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PETITIONER: COMMISSLONER OF INCOME TAX,SHILONG

       Vs.

RESPONDENT: JAI PRAKASH SINGH

DATE OF JUDGMENT:       13/03/1996

BENCH: JEEVAN REDDY, B.P. (J) BENCH: JEEVAN REDDY, B.P. (J) MAJMUDAR S.B. (J)

CITATION:  1996 AIR 1303            1996 SCC  (3) 525  JT 1996 (3)   356        1996 SCALE  (2)832

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T 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"?      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 widows, 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.  [lt  may  be emphasized that B.N.Singh died after the close of the

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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 scrutinized 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  Singh filed further appeals before the  Tribunal raising the very same contention but to no avail.  lt  is  then  that  the  aforesaid  question  was referred for the opinion of the High Court.      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 Commission [affirmed by  the Tribunal]  remitting the  matters  to  the Income Tax Officer for making fresh assessments after notice to all the legal representatives.      The question that arises in these appeals is whether in the facts  and circumstances  of the  case,  the  orders  of assessment made  by the Income Tax Officer Without notice to all the legal representatives of B.N.Singh are null and void in law  or merely  irregular/defective proceedings which can be set  right by remitting the matters to Income Tax Officer for making  fresh  assessments  with  notice  to  all  legal representatives.      The expression  ‘assessee’ is  defined in Clause (7) of Section 2 in the following words:      "assessee’ means  a person  by whom      any tax  or any  other sum of money      is  payable  under  this  Act,  and      includes:      (a) Every person in respect of whom      any proceeding  under this  Act has      been taken  for the  assessment  of      his income  or of the income of any      other person in respect of which he      is  assessable,   or  of  the  loss      sustained by  him or  by such other      person, or  of the amount of refund      due to him or to such other person:      (b) every  person who  is deemed to

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    be an  assessee under any provision      of this Act;      (c) every  person who  is deemed to      be an assessee in default under any      provision of this Act."      Clause (29)  in Section 2 defines the expression "legal representative" in the following words:      "2 (29)  ’legal representative’ has      the  meaning   assigned  to  it  in      Clause (11)  of Section  2  of  the      Code of Civil Procedure, 1908 (5 of      1908)."      Section 2(11)  of the  Code of  Civil Procedure defines the said expression as follows:-      "2.(11)   ’legal    representative’      means   a   person   who   in   law      represents the estate of a deceased      person, and includes any person who      intermeddles with the estate of the      deceased and  where a party sues or      is   sued   in   a   representative      character the  person on  whom  the      estate devolves on the death of the      party so suing or sued." Section 159 of the Income Tax Act, which is relevant in this behalf, reads:      "159,  Legal  representatives.  (1)      where  a   person  dies  his  legal      representative shall  be liable  to      pay  any  sum  which  the  deceased      would have been liable to pay if he      had not  died, in  the like  manner      and  to  the  same  extent  as  the      decease.      (2) For  the purpose  of making  an      assessment      (including       an      assessment,     reassessment     or      recomputation under Section 147) of      the income  of the deceased and for      the purposes  of levying any sum in      the    hands     of    the    legal      representative in  accordance  with      the provisions of subsection (1)-,      (a) 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      the death of the deceased;      (b) any proceeding which could have      been taken  against the deceased if      he  had   survived,  may  be  taken      against the  legal  representative;      and      (c) all  the provisions of this Act      shall apply accordingly.      (3) The legal representative of the      deceased shall, for the purposes as      the Act, be deemed to an assessee.      (4)  Every   legal   representative      shall be  personally liable for any      tax payable  by him in his capacity      as legal  representative if,  while

