1. The Income-tax Appellate Tribunal, Allahabad Bench, has referred the following questions :
" 1. Whether, on the facts and in the circumstances of the case, the Commissioner having authorised an appeal against the order of the Appellate Assistant Commissioner for the assessment year 1960-61 was justified in passing an order under Section 33B relying solely on the very order of the Appellate Assistant Commissioner for the purposes of holding that the order of the Income-tax Officer was erroneous in so far as it was prejudicial to the interest of revenue ?
2. Whether Section 33B proceedings can be taken against the legal heirs of a deceased assessee, and if so, whether the proceedings taken in this case by issue of a notice on an heir who was the karta of the Hindu undivided family are valid ?
3. Whether the legality of an assessment which had become final could be challenged in the proceedings taken by the Commissioner of Income-tax under Section 33B of the Indian Income-tax Act, 1922 ?"
2. The assessee, Sunderlal, had filed a return for the assessment year 1959-60 on September 5, 1959, in response to a notice under Section 22(2) dated May 2, 1959. In the return, he showed a net loss of Rs. 4,229. In Section D of the return, the assessee claimed that a sum of Rs. 1,02,500, received by him on retirement from the firm styled Messrs. Ram Kishore Sunder Lal & Co. (sic) and was, therefore, not includible in his income. The assessee died on February 11, 1961, but the Income-tax Officer completed the assessment on February 6, 1964. The Income-tax Officer did not include the amount of Rs. 1,02,500 in the income of that year on the ground that it was received in April, 1959, and as such was to be considered in the assessment year 1960-61 only. The Income-tax Officer thereafter, assessed this amount as capital gain in the assessment year 1960-61. An appeal was filed by the assessee against the aforesaid inclusion and the Appellate Assistant Commissioner deleted the addition on the ground that the amount was assessable as capital gain in the assessment year 1959-60 and not in the assessment year 1960-61. The Commissioner of Income-tax being of the view that the order of the Income-tax Officer for the year 1959-60 was prejudicial to the interest of the revenue, issued a notice under Section 33B of the Act to Bankey Behari Lal, the legal heir of the deceased assessee, to show cause why action under Section 33B of the Act should not be taken. In the meantime, it appears that the department had filed an appeal before the Tribunal for the assessment year 1960-61. The Commissioner, however, passed the following order:
" The counsel only wanted that action under Section 33B be deferred till the disposal of the appeal for the assessment year 1960-61 by the Tribunal. I do not find any force in this argument and his request cannot, therefore, be adhered to. For the reasons in para. 2 above (wherein the order of the Appellate Assistant Commissioner for the assessment year 1960-61 has been discussed), the Income-tax Officer's order under
Section 23(3) of the Indian Income-tax Act, 1922, dated February 6, 1964, is erroneous; the assessment is, therefore, set aside and the Income-tax Officer is directed to make a fresh assessment in accordance with law."
3. The order of the Commissioner was thereafter challenged by the assessee before the Tribunal. The Tribunal repelled the contention that the order of assessment was a nullity as it was passed against a dead person on the basis of a decision of the Supreme Court in the case of Income-tax Officer v. S. K. Habibullah, [1962] 44 I.T.R. 809 (S.C.) and held that the assessment order had to be taken as a valid order till such time that it was not set aside and this being so, this question could not be agitated in the appeal against the Section 33B order. It also negatived the contention that the order under Section 33B was invalid as it was passed against a dead person on the ground that the order having been served on Bankey Behari Lal, the karta and heir of the deceased, the order in question had to be treated as one passed against him and not against a deceased person. It, however, held that inasmuch as the Commissioner had authorised the filing of an appeal against the order of the Appellate Assistant Commissioner for the assessment year 1960-61, the Commissioner did not exercise his powers under Section 33B in accordance with the law, and further that the Commissioner had not applied his mind to the matters in dispute, inasmuch as he had relied solely on the order of the Appellate Assistant Commissioner for passing the order. It also took the view that the proceedings under Section 33B could not be taken against the heirs of a deceased assessee.
4. We now propose to deal with the questions referred to in seriatim. Coming to the first question, Section 33B runs as follows :
" 33B. Power of Commissioner to revise Income-lax Officer's orders.--(1) The Commissioner may call for and examine the record of any proceeding under this Act and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such enquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment.
(2) No order shall be made under Sub-section (1)--
(a) to revise an order of reassessment made under the provisions of section 34 ; or
(b) after the expiry of two years from the date of the order sought to be revised.
(3) Any assessee objecting to an order passed by the Commissioner under Sub-section (1) may appeal to the Appellate Tribunal within 60 days of the date on which the order is communicated to him.
(4) An appeal to the Appellate Tribunal under Sub-section (3) shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by a treasury receipt in support of having paid the fee of Rs. 100, and such appeal shall be dealt within the same manner as if it were an appeal under Sub-section (1) of Section 33."
