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Vijay Sarin v. Income Tax Officer .
Concise Analytical Summary of the Opinion
Factual and Procedural Background
In April 1963 an Income-tax Officer issued a notice under Section 139(2) of the Income-tax Act, 1961 to the assessee, Basheshar Nath, for the assessment year 1963–1964. The assessee filed his return on 20 October 1963. While the assessment proceedings were pending, Basheshar Nath died on 10 December 1965. The matter had been managed by M/s A. S. Bhatia & Co., Chartered Accountants. Despite being informed of the death and a request for time by the family, the Income-tax Officer continued proceedings and issued a notice under Section 143(2) in the name of the deceased; that notice was served on an advocate, Mr. Shinghari. The assessment was completed on 22 March 1968, determining total income at Rs. 3,99,819.
Some legal representatives of the deceased appealed to the Appellate Assistant Commissioner, contending the assessment was null and void because it was made against a dead man. The Appellate Assistant Commissioner held that proceedings could be continued against legal representatives but that notice should have been given to them; accordingly, by order dated 31 January 1970 he set aside the assessment and directed a fresh assessment after making the legal representatives parties from the stage at which the proceedings stood on the date of death.
The legal representatives appealed to the Income-tax Appellate Tribunal (Delhi Bench A), which on 29 March 1972 dismissed the appeal and upheld the Appellate Assistant Commissioner’s order. A reference of the law point to this Court was sought and registered as Income-tax Reference No. 15 of 1974, but that reference was not pursued and was returned unanswered by order dated 25 February 1981.
Separately, one legal representative, Vijay Sarin, filed a writ petition challenging the assessment order and the appellate orders on the same grounds (that the assessment was a nullity as being against a deceased person and could not be continued against legal representatives). The Income-tax Department opposed the writ petition. The Court ultimately dismissed the writ petition with costs.
Legal Issues Presented
- Whether an assessment completed in the name of a deceased person (continuing proceedings after the assessee's death) is a nullity and cannot be continued against the legal representatives from the stage at which the assessee died.
- Whether the Appellate Assistant Commissioner had the power to set aside the assessment and remit the matter to the assessing officer for a fresh assessment and to direct that legal representatives be made parties to proceedings from the stage at which they stood on the date of the deceased's death.
Arguments of the Parties
Appellant's Arguments (legal representative — Vijay Sarin)
- The assessment made in the name of Basheshar Nath after his death was a nullity because it was made against a dead person.
- Proceedings could not validly be continued against the legal representatives from the stage at which the deceased had died without re-issuing notice to the legal representatives.
- The Appellate Assistant Commissioner allegedly lacked power to remand the matter to the assessing officer for continuation of proceedings or a fresh order.
Respondent's Position (Income-tax Department)
- The writ petition was opposed by the Income-tax Department. The opinion does not set out detailed, separate arguments advanced by the Department in the text of the judgment, but the Court’s analysis rests on statutory provisions (Section 159(2) and Section 251) and on the precedent cited below.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Estate of Late Rangalal Jajodia v. Commissioner of Income-tax, Madras, 79 ITR 505 | The absence of notice to legal representatives does not strip the revenue authority of jurisdiction; want of notice renders the assessment defective (procedural defect) and amenable to challenge and correction, and proceedings commenced during the lifetime of the assessee may be continued against legal representatives. | The Court relied on this authority to conclude that the assessment was not a nullity for want of notice; the defect was procedural. The Court therefore upheld the remand by the Appellate Assistant Commissioner and the Tribunal's approach that notice should be given and a fresh assessment made from the stage at which proceedings stood on the date of death. |
Court's Reasoning and Analysis
The Court's reasoning proceeds from statutory provisions and the precedent cited. The analysis can be summarized in the following steps, reflecting only the content of the opinion:
- Statutory framework: The Court examined Section 159(2) (which deals with liabilities of legal representatives where proceedings were taken against the deceased before death) and Section 251 (dealing with the powers of the Appellate Assistant Commissioner, including power to set aside and remit an assessment for fresh proceedings).
- Effect of Section 159(2)(a): The Court noted that Section 159(2)(a) provides that any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of death. On this statutory basis the Court concluded there was legal scope for continuing proceedings against legal representatives.
