9911796707
TMI Blog1981 (4) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... pa Bai individually and treated the said sum of Rs. 22,000 each as capital gains but on protective basis observing that the transaction appeared to be an adventure in the nature of trade carried on by an association of persons. So far as Shrimati Saraswati Bai was concerned, the ITO held it to be business income in her hands. On March 1, 1969, a single notice under s. 148 of the I.T. Act, 1961, was issued to the aforesaid three ladies. In response to this notice, these ladies filed a return showing their income at rupees nil contending that they did not constitute an association of persons and that the notice issued to them under s. 148 of the Act was invalid. They further submitted that they did not carry on any business and as such the sum of Rs. 66,000 was not liable to be assessed in their hands as business income. They went on to explain that they had purchased the land in question for constructing residential house but on finding out that the locality was not good, they changed their mind and sold the property. According to them, therefore, the transaction in question was not an adventure in the nature of trade. They pointed out that their individual assessments had been conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bai and Smt. Pushpa Bai jointly carried on business in the sale and purchase of land either before the transaction in question or thereafter. It cannot, therefore, be said that they had constituted an 'association of persons' with the common object of producing income, profits or gains. The only transaction in which they joined together is the transaction under consideration. The case of the appellants has throughout been that they purchased the land in question with the intention of constructing a house for their residence, but, later on, they abandoned the idea and sold the land as they did not find the locality suitable for their residence. There is no good reason to reject this version as the ladies purchased residential flats at Malabar Hills some time after the sale of the land in question. Even if we presume, in view of the circumstances referred to by the Appellate Assistant Commissioner, that the intention of the appellants to purchase the land was to make profit out of the same, this being a solitary transaction, it cannot be said that the same was necessarily an adventure in the nature of trade. In this connection, we may refer to the commentary at pp. 114 and 115 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at p. 113 of the said commentary, the assessee, a prosperous businessman, with a view to building a residential house for himself and constructing a workshop agreed to purchase a plot of land from an insurance society which had undertaken a land development scheme and also paid a part of the purchase price. The purchase was to be completed later since the land was under acquisition by the Government. After a year, the assessee changed his mind and assigned to a third party at a profit his rights under the agreement with the society. The Supreme Court held that in the absence of any evidence to support the inference that the isolated transaction constituted an adventure in the nature of trade, it should be regarded as on capital account : Saroj Kumar Mazumdar v. CIT [1959] 37 ITR 242 (SC). 8. In view of the above discussion, we hold that there is no evidence to hold that the appellants constituted an AOP and carried on the business of sale and purchase of land in that capacity. We are also of the opinion that, in the circumstances attending the case, the transaction in question, being an isolated transaction, was not an adventure in the nature of trade and as such the profit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e application of any abstract rule, principle or test and must in every case depend upon all the relevant facts and circumstances. " In our advisory jurisdiction under s. 256 of the Act, we are not court of appeal. The finding of the Tribunal is clear and positive. It is held that there is no evidence to hold that the appellants constituted an AOP and carried on the business of sale and purchase of land in that capacity. It is also held in their view that the attending circumstances of the case make them hold that the transaction in question being an isolated transaction was not an adventure in the nature of trade. Merely because in the agreement for purchase, liberty has been given to the purchasers to get conveyance in their name or in the name of their nominees or co-operative societies and the vendor was bound to execute the deed of sale to such named persons on the direction of the purchasers, is by itself not indicative of any element of trade or, business. The taxable event was the sale of the property alone and none other. Such like transactions of purchase and sale were not repeated. Further, the mere fact that the property was purchased by the purchaser as Chief Secreta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression " association of persons " was not used in the notice addressed to the three ladies figuring in the present case. Concededly, the ladies had individually been assessed for the sum of Rs. 22,000, each falling in their hands as individuals. It is not that their assessments were to be reopened but a new assessee, that is, the AOP, was being awakened by a notice under s. 148 of the Act as, according to the ITO, he had reason to believe that the income had escaped assessment. The Tribunal, while dealing with the question, held as follows: "9. The learned representative of the assessee has also challenged the validity of the notice dated 1-3-1969 under section 148 of the Incometax Act, 1961. He urges that this notice was not addressed to the so-called AOP of the appellants and that there is nothing in the notice to indicate that the same was intended to be addressed to the aforesaid AOP or that the appellants were sought to be assessed in the status of an AOP. It is, accordingly, pleaded by the learned representative of the assessee that this notice is invalid and as such the entire proceedings taken in pursuance thereof are illegal. This contention is well-founded and must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are of no avail to the Revenue, for that was, if at all, the domain of question No. 3, which we have left unanswered. There is catena of precedents in Madhav Motor Stores v. CIT [1978] 115 ITR 887 (Bom), Bhagwan Devi Saraogi v. ITO [1979] 118 ITR 906 (Cal), Rama Devi Agarwalla v. CIT [1979] 117 ITR 256 (Cal) and ITO v. Chandi Prasad Modi [1979] 119 ITR 340 (Cal), for the view that it is only on the issuance of a valid notice does the ITO acquire jurisdiction to proceed in the matter. Once it is held that there was no valid notice of reassessment, the entire reassessment proceedings would be without jurisdiction and would be void and illegal. It is also well settled that the issuance of a notice under s. 148 of the Act cannot be regarded as a mere procedural requirement and if the notice so issued is invalid for any reason, the entire proceedings taken by the ITO would become void for want of jurisdiction. It also stands settled that if such a notice is ambiguous or defective or otherwise invalid, the same cannot be cured by taking into account and/or looking into other documents whereby such defects can be rectified and/or omissions filled in. Here the finding of the Tribunal is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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