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    his  liability   for  tax   remains      undischarged, he  creates a  charge      on or disposes of or parts with any      assets  of   the  estate   of   the      deceased, which are in, or may come      into,  his   possession,  but  such      liability shall  be limited  to the      value  of  the  asset  so  charged,      disposed of or parted with.      (5) The  provisions of  sub-section      (2) of Section 161, Section 162 and      Section 167,  shall, so  far as may      be and  to the extent to which they      are  not   inconsistent  with   the      provisions of  this section,  apply      in    relation     to    a    legal      representative .      (6)  The   liability  of   a  legal      representative under  this  section      shall, subject to the provisions of      sub-section  (4)   and  sub-section      (5), be  limited to  the extent  to      which  the  estate  is  capable  of      meeting the liability."      Dr.Gauri Shankar,  learned  counsel  for  the  Revenue. contended that  in the  facts and  circumstances of the case the assessment orders cannot be said to be null and void. At worst, they  are irregular  orders. This is not a case where no notice  was served  upon the legal representatives and an assessment made.  Even before service of any notice, returns were filed  by one of the legal representatives [Jai Prakash Singh] voluntarily.  The returns  were filed  by Jai Prakash Singh  taking  advantage  of  the  provisions  contained  in subsection (4)  of Section 139; actually the time for filing the returns  had expired  by the  time they  were filed. The violation, if  any, was  not serious  enough to  declare the entire proceedings  a nullity.  Sri  N.R.Choudhary,  learned counsel for  the assessee, on the other hand, submitted that an assessment  made on  persons without  notice to them is a clear case  of violation  of principles  of natural  Justice and, hence,  the assessments  are null  and void.  Since the proceedings are  a nullity  in law  there was no question of sending the  matters back  to the  Income  Tax  Officer  for making fresh  assessments. The learned counsel commended the reasoning  and   conclusion  of   the  High  Court  for  our acceptance.      Before  we   proceed  to  answer  the  question  it  is necessary to  keep in mind the facts of this case. B.N.Singh died on  April 16,  1967. He failed to file a return for the Assessment  Years   1965-66  and  1966-67  within  the  time prescribed.  So  far  as  the  Assessment  Year  1967-68  is concerned hes  of courses  died before  the  expiry  of  the period prescribed for filing the return. No return was filed for the  Assessment Year  1967-68 also within the prescribed period. Jai Prakash Singh, however, wanted to take advantage of tho provision contained in Section 139(4) - which enables an assessee  to "furnish the return for any previous year at any time  before the  end of  the period specified in clause (b)" provided  the assessment  is not  made by  the time  of filing the  return.  (Clause  (b)  of  the  said  subsection specifies various  periods of  limitation; in respect of the assessment years concerned herein, it is four years from the end of the relevant assessment year.) The returns were filed voluntarily disclosing  the  income  received  by  B.N.Singh during the  relevant accounting  years by  one of  his legal

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representatives   inviting an  assessment. The  names of all the legal   representatives  were already  intimated to  the Income Tax   Officer [as found recorded in the orders of the t Appellate  Assistant Commissioner  and the Tribunal though the occasion  for giving  such information  is  not  evident from  the  record.  It  is  also  not  clear  who  gave  the information regarding  the death  of B.N.Singh and his legal representatives and  in what  connection.]. It  is true that the returns were signed only by Jai Prakash Singh and not by the other  nine legal representatives, but it should also be remembered that  when  notices  under  Sections  142(1)  and 143(2) were issued to Jai Prakash Singh, he appeared through his Authorised  Representative  and  produced  the  relevant books and  accounts on  the basis  of which assessments were made. Jai  Prakash Singh  did not  raise an objection before the Income  Tax Officer that unless and until notices to all the other  legal representatives are sent, assessment orders cannot be  made. He  raised this question for the first time in  the  appeals  preferred  by  him  before  the  Appellate Assistant Commissioner  and thereafter  before the Tribunal. It appears rather curious that Jai Prakash Singh who had voluntarily filed  the returns  of income  should raise this issue; no  other legal  representative of B.N.Singh has come forward with  such a  plea. We  do not  wish to  go into the question whether  Jai Prakash  Singh should at all have been allowed to  so turn round and raise this plea in appeal, for the reason  that the  said issue  is not  before us in these appeals.      We are of the opinion that the High Court was not right in holding  in the  above circumstances  that the assessment orders made  are null  and void. They are not. At the worst, they are  defective proceedings   or irregular proceedings - as  has   been  rightly  held  by  the  Appellate  Assistant Commissioner and  the Tribunal.  In Chatturam  and Others v. Commissioner of  Income Tax,Bihar [(1947) 15 I.T.R. 302), it has been held by the Federal Court that the liability to pay the tax  arises by  virtue of Sections 3 and 4 of the Indian Income Tax Act, 1922 [charging sections] and that Section 22 and other  Sections of  the said  Act are  merely  machinery provisions to  determine the  quantum of  tax. The following observations are apposite:      "The     income-tax      assessment      proceedings commence with the issue      of a  notice. The  issue or receipt      of a  notice is  not, however,  the      foundation of  the jurisdiction  of      the Income-tax  Officer to make the      assessment or  of the  liability of      the assessee to pay the tax. It may      be urged that the issue and service      of a notice under Section 22 (1) or      (2) may affect the liability under)      the penal clauses which provide for      failure to  act as  required by the      notice. The  jurisdiction to assess      and  the   liability  to   pay  the      tax,however, are not conditional on      the validity of the notice. Suppose      a person,  even before  a notice is      published  in   the  papers   under      Section   22(1),   or   before   he      receives  a  notice  under  Section      22(2) of the Income tax Act, gets a      form of  return from the Income-tax      Office and  submits his  return, it

