1. Assessment of deceased person's income — Returns filed by one legal representative — Non-service of notice to other legal representatives — Validity of assessment orders under Income-tax Act. (Para 2 )
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1996 Supreme(SC) 565
1996(3) Supreme 61
SUPREME COURT OF INDIA
B.P. Jeevan Reddy & S.B. Majmudar, JJ.
Commissioner of Income Tax, Shilong -Appellant
versus
Jai Prakash Singh -Respondent
Civil Appeal Nos. 2542-2544 of 1977
Decided on 13-3-1996
Coursel for the Parties :
For the Appellant : Dr. Gauri Shankar.
For the Respondent : N.R. Choudhary.
Important Points
IMPORTANT POINT
Orders of assessment made by the Income Tax Officer without notice to all the legal representatives of the deceased assessee are not null and void in law. These are merely irregular/defective proceedings.
Orders of assessment made by the Income Tax Officer without notice to all the legal representatives of the deceased assessee are not null and void in law. These are merely irregular/defective proceedings.
Subject
Taxation Law - Income Tax
Act Referred
Headnote
Income-tax Act, 1961-Section 159-Assessment years 1965-66, 1966-67 and 1967-68-Assessee died leaving behind ten legal representatives-Eldest son filed returns-Assessment orders-Non-service of notice under Section 143(2) against nine out of ten legal representatives-Whether orders of assessment made by Income Tax Officer without notice to all legal representatives of the assessee-deceased are null and void in law or merely irregular/defective proceedings ?-Held, Assessment orders made are not null and void-They are defective/irregular proceedings.
Held that an omission to serve or anyu defect in the servi ce of notices provided by procedural provisions does not efface or erase the liability to pay tax where such liability is created by distinct substantive provisions (charging sections). Any such omission or defect may render the order made irregular - depending upon the nature of the provision not complied with - but certainly not void or illegal. (Para 8)
Legal Category Hierarchy
Table of Contents
2. Revenue contended assessments were merely irregular due to voluntary return filing — Assessee argued non-service of notice violated natural justice, rendering assessments null and void. (Para 6 )
3. Procedural notices are machinery provisions to determine tax quantum and do not create the substantive liability to pay tax established by charging sections. (Para 8 )
4. Omission or defect in serving procedural notices does not invalidate assessments or erase substantive tax liability created by charging sections, rendering such orders irregular but not void. (Para 8 )
5. Appeals allowed — High Court judgment set aside — Assessment orders held not to be null and void. (Para 10 )
6. Does the failure to serve notice on all legal representatives of a deceased person render an income tax assessment null and void?
No. Such an omission is considered a procedural irregularity or a defect rather than a jurisdictional nullity. It does not erase the substantive liability to pay tax created by the charging sections of the Act. (Para 8 )
7. What is the legal distinction between charging sections and machinery provisions in income tax assessments?
Charging sections create the substantive liability to pay tax. Machinery provisions, such as the issuance of notices, are used to determine the quantum of tax and do not form the foundation of the jurisdiction to assess or the liability to pay. (Para 8 )
8. Can a procedural defect in the service of notice be waived by the assessee?
Yes. If a legal representative is aware of the proceedings and voluntarily files returns or participates in the assessment, irregularities in the service of notice may be considered waived. (Para 8 )
JUDGMENT
B.P. Jeevan Reddy, J.-These appeals are preferred against the judgment of the Gauhati High Court answering the following question in favour of the assessee and against the revenue :
"Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that non-service of notice under Section 143(2) of the Income-tax Act, 1961, against nine out of the ten legal representatives of the deceased Shri B.N. Singh did not invalidate the assessment orders of the Income-tax Officer relating to the assessment years 1965-66, 1966-67 and 1967-68 and that it was at best an irregularity for which the Appellate Assistant Commissioner was justified in setting aside the assessments and it was not a case fit for cancellation of the assessments"?
2. One B.N. Singh had extensive business interests. He did not file a return for the Assessment Years 1965-66, 1966-67 and 1967-68. He died on April 16, 1967. He left behind ten legal representatives comprising three windows, four sons and three daughters. The eldest son, Jai Prakash Singh, filed the returns for the said three assessment years on March 17, 1970, November 12, 1970 and October 27, 1971 respectively. The returns were signed by Jai Prakash Singh alone - not by other legal representatives. In these returns, Jai Prakash Singh disclosed the income received by late B.N. Singh from all his business interests and properties. (It may be emphasised that B.N. Singh died after the close of the accounting year relevant to Assessment Year 1967-68 - in fact, sixteen days after the commencement of the Assessment Year 1967-68). The returns filed by Jai Prakash Singh were scrutinised by the Income Tax Officer who also issued notices under Sections 142(1) and 143(2) to him to appear and produce documents, accounts and other material. He complied with the same. No objection was raised by Jai Prakash Singh before the Income Tax Officer in the said assessment proceedings that notice must be given to the other legal representatives of late B.N. Singh. Assessment orders were made mentioning the names of all the ten legal representatives against the column "Name of the Assessee". They were described as "legal representatives of late B.N. Singh". Assessment was made in the status of "individual". Appeals were filed by Sri Jai Prakash Singh contending for the first time therein that inasmuch as all the legal representatives of B.N. Singh were not given notice of the assessment proceedings, the assessments made were illegal and void and must be so declared. The Appellate Assistant Commissioner rejected the contention. While taking note of the fact that "B.N. Singh s death and the names of his legal representatives were intimated to the Income Tax Officer shortly after his death", he held that completing the assessment without serving notices upon all the legal representatives was only an irregularity in completing the assessment. Accordingly, he set aside the assessment orders and remitted the matters to the Income Tax Officer for making fresh assessments after notice to all the legal representatives. Jai Prakash Singh filed further appeals before the Tribunal raising the very same contention but to no avail. It is then that the aforesaid question was referred for the opinion of the High Court.
3. The High Court referred to the definitions of "assessee" and "legal representatives" in Clauses (7) and (29) of Section 2 as well as to Section 159 of the Act and held that in the absence of service of notice on all the legal representatives, the assessment made upon them is a nullity and not a mere irregularity. It has accordingly set aside the direction of the Appellate Assistant Commissioner (affirmed by the Tribunal) remitting the matters to the Income Tax Officer for making fresh assessments after notice to all the legal representatives.
4. The question that arises in these appeals is whether in the facts and circumstances of the case, the orders of assessmen
