COMMISSIONER OF INCOME TAX Vs. MANDAGI N A

JUDGEMENT

(1.) MR. A. A. Mandagi, who was the Asstt. Government Pleader in the State of Bombay, died in March, 1956, and after his death one of his four sons, MR. N. A. Mandagi, produced a return in August, 1960, disclosing an income of Rs. 48,999 during the asst. yr. 1956-57. This income represented the fee which he received as Government Pleader for conducting civil and criminal cases in the High Court of Bombay. The ITO made an order of assessment treating the income as an income from other sources to which s. 12 of the Indian IT Act, 1922, refers. MR. N. A. Mandagi, who produced the return, appealed to the AAC and contended that the assessment was illegal since not all the legal representatives of his deceased father had been brought on record and since there was no compliance with the provisions of s. 24B. He challenged the correctness of the view taken by the ITO that the income was an income from other sources. The AAC dismissed the appeal pronouncing against the appellant on all the questions raised before him.

(2.) BUT in the further appeal preferred to the Tribunal, the assessment was set aside. The Tribunal expressed the view that issue of a notice under s. 24B(2) of the Act was a condition precedent to the exercise of jurisdiction by the ITO for an assessment with respect to the income of the deceased. It was said that, since no such notice was issued, the assessment could not be supported. The Tribunal accepted the contention that the income was derived by the exercise of a profession and not from other sources. The CIT asked for a statement of the case to this Court under s. 66(1), and on that application the Tribunal has referred the following two questions for our decision :

(3.) WE were, therefore, asked by both sides to decide whether, in the case before us, it was incumbent on the ITO notwithstanding the voluntary return submitted by N.A. Mandagi to serve notices on all the legal representatives as required by s. 24B(2) before he could proceed to make an assessment. It was submitted for the CIT on the basis of the pronouncement of the Federal Court in Chatturam vs. CIT (1947) 15 ITR 302 (F.C.) that the issue of a notice under the IT Act is not the foundation of the jurisdiction of the ITO to make the assessment or of the liability of the assessee to pay the tax which is founded on ss. 3 and 4 of the Act which are the charging sections and that s. 22 and the other sections are the machinery sections to determine the amount of the tax. Kania J., as he then was, observed :