5. This section empowers the Commissioner to call for and examine record of any proceedings and to pass any order which he thinks fit, in case he is satisfied that the Income-tax Officer has passed an order which is prejudicial to the interest of the revenue. It will be seen that the Commissioner can exercise his power under this section only in case he considers the order passed by the Income-tax Officer to be "prejudicial to the interest of the revenue ". The revisional power conferred on the Commissioner is undoubtedly a quasi-judicial power (See Dwarka Nath v. Income-tax Officer, [1965] 57 I.T.R. 349 (S.C.). Although the case deals with the nature of the powers conferred on the Commissioner under Section 33A(2) of the Act, we see no difference in that power and the one exercised under Section 33B of the Act. This being so, he must give his own reasons for being satisfied that the order passed by the Income-tax Officer is prejudicial to the interest of the revenue. This conclusion is further strengthened by the use of the words " if he considers " used in the sub-section which postulates a scrutiny by the Commissioner of all the relevant facts for holding that the order is prejudicial to the interest of the revenue. A perusal of the order of the Commissioner of Income-tax shows that after referring to the fact that the Appellate Assistant Commissioner had held that the amount in question was taxable in the assessment year 1959-60 and not in the assessment year 1960-61, and stating the reasons which led the Appellate Assistant Commissioner to come to this conclusion, the Commissioner of Income-tax held as under :
" The Income-tax Officer had failed to assess the said capital gains in his order for the assessment year 1959-60. The Income-tax Officer's order under
Section 23(3) of the Indian Income-tax Act, 1922, dated February 6, 1964, was, therefore, erroneous in so far as it is prejudicial to the interest of the revenue......"
6. It will be seen that no reasons at all have been given by the Commissioner of Income-tax for coming to the conclusion that the order in question was prejudicial to the interest of the revenue. It is also not possible to accept the argument on behalf of the revenue that the Commissioner must be deemed to have adopted the reasoning of the Appellate Assistant Commissioner, inasmuch as he had authorised the Income-tax Officer to file an appeal to the Tribunal against the order of the Appellate Assistant Commissioner. It is settled law that an order passed by a quasi-judicial authority without giving any reasons for its conclusion is vitiated in law (See Bhagat Raja v. Union Of India & Others, A.I.R. 1967 S.C. 1606). The order passed by the Commissioner clearly suffers from this infirmity.
7. Coming now to the second question, in the present case, the assessee had filed a return but before the assessment could be made, he died. The Income-tax Officer, however, made the assessment on the deceased assessee by recourse to the provisions of Section 24B(3) of the Indian Income-tax Act, 1922. This sub-section confers jurisdiction on the Income-tax Officer to make an assessment on a person who is dead on the date of the assessment order. This sub-section was inserted by an amendment which came into force on the 11th September, 1933, and was introduced in order to get over the difficulty caused by a decision of the Bombay High Court in Ellis C. Reid, Administrator in India of the Estate of Sir Henry Proctor v.
Commissioner oj Income-tax, [1930] 5 I.T.C. 100 (Bom.) where it was held that assessment proceedings could not be continued after a person's death, and his executors were not liable to pay tax, if the death occurred while assessment proceedings were pending. The proceedings which the Commissioner took out under Section 33B of the Act were against Lala Sander Lal, and not against the legal representatives although notice was served on Sri Binkey Behari Lal as karta. It is trite that proceedings taken against a deceased person are a nulity, and that is the reason why statutes contain specific provision for continuing pending proceedings against the heirs or legal representatives of a deceased person. As has been seen, the Indian Income-tax Act, 1922, contains specific provision by way of Section 24B for making an assessment against a deceased person, but this provision applies only to assessment proceedings before the Income-tax Officer and not to revisional proceedings. The question arises as to whether proceedings under Section 33B can be exercised after the death of an assessee. Now Section 33B postulates revisional power being exercised only after giving an assessee concerned an opportunity of being heard. " Assessee " has been defined in Section 2(2) of the Act as under :
" 2. (2) ' assessee ' means a person by whom income-tax or any other sum of money is payable under this Act, and includes every person in respect of whom any proceeding under this Act has been taken for the assessment of his income or of the loss sustained by him or of the amount of refund due to him."
8. The result of this provision is that the Commissioner can pass an order under Section 33B only after giving an opportunity to a person by whom income-tax or any other sum is payable under the Act or a person in respect of whom proceedings for assessment have been taken under the Act. So far as Bankey Behari Lal is concerned, he does not fall under the description of a person against whom the proceedings have been taken under the Act. He would, however, be a person by whom tax was payable because of the provisions of section 24b(1). This means that the revisional power could be exercised by the Commissioner in respect of an assessment order passed by the Income-tax Officer. The result of the foregoing discussion is that while on the one hand proceedings against a deceased person are a nullity, on the other side the conditions requisite for the exercise of power under Section 33B were satisfied in the present case. Now, the principle that proceedings cannot be taken against a deceased person is one of general law, and does not pertain to the domain of statute law. It is settled that the principles of general law give way to statutory law on the subject. One such instance is provided under Section 24B(3) of the Act. In the present case inasmuch as it was possible for the Commissioner to hear Lala Bankey Behari Lal, as he answered the description of an assessee as contemplated by the section, the Commissioner could validly initiate proceedings for revising the order of the Income-tax Officer. The fact that Section 24B of the Act could not be extended to the revision proceedings is inconsequential in this view of the matter. We are, therefore, of the view that proceedings under Section 33B of the Act can be taken against the legal heirs of the deceased provided notice of the same is issued to the person liable to pay the tax on the deceased.
9. This brings us to the last question. Although this question is closely connected with questions Nos. 1 and 2, we find that this question does not arise out of the order of the Tribunal, as no argument on this aspect of the controversy was raised before the Tribunal and neither has the Tribunal considered such a question. We, therefore, decline to answer the question. In view of our conclusions stated above, we answer the first question in the negative, and the second question in the affirmative, and return the third question unanswered. In view of the partial success and failure of the parties, they shall bear their own costs.