1979 (7) TMI 58 - HC - Income Tax

Summary

Issues Involved:
1. Validity of simultaneous notices under sections 34(1A) and 34(1)(a) of the Indian Income Tax Act, 1922.
2. Validity of assessment proceedings without serving notices to all legal representatives.
3. Jurisdiction to issue notices under section 34(1)(a) when a return under section 34(1A) is already on record.

Detailed Analysis:

1. Validity of Simultaneous Notices under Sections 34(1A) and 34(1)(a):
The primary issue was whether two notices, one under section 34(1A) and another under section 34(1)(a), could exist concurrently. The legal representatives of the deceased had filed a return in response to the notice under section 34(1A). The court held that the appellants could not ignore the return filed under section 34(1A) and then proceed to issue a notice under section 34(1)(a) on the grounds that income had escaped assessment. The trial judge emphasized that the earlier proceedings under section 34(1A) had neither been terminated by an order of assessment nor canceled. Therefore, initiating a parallel proceeding under section 34(1)(a) was deemed invalid and without jurisdiction.

2. Validity of Assessment Proceedings Without Serving Notices to All Legal Representatives:
The respondents argued that the assessment proceedings were invalid as not all legal representatives of the deceased were served with notices. The court had previously directed that the Income Tax Officer (ITO) should serve notices on all legal representatives before proceeding with the assessment. The failure to serve notices on two of the deceased's representatives, Hakima Khatoon and Gulabi Bibi, was highlighted. The court maintained that the ITO could not proceed with the assessment without serving notices on all legal representatives, as mandated by law.

3. Jurisdiction to Issue Notices under Section 34(1)(a) When a Return under Section 34(1A) is Already on Record:
The court analyzed sections 22, 34(1)(a), and 34(1A) of the Indian Income Tax Act, 1922, to determine the jurisdiction to issue notices under section 34(1)(a) when a return under section 34(1A) was already filed. It was noted that a return filed under section 34(1A) stands on its own footing and is distinct from a return under section 22. The court concluded that a valid return under section 34(1A) does not bar the issuance of a notice under section 34(1)(a). The Supreme Court's decision in CIT v. S. Raman Chettiar was referenced to support this interpretation, stating that a return under section 22(3) must be filed before the time mentioned in section 34(3).

The court ultimately held that the notices issued under section 34(1)(a) were valid and set aside the judgment and order under appeal. The rule was discharged, and interim orders, if any, were vacated. The court also refused leave to appeal to the Supreme Court, stating that there was no substantial question of law of general importance in this case.

Conclusion:
The appeal was allowed, and the judgment and order under appeal were set aside. The court ruled that the notices under section 34(1)(a) were valid despite the existence of a return under section 34(1A), and the assessment proceedings could proceed accordingly. The court emphasized the importance of serving notices to all legal representatives and clarified the distinct nature of returns under sections 34(1A) and 34(1)(a).