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    will be  futile to contend that the      Income-tax Officer  is not entitled      to assess  the party  or  that  the      party is  not liable to pay any tax      because  a   notice  had  not  been      issued to him. The liability to pay      the tax  is founded  in Sections  3      and 4  of the Income Tax Act, which      are the  charging sections. Section      22 etc.  are the machinery sections      to determine the amount of tax."                         (Emphasis added)      In Maharaja  of Patiala  v. Commissioner of Income Tax. (Central) Bombay [(1943) 11 I.T.R. 202], a decision rendered by the  Bombay High  Court, the  facts were  these: the late Maharaja of Patiala had income from property and business in Gritish India.  He died  on March  23, 1938. On November 23, 1938, the  Income Tax Officer, Bombay sent two notices under Sections 22(2)  and 38  of the  Indian Income  Tax Act, 1922 addressed to the Maharaja cf Patiala requiring him to make a return of  his income  from all  sources for  the Assessment Years  1937-38  and  1938-39.  They  were  served  upon  the successor  Maharaja.  Returns  were  filed,  signed  by  the Foreign Minister  of patiala.  The Income Tax officer passed assessment  orders   describing   the   assessee   as   "His Highness.....late  Maharaja   of  patiala".  The  succeeding Maharaja appealed against the assessment orders contending that inasmuch  as the  notices were  sent  in  the  name  of Maharaja  of   Patiala  and   not  to   him  as   the  legal representative of  the Maharaja  of Patiala, the assessments made were  illegal. The contention was that the notices were really addressed  to the  late Maharaja,  who was  not alive when the said notices were issued and that they were wrongly served  upon   him.  The   argument  was   rejected  by  the authorities under  the Act  as well  as by the High Court on reference. The  Division Bench  comprising Beaumont, CJ. and Kania,J. held  that inasmuch  as the  present  Maharaja,"who raised  the   contention   of   nullity)   was   the   legal representative of  the late  Maharaja of Patiala and because the return  of the  Late Maharaja’s  income was  made by the Foreign Minister on his behalf and because he knew perfectly well that  what was  being assessed  was the  income of  his predecessor,  the  assessment  made,  though  not  complying strictly with  Section 24-B (Corresponding to Section 159 of the present Act),is yet valid. The following observations of Beaumont,CJ., are relevant for our purpose:      "In this  case  the  person  to  be      assessed was the late Maharaja, who      had died  before he was served with      any notice  under Section  22, and,      therefore,   the    provisions   of      Section  24b(2)   apply,  and   the      Income-Tax officer  was entitled to      serve     on      the     executor,      administrator   or    other   legal      representative  of   the   deceased      Maharaja   a notice  under  Section      22(2) or  under Section  34 as  the      case might  be, and then proceed to      assess  the  total  income  of  the      deceased  Maharaja   as   if   such      executor,  administrator  or  other      legal   representative   were   the      assessee..  As   observed  by   the      president of  the Tribunal  in  his

