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TMI Blog1993 (4) TMI 116X X X X Extracts X X X X X X X X Extracts X X X X ..... the deceased assessee had not filed return of his income for A. Y. 1985-86. However, in compliance of the letter dated 26-9-1986 and notices under sections 142(1) and 143(2), both dated 15-12-1986, his widow, Smt. Pushpa Devi filed a return on 30-7-1987 declaring the income of the deceased assessee for A. Y. 1985-86 at Rs. 19,020. The ITO completed the assessment under section 143(3) on 30-3-1988 assessing the deceased on total income of Rs. 1,46,590. Smt. Pushpa Devi carried the matter in appeal. 3. Before the CIT(A) the very validity and legality of the assessment as made by the ITO on 30-3-1988 on the deceased assessee through her LR Smt. Pushpa Devi was challenged on the ground that all the LRs of the deceased had not been made party to the proceedings. The learned CIT(A) though found the factual position true and correct yet held that it was a case of procedural irregularity rectifiable by issue of notices to all the LRs of the deceased assessee. In this behalf he relied upon, mainly, the Calcuatta High Court decision in the case of Sajjan Kumar Saraf v. CIT [1978] 114 ITR 155. He, therefore, set aside the assessment to the ITO to be made afresh according to law and as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled the assessment as the same was void ab initio. On the other had the contention of the Department in this appeal No. 1131/JP/91 is that the CIT(A) should have confirmed the assessment order instead of setting aside the same to the ITO for de novo assessment. 7. We heard the parties at sufficient length and considered the material brought on our record. The learned counsel for the assessee vehemently urged that it was well within the knowledge of the ITO that the deceased assessee had died long back after leaving as many as 7 heirs behind him to represent his estate, that despite his knowledge the learned ITO did not like to bring all the LRs of the deceased assessee on record and did not issue required notices to them. It was submitted that Smt. Pushpa Devi, the widow of the deceased assessee had also pointed out to the ITO that the assessments being made by him in the absence of the other legal representatives of the deceased assessee would be bad in law. But despite such objection having been raised before him the ITO chose to pass an assessment order by impleading Smt. Pushpa Devi alone as LR of the deceased assessee. It was thus submitted that in the first round learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the merits of the case on hand, it would be necessary to consider the legal history of section 159 of the Act. It may be recalled that in the case of Ellis C. Reid v. CIT [1930] 5 ITC 100 the Bombay High Court had pointed out that according to the law as it then stood, where a person died after the commencement of the assessment year but before his income of the previous year was assessed his executor was not liable to pay the tax and if the death occurred whilst assessments were pending, the proceedings could not be continued and the assessments could not be made after the person's death.This lacuna was removed by the enactment of section 24B in the Indian IT Act, 1922, which made the LRs liable to pay the tax which might have been assessed but not paid by the deceased person or which might be assessed after his death. The liability, though absolute, was, however, limited to the extent to which the estimate of the deceased person was capable of meeting the charge. When the present Act was enacted, section 159 occurring in Chapter XV entitled as " Liability in Special Cases ", made a provision to meet with a similar situation. Under the Act the words " Legal Representative " were g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is one of general application. There is no reason why the same principles cannot be invoked in the case of assessment of the income of a deceased person in the hands of his legal representatives. The same principle appears to have been reiterated by the Supreme Court in the case of ITO v. Maramreddy Sulochanamma [1971] 79 ITR 1 also. 13. In the case of Muniyammal v. Third Addl. ITO [1960] 38 ITR 664 the Madras High Court had thrown the proposition that in a case where a person died leaving more than one LR, the estate was represented by all of them jointly, and not by some of them alone. As between co-heirs, one was not the agent of the other. Referring to section 24B of the IT Act, 1922 their Lordships observed that the said provision made a legal representative of a deceased person liable to the tax, assessed as payable by the deceased, the liability being, however, limited to the extent of the estate left by the deceased. The word " legal representative ", it was observed, " used in section 24B sub-section (1), meant all the legal representative collectively, if there were more than one ". 14. In the case of CIT v. N. A. Mandagi [1967] 63 ITR 173 the Mysore High Court held t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee by serving notice under section 22(2) or section 34 of the IT Act, 1922 on all the LRs. If the notice is served on only one LR, there would be no complete representation of the estate and the proceedings will be wholly invalid. Their Lordships further held that there may be cases where, though there are several legal representatives, one may represent the whole interest of the deceased and in such a case there being complete representation of the interest of the deceased before the ITO, the assessment made would bind the estate of the deceased. Again, where the ITO bonafide and diligently believes one or more persons to be the only legal representatives of the deceased and initiates proceedings by serving notices on them and, subsequently it is found that, besides those served, there were also other legal representatives of the deceased, there is no reason why in such cases the general rule evolved in the field of civil law should not be applied and the proceedings may be held to be valid. 18A. The principles that emerge from a study of the cases discussed above are that before an assessment in the case of a deceased assessee is made, his estate should be duly represented t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the first round. Therefore, the learned CIT(A) had to set aside the assessment in the first round with a direction to him to bring all the LRs of the deceased assessee on record by issuing required notices to them. 20. No doubt, the provisions of section 159, as stated above, are machinery provisions and hence procedural in nature. Procedural lapses ordinarily give rise to curable irregularity and it was perhaps from that angle that the learned CIT(A) in the first round had set aside the assessment to the ITO to be redone afresh. It is purely from this angle that we would not like to disturb CIT(A)'s order passed in the first round. 21. But in the second round of proceedings we find that though the learned CIT(A) had clearly mentioned in his order setting aside the assessment to the ITO that the deceased assessee had left as many as 7 LRs and notices were required to be issued to all of them yet the ITO does not appear to have followed his directions. It can hardly be disputed that notices to 5 LRs only were sent in one envelope and that too at an address where the deceased assessee used to work in his life time to earn his livelihood. It is not at an in evidence that any of h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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