1978 (7) TMI 33 - HC - Income Tax

Issues Involved:
1. Validity of continuing assessment proceedings after the death of the assessee without serving a fresh notice under section 34(1A) or section 34 on the legal heirs.
2. Applicability of section 24B(3) of the Indian Income-tax Act, 1922.
3. Validity of the Income-tax Officer's refusal to reopen the assessment under section 27.
4. Validity of service of notice under section 22(4) on the legal representatives of the deceased.

Detailed Analysis:

Issue 1: Validity of Continuing Assessment Proceedings Post-Death Without Fresh Notice
The primary question was whether the Tribunal was right in holding that the assessment proceedings were rightly continued and completed after the death of the assessee in the hands of his legal heirs without serving a fresh notice under section 34(1A) or section 34 of the Indian Income-tax Act, 1922. The court held that since a notice under section 34(1A) had already been served on the deceased before his death, it was not necessary to serve another notice on the legal representatives. The proceedings could validly continue, and reassessment could lawfully be made on the legal representatives. This interpretation was supported by the Supreme Court's judgment in Kantamani Venkata Narayana and Sons v. First Addl. ITO [1967] 63 ITR 638, which equated a notice under section 34(1A) with a notice under section 22(2).

Issue 2: Applicability of Section 24B(3)
The second issue was whether section 24B(3) of the Indian Income-tax Act, 1922, was applicable in this case. The court affirmed that section 24B(3) could be invoked. The section allows the Income-tax Officer to make an assessment of the total income of the deceased person and determine the tax payable by him, requiring the legal representatives to furnish necessary documents. Since the deceased had not complied with the notice under section 34(1A), the ITO had the jurisdiction to reassess the legal representatives under section 24B(3).

Issue 3: Validity of ITO's Refusal to Reopen Assessment
The third question was whether the Tribunal was right in holding that the ITO's order under section 27 refusing to reopen the assessment was in order. The court declined to answer this question as it was not pressed by the assessee's counsel.

Issue 4: Validity of Service of Notice Under Section 22(4)
The final issue was whether the service of notice under section 22(4) upon the legal representatives of the deceased was valid. The court held that the service of notice under section 22(4) on the legal representatives was valid. Since a notice under section 34(1A) containing the provisions of section 22(2) had already been served on the deceased before his death, it was not necessary to serve a fresh notice under section 22(2) on the legal representatives. The court equated the notice under section 34(1A) with a notice under section 22(2), thereby validating the subsequent notice under section 22(4).

Conclusion:
The court answered the first and second questions in the affirmative, favoring the revenue. The third question was not pressed and, therefore, not answered. The application for a certificate to appeal to the Supreme Court was rejected, as the court found that the issues were already concluded by previous Supreme Court decisions.

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