2009 (2) TMI 351 - HC - Income Tax

Notice under section 147, 148 Limitation In this case Rajasthan High Court-held that the Assessing officer wrongly exercised the jurisdiction under sections 148 and 149 in issuing the notice to the legal representatives had been issued after the expiry of limitation period. The order of the appellate authority and the Tribunal were set aside and the assessment order passed by the Assessing Officer was maintained. Thus the notice to the dead person was illegal. Decision in favor of assessee against the revenue.

Summary

Issues:
1. Validity of assessment order and notice of demand made in the name of a deceased person for the assessment year 1972-73.
2. Consideration of Supreme Court decision in CIT v. Amarchand N. Shroff [1963] 48 ITR (SC) 59.
3. Application of section 292B of the Income-tax Act, 1961 in annulling the assessment order and notice of demand.
4. Annulling the assessment order due to failure to bring on record all legal representatives of the deceased.

Analysis:

Issue 1: The case involved a reference made by the Income-tax Appellate Tribunal regarding the assessment order and notice of demand made in the name of a deceased person for the assessment year 1972-73. The court found that the Assessing Officer had wrongly exercised jurisdiction by reopening the assessment after the limitation period of 8 years, as per sections 148 and 149 of the Income-tax Act. The notice to the legal representatives was issued after the expiry of the statutory period, rendering it invalid. The court set aside the orders of the appellate authority and the Tribunal, maintaining the original assessment order passed by the Assessing Officer.

Issue 2: The court noted that the judgment of the Supreme Court cited during the proceedings had not been properly applied by the authorities under the Income-tax Act. This failure to consider the Supreme Court decision was a significant factor in the assessment process for the relevant year.

Issue 3: The application of section 292B of the Income-tax Act was raised by the counsel for the assessee. However, it was submitted that the Tribunal's application of this law was incorrect. Consequently, this issue was not pressed further by the counsel.

Issue 4: The matter of bringing on record all legal representatives of the deceased was discussed, referencing a previous judgment in a related case. It was highlighted that the Assessing Officer had failed to include all legal representatives, which was a crucial aspect in the assessment process.

The court emphasized the importance of adhering to statutory limitations and procedures in tax assessments, especially concerning deceased individuals. The judgment favored the assessee due to procedural lapses and incorrect application of relevant legal provisions, ultimately leading to the disposal of the reference in favor of the assessee.