- Nature of the defect: The Court accepted the Appellate Assistant Commissioner and Tribunal's view that the assessing officer committed an error of procedure by not issuing a notice to the legal representatives for the further proceedings; however, that omission was a procedural defect and not a lack of jurisdiction. The Court relied on the Rangalal Jajodia decision for the proposition that lack of notice renders an assessment defective but does not convert proceedings into a nullity.
- Power to remit: The Court considered and rejected the argument that the Appellate Assistant Commissioner lacked power to remit the matter. It cited Section 251(1)(a), which authorizes the Commissioner (Appeal) to set aside an assessment and refer the case back to the assessing officer for making a fresh assessment in accordance with directions given by him. Therefore the remand was within the appellate authority’s statutory powers.
- Practical outcome: Because the error was procedural (absence of notice), the correct remedy was to set aside the defective assessment and direct that the assessing officer proceed afresh from the stage at which the proceedings stood on the date of death, after issuing notice to the legal representatives. The Court found no ground for exercising extraordinary writ jurisdiction to interfere with that outcome.
Holding and Implications
Holding: The writ petition was dismissed. The Court held that (a) proceedings commenced against the deceased may be continued against his legal representatives under Section 159(2); (b) lack of notice to the legal representatives is a procedural defect and does not render the assessment a nullity; and (c) the Appellate Assistant Commissioner had the power under Section 251(1)(a) to set aside the assessment and remit the matter for fresh assessment with directions to issue notice to the legal representatives.
Direct consequences for the parties:
- The orders of the Appellate Assistant Commissioner and the Tribunal upholding the remand and directing fresh proceedings from the stage at death stand affirmed by the dismissal of the writ petition.
- The assessing officer was to proceed afresh from the stage at which proceedings stood on the date of death after issuing notice to the legal representatives (this is the relief effectively preserved by the appellate remand and accepted by the Court).
- The petitioner was ordered to pay costs, including counsel's fee of Rs. 5,000.
Broader implications: The opinion rests on existing statutory provisions and the precedent cited; the Court did not purport to lay down a novel principle of law beyond applying Section 159(2), Section 251 and the established authority in Estate of Late Rangalal Jajodia. The judgment treats lack of notice as remediable procedural defect rather than a jurisdictional nullity.
Disposition: Petition dismissed.
Mr. Gokal Chand Mital, C.J— In April, 1963, concerned Income-tax Officer issued notice to Mr. Basheshar Nath., assessee, under Section 139(2) of the Income-tax Act, 1961 in respect of the assessment year 1963-1964. On 20th October, 1963 Basheshar Nath submitted his return of income in response to the said notice. While the proceedings were still pending, in December 1965 Basheshar Nath died leaving behind his widow and three sons. The matter was being conducted by M/s. A.S Bhatia & Co., the Chartered Accountants concerned. The Income-tax Officer gave an intimation to him about Basheshar Naths's case, in reply to which the Income-tax Officer was informed that the assessee had died on 10th December, 1965 and the family was in the mourning and some time should be granted. Despite information, the Income-tax Officer continued the proceedings and issued notice under Section 143(2) in the name of Basheshar Nath, which was served on Mr. Shinghari, Advocate. The assessment was completed on 22nd March, 1968 determining the total income at Rs. 3,99,819/-.
2. Some of the legal representatives of Basheshar Nath filed an appeal before the Appellate Assistant Commissioner and challenged the assessment as being null and void, being against a dead man. The Appellate Assistant Commissioner came to the conclusion that in spite of the death of the assessee, the proceedings could be continued against the legal representatives and, therefore, were not invalid or nullity but held that it was necessary to issue notice to the legal representatives and accordingly, vide order dated 31st January, 1970 set aside the assessment and directed the Income-tax Officer to make fresh assessment in accordance with law, after making the legal representatives party to the proceedings from the stage they were when Basheshar Nath, died.
3. The legal representatives who had gone up in appeal before the Appellate Assistant Commissioner filed further appeal before the Income-tax Appellate Tribunal, Delhi Bench A and the appeal was dismissed on 29th March, 1972 upholding the order of the Appellate Assistant Commissioner.
