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Issues Involved: Application u/s 256(2) of the Income-tax Act, 1961 seeking direction to Tribunal to state case and refer questions arising from Tribunal's order for assessment year 1973-74.
Issue 1: The Tribunal's failure to consider information about execution of will by Smt. Rambhabai after completion of assessment. The deceased filed return in 1975, assessment completed in 1975, set aside in 1979, fresh assessment in 1981 after her death. Income-tax Officer rectified mistake in 1981 upon learning of will, substituting legal representative. Tribunal annulled assessment, applicant sought direction under section 256(2) of the Act. Issue 2: Legality of Tribunal's decision on the order passed u/s 154. Tribunal held that the order under section 154 could not validate the already invalid assessment. Tribunal annulled assessment, emphasizing the duty of Income-tax Officer to ascertain legal heirs in case of death of assessee. Citing Jai Prakash Singh v. CIT [1978] 111 ITR 507 (Gauhati) on the necessity to implead all legal representatives for valid assessment. Issue 3: Tribunal's justification for not considering rectification u/s 154 due to mistake apparent from record. Tribunal found the assessment invalid as proper legal heir was not impleaded. Declined to state the case, emphasizing the necessity for diligent inquiry by Income-tax Officer in case of deceased assessee. Rejected applicant's proposal for questions arising from Tribunal's order. In summary, the High Court rejected the application under section 256(2) of the Income-tax Act, 1961, as the questions proposed did not arise from the Tribunal's order. The Tribunal's decision to annul the assessment was upheld, highlighting the importance of diligent inquiry by the Income-tax Officer in cases of deceased assessees to ensure all legal heirs are impleaded for a valid assessment.
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