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TMI Blog1990 (12) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... ded family represented by its karta, Kailash Chand Jain. During the years 1949 to 1955, it carried on banking business under the name and style of Mansa Ram and Sons, with its head office at Dehradun and branches at Mussoorie, Saharanpur, Rishikesh and Hardwar. In this reference, we are concerned with the validity of the reassessment orders made under section 147 for the years 1949-50, 1952-53, 1953-54, 1954-55 and 1955-56. The ground upon which the reassessment orders are said to be bad is that the notices under section 34(1) of the Indian Income-tax Act, 1922, and under section 147 of the Income-tax Act, 1961, were not served upon the assessee. Inasmuch as such service is a condition precedent to a valid assessment, it is urged that reassessments made are totally illegal and void. For a proper appreciation of the question, it is necessary to state a few more facts as they appear from the statement of the case and the Tribunal's order. In the year 1955, there was a huge rush at the assessee's bank. The assessee could not meet all the demands of its customers. Insolvency petitions were filed by the creditors wherein the District Judge, Saharanpur, appointed the official receivers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made on the basis of such notices. The Income-tax Officer rejected the said objection and passed orders of reassessment. The appeals filed by the assessee were rejected by the Appellate Assistant Commissioner, whereupon the matter was carried to the Appellate Tribunal in further appeal. It would be appropriate to notice the findings of the Tribunal: (i) "It is an undisputed fact that insolvency petitions were filed against the assessee-family by its creditors and that in the said insolvency proceedings, the learned District Judge, Saharanpur appointed, by his order dated July 26, 1955 in Insolvency Case No. 1 of 1955, the official receivers at Saharanpur and Dehradun to be the interim official receivers of the entire properties of the debtors in the two districts of Saharanpur and Dehradun, respectively, to take possession of the said properties and to administer them to the best advantage of the creditors, with full powers of administration, including that of filing suits on behalf of the debtors for the realisation of their assets. (ii) The interim receivers were in charge of the properties till July 5, 1968. Subsequently, in Insolvency Petition No. 8 of 1971, the Official ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ignored. The interim receiver was not authorised to receive the said notices on behalf of the assessee-Hindu undivided family. (ii) That the interim receiver was appointed not with respect to the assessee-Hindu undivided family but with respect to the banking business carried on by a partnership, Mansa Ram and Sons. The Tribunal has confused itself on this factual aspect. In the year 1952, there was a partial partition amongst the members of the Hindu undivided family whereunder the banking business was taken over by a partnership wherein all the members of the assessee-Hindu undivided family were partners. The immovable properties remained with the Hindu undivided family and the Hindu undivided family continued. The appointment of interim receivers in Insolvency Cases Nos. 1 of 1955 and 8 of 1971 was in respect of the banking business done by the said firm and was totally unconnected with the assessee-Hindu undivided family. This fact would be evident from the assessment order relating to 1965-66, copy of which is available in the records of I. T. R. No. 221 of 1981. If so, the service of the notices under sections 34/147, 148 on the interim receiver was totally unauthorised and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mansa Ram and Sons and its partners as insolvents. The above findings of the Tribunal are pure findings of fact from which no point of law can be spelt out. We are, therefore, unable to accept the contentions of learned counsel for the assessee that any question of law arises out of these findings of the Tribunal." The above paragraph, according to learned counsel for the assessee, does establish his contention that the insolvency proceedings were taken only against the firm, Mansa Ram and Sons, and were, in no way, concerned with the assessee-Hindu undivided family, we are afraid. We cannot accept the said proposition for more than one reason. Firstly, the said paragraph 13 refers only to Insolvency Case No. 8 of 1971. It does not refer to Insolvency Case No. 1 of 1955 wherein the interim receivers were appointed for the first time, and it is those interim receivers who received the notices in question on behalf of the assessee-Hindu undivided family. The said notices were not received by the interim receiver appointed in Insolvency Case No. 8 of 1971 referred to in paragraph 13. Secondly, the said observations were made while declining to refer two other questions under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by decisions rendered under the Income-tax Act. The real question is whether service of the notices on the interim receiver is service upon the assessee. Section 282 of the Income-tax Act, 1961, prescribes the mode of service of notice. Section 63 of the 1922 Act is almost in the same terms (the only difference is that in the case of Hindu undivided family, the previous Act permitted service of notice upon any adult male member of the family, whereas the present Act permits service on any adult member of the family. This distinction is not relevant for the present purpose). Section 282 reads thus : "282. (1) A notice or requisition under this Act may be served on the person therein named either by post or as if it were a summons issued by a court under the Code of Civil Procedure, 1908 (5 of 1908). (2) Any such notice or requisition may be addressed (a) in the case of a firm or a Hindu undivided family, to any member of the firm or to the manager or any adult member of the family; (b) in the case of a local authority or company, to the principal officer thereof ; (c) in the case of any other association or body of individuals, to the principal officer or any member thereof ; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entative-assessee under section 160 of the 1961 Act. It must be remembered that the said notices were addressed to the Hindu undivided family. They were not addressed to the receivers as the representatives of the assessee-Hindu undivided family. Moreover, the income of the assessment years concerned was not received by the receivers and if so, no assessment could be made upon the receivers under section 160(1)(iii). Section 160, in so far as it is relevant, reads as follows : "160. (1) For the purposes of this Act, 'representative assessee' means .... (iii) in respect of income which the Court of Wards, the Administrator-General, the Official Trustee or any receiver or manager (including any person, whatever his designation, who in fact manages property on behalf of another) appointed by or under any order of a court, receives or is entitled to receive, on behalf or for the benefit of any person, such Court of Wards, Administrator-General, Official Trustee, receiver or manager." Since, admittedly, the receivers were not in receipt of the income in respect of the assessment years concerned herein, no assessment could be made upon them under the said provision. For the above rea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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