4. The legal representatives sought reference of the law point involved in this case for opinion of this Court and the matter was referred to this Court and was registered as Income-tax Reference No. 15 of 1974. It appears that those legal representatives, who sought reference, did not pursue the reference and ultimately by order dated 25th February, 1981, the reference was returned unanswered.
5. While reference was being sought, one of the four legal representatives, namely, Vijay Sarin, filed this writ petition to challenge the order of assessment and the orders passed by the Appellate Assistant Commissioner and the Tribunal on identical grounds, namely, that the order of the Income-tax Officer was nullity and the proceedings could not be continued against the legal representatives of Basheshar Nath from the stage they were when he died. The writ petition is opposed by the Income-tax Department.
6. On a consideration of the matter, we are of the view that in view of the provisions of Section 159(2), relating to liabilities in such cases of the legal representatives. Section 251, relating to the powers of the Appellate Assistant Commissioner, including the power to refer back to the assessing authority for making a fresh assessment in accordance with law and the decision of the Supreme Court in Estate of Late Rangalal Jajodia v. Commissioner of Income-tax, Madras, 79 ITR 505, there is no scope for interference in the exercise of the extra-ordinary writ jurisdiction of this Court.
7. Apart from the fact that some other legal representatives failed in scuttling the proceedings by issuing fresh notice to the legal representatives from the stage when Basheshar Nath, assessee, died, upto the Tribunal and then in not pursuing the reference made to this Court in view of Section 159(2) of the Act, the Income-tax Officer was justified in continuing the proceedings against the legal representatives of the deceased. section 159(2)(a) clearly provides that any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of death of the deceased. The Income-tax Officer committed an error of procedure in not issuing notice to the legal representatives regarding further proceedings to be continued and, therefore, the Appellate Assistant Commissioner and the Tribunal were right in coming to the conclusion that there is a, procedural defect and not absence of jurisdiction and were right in remanding the matter to the Income-tax Officer for proceeding afresh from the stage at which it stood on the date of death of the deceased by issuing notice to the legal representatives.
8. It was also urged before us that the Appellate Assistant Commissioner after setting aside the order of the Income-tax Officer had no power to remand the matter to him for continuing the proceedings from the date of death of the assessee and in making a fresh order. This argument is also against the wording of Section 251 of the Act. Section 251(1)(a) clearly provides that the Commissioner (Appeal) shall have the power to set aside an assessment and refer the case back to the assessing officer for making a fresh assessment in accordance with the directions given by him. Accordingly this contention is also repelled.
9. The following observations, made in Rangalal Jajodia's case (supra) are of great help for deciding this case:
What happened in the present assessment proceedings was that the proceedings were commenced during the lifetime of Rangalal Jajodia by reason of the returns being filed by and notices under Secs. 22(3), 23(2) of the Act having been served on Rangalal Jajodia during his lifetime. The assesment order contains intrinsic evidence to that effect as also of repeated intimation having been given to Shankarlal Jajodia after the death of Rangalal Jajodia. No reply having been received from Shankarlal Jajodia, the assessment was Completed under Section 24-B of the Act through the legal heirs and representatives including Aruna Devi. The Appellant Assistant Commissioner on an appeal preferred by Shankarlal Jajodia set aside the assessment because no notice was given to Aruna Devi though the assessment proceeding was against her as a legal representative. The lack of a notice does not amount to the revenue authority having had no jurisdiction to assess, but that the assessment was defective by reason of notice not having been given to her. An assessment proceeding does not cease to be a proceeding under the Act merely by reason of want of notice. It will be a proceeding liable to be challenged and corrected. Similarly, if there is a mistake as to name or there is a misdescription of the name, the proceedings will be liable to be challenged and corrected by giving notice to the assessee subject to such just exceptions as an assessee can take under law. The direction given by the Appellate Assistant Commissioner was to make fresh assessment on Aruna Devi in accordance with the provisions of the Act.”
10. A reading of the aforesaid quotation clearly shows that lack of notice to the legal representatives does not amount to revenue authority having no jurisdiction, but the assessment was defective by reason of want of notice. It was also observed that an assessment proceeding does not cease to be a proceeding under the Act merely by rerson of want of notice. Accordingly, we find not the least ground to interfere in the writ jurisdiction and the writ petition is dismissed with costs. Counsel's fee Rs. 5,000/-.
Petition dismissed.
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