2005 (11) TMI 499 - HC - Income Tax

Summary

Issues:
Reopening of assessment without notice to all legal heirs of deceased-assessee, validity of reassessment orders, principles of natural justice, non-service of notice to other legal representatives, authority of Supreme Court judgment in similar cases.

Issue 1: Reopening of Assessment without Notice to All Legal Heirs
The deceased-assessee had filed returns for assessment years 1992-93 and 1993-94. After his demise, a notice under section 148 was issued to the appellant, one of the legal heirs, proposing to reopen the assessments. The appellant contended that since notice was not served to all legal heirs, the reassessment orders were illegal. The Commissioner annulled the reassessment orders on this basis. However, the Tribunal, relying on Supreme Court and High Court decisions, held that non-service of notice to all legal representatives was an irregularity, not an illegality, and upheld the reassessment orders.

Issue 2: Principles of Natural Justice and Non-Service of Notice to Other Legal Representatives
The appellant argued that non-service of notices to other legal representatives violated principles of natural justice and rendered the reassessment orders invalid. The Supreme Court precedent cited in a similar case emphasized that defects in notice service do not invalidate assessment orders, as long as the liability to pay tax is established by substantive provisions. The Court highlighted that the appellant had received the notice, participated in reassessment proceedings, and the irregularity did not affect his liability to pay tax. Therefore, the argument regarding violation of natural justice was not applicable in this case.

Conclusion:
The High Court dismissed the appeal, stating that no substantial question of law arose for consideration. The Court upheld the reassessment orders, emphasizing that the irregularity in notice service did not render the orders void or illegal. The judgment reiterated the principle that procedural defects do not erase tax liability established by substantive provisions. The appellant's participation in the reassessment proceedings after receiving the notice precluded the argument of violation of natural justice.