1993 (11) TMI 36 - HC - Income Tax

Summary

Issues Involved:
1. Status of the assessee for tax assessment: individual vs. Hindu undivided family (HUF).
2. Requirement of notice under Section 139(2) of the Income-tax Act, 1961.
3. Validity of assessments made without issuing a fresh notice under Section 139(2).

Detailed Analysis:

1. Status of the Assessee for Tax Assessment: Individual vs. Hindu Undivided Family (HUF)
The primary issue in this case was whether the income should be assessed in the status of an individual or a Hindu undivided family (HUF). The original return for the assessment year 1971-72 was filed by the legal heir of the deceased, Shri Sumer Singh, in the status of an individual. A revised return was later filed claiming the status of HUF. The Income-tax Officer concluded that the assessee had been consistently assessed as an individual and that the estate was impartible, thus the income should be assessed in the status of an individual. This view was supported by the application of the rule of primogeniture, which dictated that the estate belonged to the eldest son, who was recognized as the ruler of the former Kishangarh State.

2. Requirement of Notice Under Section 139(2) of the Income-tax Act, 1961
The Tribunal relied on the decision in CWT v. Ridhkaran [1972] 84 ITR 705, which required a fresh notice under Section 14(2) of the Wealth-tax Act if the return was filed in one status and the assessment was to be made in another status. The Tribunal held that without issuing a fresh notice under Section 139(2), the assessments were vitiated. However, this was contested by the Revenue, which argued that the opportunity of being heard was given to the assessee before altering the status from HUF to individual, thereby fulfilling the requirements of natural justice.

3. Validity of Assessments Made Without Issuing a Fresh Notice Under Section 139(2)
The court examined various precedents, including Munilal Shivnarain Kothari v. CIT [1984] 149 ITR 567, which held that the Income-tax Officer could assess a person in a different status from the one in which the return was filed, provided the assessee was given an opportunity to contest the change. The court noted that in the present case, the legal heir was given due opportunity to be heard, and detailed submissions were made before the Income-tax Officer. Thus, the principles of natural justice and the requirements of Section 139(2) were deemed to have been complied with.

Conclusion
The court concluded that the Tribunal was not justified in holding that the assessments made in the status of an individual were vitiated due to the lack of a fresh notice under Section 139(2). The opportunity given to the assessee amounted to a notice, fulfilling the requirements of natural justice. Therefore, the reference was answered in favor of the Revenue and against the assessee.