1992 (11) TMI 148 - AT - Income Tax

Summary

Issues Involved:

1. Inordinate delay in communicating assessment orders.
2. Validity of assessment orders due to delayed communication.
3. Maintainability of the appeal filed by Poonamchand Toshniwal on behalf of the firm.

Issue-wise Detailed Analysis:

1. Inordinate Delay in Communicating Assessment Orders:

The assessee contended that the assessment orders for the years 1966-67, 1967-68, 1970-71, and 1971-72 were served after a delay of 14 to 17 years, rendering them unenforceable. The assessee's counsel cited decisions from the Andhra Pradesh High Court, specifically Khetmal Parekh & Co. vs. State of A.P. (1976) 38 STC 531 and M. Ramakrishnaiah & Co. vs. State of A.P. (1976) 38 STC 537, to support the argument that unreasonable delay in communicating orders makes them invalid.

2. Validity of Assessment Orders Due to Delayed Communication:

The Tribunal examined whether the delay in serving the assessment orders affected their validity. It was noted that the Andhra Pradesh High Court's decisions pertained to executive authorities, whereas the Income Tax Officer (ITO) acts as a quasi-judicial authority. The Tribunal relied on precedents under the Indian IT Act, 1922 and the IT Act, 1961, which held that delay in serving the assessment order does not invalidate it. The Tribunal cited the Mysore High Court decision in N. Subba Rao vs. Third ITO (1963) 48 ITR 808 (Mys) and the Calcutta High Court decision in CIT vs. Karnani Industrial Bank Ltd. (1978) 113 ITR 380 (Cal), which supported the view that there is no statutory limitation for issuing a notice of demand under Section 29 of the Indian IT Act, 1922. The Tribunal concluded that the delay in sending demand notices does not invalidate the assessment orders.

3. Maintainability of the Appeal Filed by Poonamchand Toshniwal on Behalf of the Firm:

The Departmental Representative challenged the maintainability of the appeals, arguing that Poonamchand Toshniwal was not a partner of the firm and thus lacked the authority to file the appeals. The Tribunal examined Section 140(cc) of the IT Act and Rule 45 of the IT Rules, which require that appeals be signed by the managing partner or, in their absence, by any partner not being a minor. The Tribunal also considered the argument that minors admitted to the benefits of partnership have a right to challenge assessments affecting their interests, and their guardian can file appeals on their behalf.

The Tribunal noted that Poonamchand Toshniwal had undertaken to pay the income-tax arrears on behalf of the partners as per the dissolution deed dated 20th January 1971. The Tribunal referred to the Calcutta High Court decision in CIT vs. Southern Bank Ltd. (1979) 120 ITR 92 (Cal), which held that a successor in interest could continue proceedings and file appeals. Applying this rationale, the Tribunal concluded that Poonamchand Toshniwal, having stepped into the shoes of the partners, was competent to file the appeals. The Tribunal distinguished the earlier Calcutta High Court decision in CEPT vs. Ramnath Bajoria (1951) 19 ITR 79 (Cal), which the Departmental Representative had relied upon, as not applicable to the present case.

Conclusion:

The Tribunal held that the delay in serving the assessment orders and demand notices does not invalidate the assessments. It also held that Poonamchand Toshniwal was entitled to file and maintain the appeals on behalf of the firm. However, on the merits, the Tribunal dismissed the appeals, concluding that the assessee had no case regarding the validity of the assessments due to delayed communication.