1970 (2) TMI 18 - HC - Income Tax

Assessment and certificate for recovery in the name of HUF - Whether Tax Recovery Officer can consider validity of assessment on HUF - Held, yes

Issues Involved:

1. Proper service of notice of demand on the assessee.
2. Jurisdiction of the Tax Recovery Officer or the Additional Collector over the town of Calcutta.
3. The validity of proceeding against the receivers versus the Hindu undivided family (HUF).
4. The correctness and propriety of the Commissioner's order.

Issue-wise Detailed Analysis:

1. Proper Service of Notice of Demand on the Assessee:

The Tax Recovery Officer found that the demand notice was received by Nagendra Nath Ghosh, a karmachari of the Hindu undivided family (HUF). The Certificate Officer held that there had been proper service of the notice of demand on the HUF. This finding of fact was challenged, but the court upheld the Tax Recovery Officer's determination, stating that the Commissioner did not reverse this finding. The court emphasized that it could not entertain the contention that the Tax Recovery Officer was in error regarding this factual finding, especially since it was not specifically recorded or stated in the affidavit-in-opposition that the Commissioner had wrongly recorded the contention.

2. Jurisdiction of the Tax Recovery Officer or the Additional Collector over the Town of Calcutta:

The objection that the Tax Recovery Officer or the Additional Collector, 24-Parganas, had no jurisdiction over the town of Calcutta was found to be without substance. The Certificate Officer, after discussing the relevant provisions of the Act, concluded that this objection lacked merit. The court did not find any error in this conclusion.

3. Validity of Proceeding Against the Receivers Versus the HUF:

The assessment was made in the name of the HUF, and the certificate under section 222 of the Income-tax Act, 1961, was also filed against the HUF. The Tax Recovery Officer held that he could not go beyond the certificate filed. The Commissioner, however, opined that the Tax Recovery Officer should have investigated whether the HUF was in existence at that point of time. The court disagreed with the Commissioner, stating that the Tax Recovery Officer was correct in his observation that he could not go beyond the certificate. The court emphasized that if the assessee contended that the HUF was not the proper unit of assessment, it should have taken up the matter in appropriate proceedings under the Income-tax Act.

The court also noted that the contention regarding the realization of tax from the receivers only was not pressed before the Tax Recovery Officer. The court found that the Tax Recovery Officer was right in not upholding this objection, as the assessment and the certificate were in the name of the HUF.

4. Correctness and Propriety of the Commissioner's Order:

The Commissioner allowed the appeal and set aside the order of the Tax Recovery Officer, stating that the income-tax department had assessed the members individually when the property was taken possession of by the receiver. The Commissioner believed that the department should have proceeded against the receiver and not against the individuals who constituted the HUF. The court found the Commissioner's order to be erroneous, contrary to the relevant provisions of law and facts on record. The court reinstated the order of the Tax Recovery Officer and the Additional District Magistrate, stating that the Commissioner was in error in holding that it was the duty of the Tax Recovery Officer to investigate whether the HUF was in existence.

Conclusion:

The court allowed the application, set aside the Commissioner's order dated 4th December 1965, and restored the order of the Tax Recovery Officer and the Additional District Magistrate dated 17th August 1964. The application was allowed with no order as to costs.

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