SASIKUMAR P N Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) These four Income Tax Reference cases arise common questions of law. The Income Tax Appellate Tribunal has referred the following two questions for the decision of this Court:

(2.) We heard counsel for the petitioners, Mr. Balachandran, as also the counsel for the Revenue, Mr. Menon. Innumerable decisions were brought to our notice by the counsel appearing on both sides. We are referring only to the few authorities which are necessary for resolving the controversy in these cases. It is evident that no return of income was furnished in respect of Archana Hotel for these four years, The Income Tax Officer issued notices on 2nd September 1977 under S.148 of the Act for the first three assessment years and under S.139(2) read with S.148 of the Act for the assessment year 1977-78 to one Sasikumar. It is agreed that the notices did not specify the capacity in which it was issued to Sasikumar. The Appellate Tribunal proceeded only on the basis that the notices were issued only to the individual. It is settled law that the issue of a notice under S.148 of the Income Tax Act is a condition precedent or a matter of jurisdiction, to the validity of any assessment order to be passed under S.147 of the Act. It is also settled law that if no such notice is issued or if the notice issued is invalid or not in accordance with the law or is not served on the proper person in accordance with law, the assessment would be illegal and without jurisdiction. The notice should specify the correct assessment year and should be issued to the particular assessee. Under S.2(31) person includes an individual or a Hindu undivided family or company, firm, an association of persons or body of individuals, whether incorporated or not etc. They are distinct and different assessees. The service of a prescribed notice, on a particular assessee, who is to be assessed, is a condition precedent to the validity of any assessment to be made under S.147 of the Act. It is the very foundation of the jurisdiction of the Income Tax Officer. The above aspect of the matter is succinctly stated in Kanga and Palkhivala's law and practice of Income Tax, Vol. I, page 910. In the present case, the assessments were made on an "Association of Persons". It is an entity, which is distinct and different from the various persons who are members of the unit, "Association of Persons". There is no material to show that the prescribed notices were sent to any "Association of Persons" or to Sasikumar as representing the "Association of Persons". In this view of the matter, it is clear that the notices under S.148 of the Act were not served in accordance with law and the said assessee who was assessed, was not called upon to file the returns. The notice was addressed only to an individual, Sasikumar. The Income Tax Officer did not make it clear or plain that the proposal was to assess, the "Association of Persons" consisting of Sasikumar and others. So, on the basis of the notices sent, the Income Tax Officer was incompetent to assess the "Association of Persons", consisting of Sasikumar and others. The entire proceedings are illegal and without jurisdiction. The proceedings are patently or ex facie illegal, and so loudly obtrusive that it leaves an indelible stamp of infirmity or vice. The decisions reported in Narayanan Chetty v. ITO 35 ITR 388 at 392 (SC) CIT, Andhra Pradesh v. K. Adinarayana Murty 65 ITR 607 (SC) Rama Devi Agarwalla and others v. CIT, West Bengal III 117 ITR 256 (Calcutta), Ravinder Narain v. Income Tax Officer, A-IV (I) District., New Delhi and others 96 ITR 612 (Delhi) and the relevant passages at page 910 of Kanga and Palkhivala's Law and Practice of Income Tax, Vol. I, (1976 edition) make the position clear.

(3.) But, the Appellate Tribunal held that S.292B cures the defects or omissions in the instant case. S.292B is as follows: