1965 (12) TMI 132 - HC - VAT and Sales Tax

Issues Involved:
1. Validity of the assessment order and recovery certificate.
2. Service of requisite notices on the plaintiff.
3. Plaintiff's status as a non-resident.
4. Proceedings against only one heir.
5. Validity of the recovery certificate in the name of the deceased.
6. Bar under section 67 of the Indian Income-tax Act, 1922.

Issue-wise Detailed Analysis:

1. Validity of the assessment order and recovery certificate:
The appellate court held that the assessment order and the recovery certificate were "illegal and without jurisdiction." It was determined that the assessment was invalid because the requisite notice under section 34 of the Indian Income-tax Act, 1922, was not issued before assessing the plaintiff for the escaped income. The court emphasized that the service of the requisite notice on the assessee was a "condition precedent" to the validity of any reassessment under section 34. The absence of such notice rendered the assessment and the recovery certificate void.

2. Service of requisite notices on the plaintiff:
The plaintiff contended that "no requisite notices were served" on him before the assessment order was passed. The trial court found that the defendants had proved that the necessary notices were served on the plaintiff as the heir of the deceased. However, the appellate court found that there was no evidence on record to show that the requisite notice under section 34 was issued. The appellate court treated this as a "pure question of law" based on the evidence and held that the absence of notice under section 34 was "fatal to the assessment."

3. Plaintiff's status as a non-resident:
The plaintiff argued that he was a non-resident and was wrongly taxed as a resident. The appellate court did not specifically address this issue, as the primary focus was on the lack of requisite notice under section 34, which was sufficient to invalidate the assessment.

4. Proceedings against only one heir:
The plaintiff contended that the proceedings were taken only against him and not against all the heirs. The trial court held that it was not necessary to issue notices to all the heirs. However, the appellate court focused on the lack of notice under section 34 and did not delve into the issue of proceedings against only one heir.

5. Validity of the recovery certificate in the name of the deceased:
The plaintiff argued that the recovery certificate in the name of the deceased could not be availed of against him. The trial court found that the recovery certificate was subsequently corrected. The appellate court, however, invalidated the recovery certificate along with the assessment order due to the lack of requisite notice under section 34.

6. Bar under section 67 of the Indian Income-tax Act, 1922:
The defendants argued that the suit was barred under section 67 of the Act, which prohibits any suit to set aside or modify an assessment made under the Act. The appellate court held that section 67 did not apply to a void assessment. It was determined that the assessment was a nullity due to the lack of requisite notice under section 34, and thus, the civil court's jurisdiction was not barred. The appellate court relied on the principle that civil courts have jurisdiction to decide whether a tribunal of limited jurisdiction has acted within its powers or has transgressed its limits.

Conclusion:
The appeal was dismissed with costs, affirming the appellate court's decision that the assessment order and recovery certificate were invalid due to the lack of requisite notice under section 34. The court also held that the suit was not barred under section 67 of the Indian Income-tax Act, 1922. The appellate court's judgment was based on the fundamental principle that the service of notice under section 34 is a condition precedent to the validity of any reassessment, and the absence of such notice renders the assessment void and without jurisdiction.

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