9911796707
TMI Blog1985 (1) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ivided family ? " The facts leading to this reference are that the assessee, Manilal Raghavji Kothari, was assessed in the capacity of the karta of a Hindu undivided family for the assessment year 1953-54 on a total income of Rs. 24,343. It may be stated that the accounts of the assessee-firm were maintained from Diwali to Diwali. In November 1953, there was a partial partition in the Hindu undivided family consisting of Manilal Raghavji Kothari and his two sons, Shashikant Kothari and Kantilal Kothari. The family business was partitioned in equal shares among three of them. The assessments in subsequent years were done in the status of an individual. On December 16, 1966, the premises of Manilal Raghavji Kothari were raided by the officers of the Income-tax Department. The documents seized during the raid showed that the assessee was maintaining duplicate set of account books. According to the seized books, the opening balance for the assessment year 1954-55 was Rs. 4,51,648. The original return had shown the opening balance as only Rs. 3,48,841 and the same was the closing balance for the assessment year 1953-54. There was thus an apparent discrepancy of Rs. 1,02,807. The Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. The assessee challenged the reopening of the assessment proceedings as also the maintenance of addition of Rs. 23,907. The Department, on the other hand, challenged the reduction in the sum accepted, as held by the Appellate Assistant Commissioner. The Appellate Tribunal held: (i) That the assessee was maintaining duplicate books of account and that there was discrepancy between them. According to it, income of 1953-54 assessment year had escaped assessment and not of 1954-55 (ii) that notice of the proceeding under section 147(a) was validly served. The notice to Manilal Raghavji Kothari, the karta of the erstwhile joint family, fulfilled the requirements of section 148 of the Income-tax Act; and (iii) that the demand notice served upon Manilal Raghavji Kothari, the karta of the Hindu undivided family, did not vitiate the assessment proceedings. Before the Tribunal, the assessee did not challenge the correctness of the figures appearing in the capital account in the seized books. In regard to the figures to be added in the assessment of the assessee, the finding of the Appellate Assistant Commissioner in regard to Rs. 78,900 being the sum to be added was chall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Income-tax Department. It was found that the opening balance shown for the succeeding Diwali was Rs. 4,51,648. The assessing officer took the figure of Rs. 4,51,648 as the correct figure in regard to the opening balance of Diwali year commencing from 1953. Thus, there was an obvious discrepancy between the closing balance of the year ending Diwali 1952 and the year commencing Diwali 1953. The submission urged on behalf of the assessee is, therefore, clearly untenable. The concealment, therefore, was in the account of 1953-54 (A.Y.). The submission on behalf of the assessee is untenable for yet another reason. From the documents seized, it was apparent that the assessee was maintaining duplicate set of accounts. The seized accounts showed discrepancy between the returned figures and the figures shown in the seized books. Conceding for the time being that the wrong or false figures occurred in the account for the year commencing Diwali 1952, yet it will fall within the assessment year 1953-54. That must be so because the wrong or false figures were found in the accounts of 1953-54, accounting year commencing from October 18, 1952. That was Diwali day, when the assessee ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome-tax Act. The notice is in the following terms: " Whereas I have reason to believe that the income of Hindu undivided family in respect of which you are assessable/chargeable to tax of the assessment year 1953-54 has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. I, therefore, propose to reassess the income for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice return in the prescribed form of ...... for the income of Hindu undivided family... in respect of which year are assessable .......... .." The notice clearly shows that the assessee had been called upon to file a return in the prescribed form for the income of the Hindu undivided family. The original proceeding was against the Hindu undivided family of which the assessee was the karta. The notice thus issued to him on January 4, 1969, clearly indicated that fresh return had to be filed for the Hindu undivided family. The fact that Manilal Raghavji Kothari was not mentioned as the karta in the notice is of no moment. He was the karta and he had been called upon to file a return of the Hindu undivided Family. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er. He was not misled in any manner. The assessment under section 147 of the Income-tax Act, therefore, cannot be assailed on the ground urged by Mr. Rameshwar Prasad. The last submission on behalf of the assessee related to the assessment being void on account of the demand notice having been sent only to one member of the Hindu undivided family. I regret, I have some difficulty in acceding to the submission urged by Mr. Rameshwar Prasad for the assessee. The demand notice is a process of recovery of tax after assessment proceeding has been completed. I fail to appreciate, therefore, how defective demand notice can vitiate the assessment proceeding. The assessment cannot be affected by the demand notice. If there is any defect in the demand notice, that can be rectified by the revenue authorities. Learned counsel for the assessee was candid in conceding that there was no authority to the effect that a defect in a demand notice would vitiate the assessment proceeding. Section 283(1) of the Income-tax Act, 1961, provides that after a finding of total partition has been recorded by the Income-tax Officer in respect of any Hindu undivided family, notices under this Act in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty allotted to him or it and the Income-tax Officer shall make assessments accordingly on the various members and groups of members in accordance with the provisions of section 23. The proviso to sub-section (2) is rather important which runs thus: "Provided that all the members and groups of members whose joint family properties had been partitioned shall be liable jointly and severally for the tax assessed on the total income received by or on behalf of the joint family as such. " (Emphasis supplied). Thus, even if there had been a total partition during the assessment year 1954-55, all members of the Hindu undivided family would be jointly and severally liable for the recovery of the tax assessed on account of assessment year 1953-54. By that process of reasoning, all the coparceners of the assessee being jointly and severally liable, it was open to the Department to proceed against him alone. There is thus no defect in the demand notice. Section 29 provides for notice of demand. It enjoins that when any sum is due in consequence of any order passed under this Act, the Income-tax Officer shall serve upon the assessee or other persons liable to pay such tax a notice of dema ..... X X X X Extracts X X X X X X X X Extracts X X X X
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