1964 (9) TMI 5 - HC - Income Tax

Reassessment notice - Whether the notice under s. 34 should have been served on all the four legal heirs

Issues Involved:
1. Jurisdiction of the Income-tax Officer to issue notices under section 148 of the Income-tax Act, 1961.
2. Validity of the notice under section 34(1)(b) of the Indian Income-tax Act, 1922.
3. Representation of the estate of the deceased by one of the petitioners.
4. Availability and adequacy of alternative remedies under the Income-tax Act.
5. Challenge to the vires of the second proviso to section 34(3) of the Indian Income-tax Act, 1922.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Income-tax Officer to issue notices under section 148 of the Income-tax Act, 1961:
The petitioners challenged the validity of the notices issued under section 148 of the Income-tax Act, 1961, on the ground that they were barred by time. The court noted that the petitioners argued that the notices were issued beyond the permissible time limit, as the relevant assessment year ended on March 31, 1958. However, the court emphasized that the determination of whether the income had escaped assessment and the validity of the notices should be adjudicated by the income-tax authorities. The court stated, "We are not convinced that there is either a jurisdictional infirmity or such grave illegality patent on the face of the record as to constitute exceptional circumstances which would justify exercise of this court's jurisdiction under article 226 of the Constitution at this stage."

2. Validity of the notice under section 34(1)(b) of the Indian Income-tax Act, 1922:
The petitioners contended that the notice under section 34(1)(b) was not properly served on all legal heirs of the deceased and was therefore invalid. The court observed that the Appellate Assistant Commissioner had set aside the assessment on the ground that the notice was not properly served and directed fresh assessment after serving notices on all legal heirs. The court noted that the income-tax authorities should evaluate the facts and circumstances to determine the validity of the notice. The court stated, "It would accordingly be highly inappropriate for this court to embark in writ proceedings on an enquiry involving appraisal of evidence."

3. Representation of the estate of the deceased by one of the petitioners:
The court considered whether petitioner No. 2, Shri H. R. Modi, effectively represented the estate of the deceased. The revenue argued that Shri H. R. Modi had attended to all assessment proceedings on behalf of the estate and was in possession and management of the entire estate. The court emphasized that this question depended on facts requiring evaluation by the income-tax authorities. The court stated, "Now, the question of Shri H. R. Modi representing the entire estate of his deceased father essentially depends on facts which require evaluation."

4. Availability and adequacy of alternative remedies under the Income-tax Act:
The revenue raised a preliminary objection, arguing that the petitioners should pursue remedies provided under the Income-tax Act rather than approaching the High Court directly. The court agreed, emphasizing that the statutory scheme provided adequate remedies for the petitioners to address their grievances. The court cited several precedents, including the Supreme Court's decision in Shivram Poddar v. Income-tax Officer, Calcutta, which stated, "Resort to the High Court in exercise of its extraordinary jurisdiction... may be permitted only when questions of infringement of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess."

5. Challenge to the vires of the second proviso to section 34(3) of the Indian Income-tax Act, 1922:
The petitioners' counsel argued that the second proviso to section 34(3) was ultra vires regarding the legal heirs of the deceased. The court noted that this challenge was not raised in the original writ petition but introduced later through an affidavit. The court ruled that new points not covered by the original writ petition should not be allowed. The court stated, "In so far as the affidavit of Shri Ghisa Ram introduces new points not covered by the original writ petition, it must, to that extent, be ruled out."

Conclusion:
The court dismissed the writ petition, directing the petitioners to pursue their remedies before the departmental authorities under the Income-tax Act. The court emphasized that the statutory scheme provided adequate remedies, and it would be inappropriate for the High Court to bypass the income-tax authorities' jurisdiction in the absence of clear-cut cases of jurisdictional infirmity or grave violation of law. The court concluded, "The petitioners are, therefore, left to pursue their remedy and urge their point of view before the departmental hierarchy." The petition was dismissed with no order as to costs.

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