proceedings the Appellate Assistant Commissioner in an appeal against the assessment for the year 1954-55 held that the status of the respondent was that of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f reassessment. Where there are two existing assessees if the Income-tax Officer chooses to issue notice in respect of one or in respect of an assessee in one status then in such a case the Supreme Court has emphasised that, in view of there being two different entities-assessable units, return filed by the one, though notice was given to the other, cannot be a valid return. In this connection it will be important to bear in mind that at page 610 of the judgment the Supreme Court has emphasised that the notice was invalid and ultra vires "in the facts and circumstances of the case" before the Supreme Court. On this aspect of the matter we are, therefore, of the opinion that here in this case where the question is of first assessment and Mahabir Prasad Poddar, the person responsible for filing of the return, on his own showing, had first indicated that it was individual and thereafter indicated that it was a Hindu undivided family and the reassessment was made by the notice served on Mahabir Prasad Poddar which was served on him without indicating in what capacity that notice had been given, it cannot be said that the assessment made in this case was without jurisdiction. There was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these applications also show that the Income-tax Officer was of the view that the amounts deposited in the name of Messrs. Daulatram Chooharmal with Messrs. Narayandas Purshottamdas represented the undisclosed profits of Chooharmal Wadhuram and the Income-tax Officer sought the sanction of the Commissioner for the purpose of assessing Chooharmal Wadhuram under section 34(1)(a). It can, therefore, hardly be disputed that the sanction of the Commissioner sought by the Income-tax Officer was for initiation of proceedings for reassessment of the profit derived by Chooharmal Wadhuram during his lifetime and the assessment was sought to be made by the Income-tax Officer on Daulatram and others as legal representatives of Chooharmal Wadhuram under section 24B(1). This assessment could obviously be made only in the status of individual and not in the status of association of persons. But, through some oversight, the applications made by the Income-tax Officer to the Commissioner showed the status of the assessee as association of persons. This was clearly a mistake and the question is whether this mistake had any invalidating consequence on the subsequent proceedings for assessment initia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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