2001 (2) TMI 80 - HC - Income Tax

Summary

Issues:
1. Failure to issue notices to all legal representatives for assessment.
2. Validity of assessment order due to lack of notice to legal representatives.

Issue 1: Failure to issue notices to all legal representatives for assessment

The judgment pertains to two questions referred by the Income-tax Appellate Tribunal, Jaipur Bench, regarding the assessment year 1985-86. The deceased assessee's legal representatives were not all served with notices during the assessment process. The Commissioner of Income-tax (Appeals) found that the assessment was invalid due to the absence of notice to all legal representatives. The Tribunal concurred, stating that the Income-tax Officer did not act diligently by not issuing notices to all legal representatives, rendering the second assessment void ab initio. The Tribunal emphasized that the minors were not brought on record, and their natural guardians were not informed of the proceedings. The Tribunal annulled the assessment, leading to the question of whether this annulment was justified.

Issue 2: Validity of assessment order due to lack of notice to legal representatives

The Supreme Court's ruling in CIT v. Jai Prakash Singh was cited, emphasizing that procedural defects in serving notices do not invalidate the tax liability unless substantive provisions are breached. The Court highlighted a similar case where assessments were made without serving notices to all legal representatives, but the assessments were not deemed void. Referring to Estate of Late Rangalal Jajodia v. CIT, the Court reiterated that assessment proceedings can be challenged and corrected even in the absence of notice. Consequently, the High Court found that the assessment order, while irregular, was not void and could be rectified by issuing proper notices to all legal representatives. The Court held that the assessment order was not void but required correction through proper notice issuance, ruling in favor of the Revenue.

In conclusion, the judgment addressed the failure to serve notices to all legal representatives during the assessment process and the subsequent annulment of the assessment order. The Court clarified the distinction between procedural irregularities and void assessments, emphasizing the need for proper notice issuance to rectify irregularities. The judgment highlighted the importance of fair procedure and diligence in serving notices to all affected parties, ultimately ruling in favor of the Revenue regarding the validity of the assessment order.