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    judgments  the  Income-tax  Officer      made  no  attempt  to  observe  the      provisions  of that sub-section. He      served the  notice on  the  present      Maharaja, without  showing in  what      capacity.But  the   tribunal   have      found, as  a fact, that the present      Maharaja     is      the      legal      representative  of   the   deceased      Maharaja,  and  although  it  would      obviously have  been better  so  to      describe him  in the  notice, I  am      not prepared to say that the notice      was had,  if it  was served  on the      legal    representative,     merely      because it omitted to state that it      was served  in  that  capacity.  It      should have been stated that it was      served on  the legal representative      of the  late Maharaja, and that the      return required  was  of  the  late      Maharaja’s income.  It was  not  so      stated, and  the  present  Maharaja      himself may have had taxable income      for the  years in  question  but  I      think there is a good deal of force      in the  contention of  the Tribunal      that  any  irregularities  in  this      respect were waived by the Maharaja      because   returns   of   the   late      Maharaja’s income-were  made by the      Foreign Minister  on behalf  of the      Maharaja,  and   then  subsequently      corrections  were   made   in   the      assessment at  the instance  of the      Maharaja. There  is no  doubt  that      the present Maharaja knew perfectly      well that  what was  being assessed      was the income of his predecessor."      To the  same effect are the observations of Kania,J. in his separate  but concurring  opinion. The  decision, one of the earliest  on the  subject shows  that an assessment made without strictly  complying with,  Section 24-B [Section 159 in the  present Act]  is not  void or  illegal and  that any infractions in  that behalf  can waived  by the  assessee.In Estate of  Late Rengalal Jajodia v. Commissioner of Income-- Tax, Madras  [(1971) 79  I.T.R. 505),  it was  held by  this Court:      "The lack  for 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."      The   facts in this case are telling. They are Rangalal Jajodia filed his income tax return for the Assessment Years 1942-43 and  1-943-44 under:  the Income  Tax Act as well as under the  Excess   Profits. Tax Act. Before the assessments were completed,  he died  (on   January  11, 1946). Rangalal

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had a son Shankar Lal, by his pre- deceased wife. He married a second  time and had children  from the second wife  Aruna Devi.  Rangalal   executed  a   will  totally  disinheriting Shankar Lal  and   appointing  Aruna  Devi  and  another  as executors of  his Will.  The income  Tax  Officers  probably unaware of  the  Will,  gave  notice  to  Shankar  Lal,  who objected that  he is  not the  legal representative  of  the deceased and that the second wife [Aruna Devi] and the other executor are  the proper  persons to be notified. The Income Tax Officer  called for  a copy  of the  Will but it was not produced. The  income Tax  Officer thereupon  completed  the assessment describing  the assessee  as "the  estate of late Sri Rangalal  Jajodia by legal heirs and representatives Sri Shankar Lal Jajodia son of Rangalal Jajodia, Smt. Aruna Devi wife of  Rangalal Jajodia  and her  children". Appeals  were preferred by  the second  wife, Aruna Devi, contending inter alia that the assessments having been made without notice to her or  the other  executor were  illegal and  invalid. This plea was  rejected by  the Appellate  Assistant Commissioner and the Tribunal, who remitted the matters to the income Tax Officer to  complete the  assessments after  notice to Aruna Devi. The  High  Court  too  rejected  the  said  contention whereupon the  matter was  brought to this Court, which held that absence  of notice  to Aruna  Devi makes the assessment merely defective  but not  null and  void.  It  is  in  this connection that  the aforesaid  observation was  made.  This Court  sustained   the  direction  given  by  the  Appellate Assistant Commissioner  to the  Income Tax  Officer to  make fresh assessment  on    Aruna  Devi  in  accordance  of  the provisions of  the Act.  This decision,  in our  opinion, is sufficient to reject the assessee’s contention herein. If an assessment made  with notice  to Shankar  Lal [who  was  not really the  legal representative  of the  deceased Rangalal] and  without   serving  notice   upon   the   lawful   legal representatives Caruna  Devi) the  other executor  or  Aruna Devi’s children]  -  that  too,  despite  the  objection  of Shankar Lal that he is not the legal representative and that notice must  be sent  to Aruna  Devi etc., who are the legal representatives  of   the  deceased   Rangalal  -   is  only "defective" and not null and void, it would be rather odd to contend that  assessments made on the basis of returns filed by one  of the  legal representatives  [disclosing the total income received  by the  deceased] is  null and  void on the ground  that   notices  were   not  sent   to  other   legal representatives. The  principle that  emerges from the above decision is  that an  omission to serve or any defect in the service 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. In  this view  of the  matter, we  do not  think it necessary to  refer to  certain other  decisions of the High Courts cited before us which have turned mainly on the basis of facts  in each  case. It is equally unnecessary for us to go into  the meaning  of the  expressions "void",  "void  ab initio", "voidable"  or "a  nullity" -  a fairly complicated exercise.      The appeals  are accordingly  allowed, the  judgment of the High  Court set aside and the question referred answered in the  affirmative, i.e.,  in favour  of  the  Revenue  and against the  assessee. The  Revenue shall be entitled to its costs  which   are  quantified   at  Rupees   ten   thousand consolidated.

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