1970 (4) TMI 35 - HC - Income Tax

Notices issued under section 34(1)(a)to legal representative of Babarbhai after B s death - held that reassessment proceedings cannot be continued against the HUF of the deceased

Issues Involved:
1. Preliminary Objection on Grounds of Delay
2. Validity of Notices under Section 34(1)(a)
3. Reassessment of Income of Hindu Undivided Family vs. Individual
4. Service of Notices and Compliance with Legal Procedures

Detailed Analysis:

1. Preliminary Objection on Grounds of Delay:
The revenue contended that the petition should be dismissed due to a delay of more than three years in filing it after the issuance of the impugned notices. The court acknowledged that delay is a factor in exercising jurisdiction under Article 226 of the Constitution but emphasized that it is not an absolute bar. The court examined the facts and found that the petitioner had promptly responded to the initial notices and had reasonable grounds to assume that the proceedings had been dropped due to the lack of further action by the Income-tax Officer for about two years. Moreover, the court noted that the petitioner had not allowed the reassessment proceedings to progress significantly before filing the petition, thus no prejudice was caused to the revenue. The court also highlighted that the petitioner sought a writ of prohibition, which is not subject to delay considerations when there is a patent lack of jurisdiction.

2. Validity of Notices under Section 34(1)(a):
The petitioner challenged the validity of the notices on the grounds that they were issued for reassessment of the income of the deceased as an individual, whereas the revenue sought to reassess the income of the Hindu undivided family. The court noted that the sanction from the Central Board of Revenue was for the Hindu undivided family, but the notices were directed at the petitioner as the legal representative of the deceased individual. The court emphasized that the notice under Section 34 is foundational for jurisdiction and must correctly identify the assessee. The court concluded that the notices were invalid as they were not issued to the Hindu undivided family but to the petitioner as the legal representative of the deceased individual.

3. Reassessment of Income of Hindu Undivided Family vs. Individual:
The court reiterated that under the Income-tax Act, 'individual' and 'Hindu undivided family' are separate units of assessment. The impugned notices, addressed to the petitioner as the legal representative of the deceased, were intended for reassessment of the deceased's individual income. The court found that the language used in the notices and related communications clearly indicated that the reassessment was targeted at the individual income of the deceased, not the Hindu undivided family. Consequently, the reassessment proceedings against the Hindu undivided family based on these notices were deemed ultra vires and without jurisdiction.

4. Service of Notices and Compliance with Legal Procedures:
The petitioner argued that the notices were not duly served as they were affixed on the outer door of the residence without complying with the conditions set out in Order 5, Rule 17 of the Code of Civil Procedure, applicable by Section 63 of the Indian Income-tax Act, 1922. However, the court found it unnecessary to delve into this issue, given its conclusion on the invalidity of the notices based on the jurisdictional grounds.

Conclusion:
The court allowed the petition, quashing the notices dated 24th March 1962, issued under Section 34(1)(a), and issued a writ of prohibition against further reassessment proceedings based on those notices. The respondents were ordered to pay the costs of the petition to the petitioner.

Petition allowed.

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