1984 (5) TMI 3 - HC - Income Tax

Issues Involved:
1. Jurisdiction of the Inspecting Assistant Commissioner to impose penalty post-April 1, 1976.
2. Substitution of legal representatives after the death of the assessee.
3. Applicability of Order XXII of the Code of Civil Procedure, 1908, to proceedings under section 261 of the Income-tax Act, 1961.
4. Validity of the will executed by the deceased assessee.

Detailed Analysis:

1. Jurisdiction of the Inspecting Assistant Commissioner to Impose Penalty Post-April 1, 1976:
The Income-tax Appellate Tribunal set aside the penalty order dated January 4, 1977, on the grounds that the power of the Inspecting Assistant Commissioner to impose penalties ceased effective April 1, 1976, due to an amendment in section 274 of the Income-tax Act, 1961. This view was affirmed by the High Court on July 31, 1980, confirming that the Tribunal was correct in holding that the Inspecting Assistant Commissioner lacked jurisdiction to pass the penalty order after April 1, 1976.

2. Substitution of Legal Representatives after the Death of the Assessee:
The assessee, Chhedi Lal, died on March 11, 1977. The Commissioner of Income-tax applied for the substitution of the widow and son of the deceased as legal representatives, accompanied by an application for condonation of delay. The widow, Smt. Chhedana, contested this, asserting that the Department was aware of the death since she had informed the Income-tax Appellate Tribunal on September 20, 1978. The court found that the substitution of the legal representatives was deemed to have occurred at the appellate stage before the Tribunal, as the objector had already taken notice and derived benefits from the appeal decided in her favor on November 30, 1978.

3. Applicability of Order XXII of the Code of Civil Procedure, 1908, to Proceedings under Section 261 of the Income-tax Act, 1961:
The court concluded that Order XXII of the Code of Civil Procedure, 1908, is not applicable to proceedings under section 261 of the Income-tax Act, 1961. Rule 38A, Chapter VIII of the Rules of the Court, which extends the application of certain provisions of the Civil Procedure Code to special appeals, writ petitions under Article 226, and tax references, does not apply to petitions for certificates of fitness to appeal to the Supreme Court under section 261. The court also referenced previous decisions, such as CIT v. I. D. Varshani and CIT v. Gulam Hyderkhan, which supported the view that Order XXII was not applicable to tax references.

4. Validity of the Will Executed by the Deceased Assessee:
Smt. Chhedana claimed that her husband executed a registered will in her favor on February 15, 1971. The Revenue did not file a rejoinder affidavit contesting this claim. Consequently, the court accepted the will as genuine and recognized Smt. Chhedana as the sole representative of the deceased assessee's estate for the purposes of these proceedings.

Conclusion:
The court permitted the petitioner to bring Smt. Chhedana on record as the legal representative of the deceased assessee, Chhedi Lal. The applications for substitution and condonation of delay were disposed of accordingly. The petition for a certificate for leave to appeal to the Supreme Court was scheduled for hearing in the week commencing July 23, 1984.

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