COMMISSIONER OF INCOME TAX Vs. SUMANTBHAI C MUNSHAW

JUDGEMENT

(1.) ONE S. C. Munshaw was assessed to income tax in the status of an individual up to the asst. yr. 1967 68. For the asst. year 1968 69, the previous year being the financial year ended on 31st March, 1968, he filed a return of income on 25th March, 1970. He died on 7th Jan., 1971. On 23rd Feb., 1972, the ITO passed an assessment order determining the total income of the deceased at Rs. 1,50,410. In the assessment order, the name of the assessee was shown as "Shri S. C. Munshaw".

(2.) AN appeal was carried to the AAC against the aforesaid assessment order by "Shri S.C. Munshaw (decd.), legal heir, Renukaben S. Munshaw". The submission on behalf of the appellant was that after the death of Munshaw, which was a fact within the knowledge of the ITO, the assessment proceedings could have been continued only against the legal representative from the stage at which it stood on the date of death of the deceased and that that having not been done and an invalid assessment order having been passed against a dead person, the entire proceeding was bad in law. The stand of the Department, on the other hand, was : (1) that the ITO, who passed the assessment order, was not aware of the death of Munshaw when he made the said order; (2) that it was the responsibility of the legal representative of the deceased to inform the ITO about the death of the deceased and that since she failed to do so, the assessment was validly completed against the deceased as if the provisions of S. 159(2) were non existent or inapplicable; (3) that, in any case, the proceeding was validly completed against the legal representative, who had received through her agents the notices issued under S. 142(2) of the IT Act, 1961 (hereinafter referred to as "the Act"), in the name of the deceased and produced the books of account in the course of the assessment proceedings, and (4) that, alternatively, the legal representative cannot be allowed to raise the objection as to the validity of the assessment proceedings or the assessment order when "she knowingly remained silent even when a number of notices were issued, served and complied with by her employees, etc.,...it is clear from their behaviour that they knew that the notices were meant for the legal heir or successor to the business and they submitted to the jurisdiction of the Assessing Officer." The AAC, in the course of his order dt. 27th Jan., 1973, observed that the following facts were not in dispute : (1) that a return of income for the assessment year in question was filed by the deceased assessee in his own name and under his own signature on 25th March, 1970, and that he had thereafter expired on 7th Jan., 1971; (2) that on the basis of the said return eleven notices under S. 142(2) were issued in the name of the deceased from time to time and that three of such notices were issued during the lifetime of the deceased and the remaining eight after his death; (3) that the notices issued during the lifetime of the deceased were received by one of his employees and those issued after his death, by some persons who were the employees of the deceased, but none of such notices was served on Smt. Renukaben herself; (4) that the assessment order was passed on 23rd Feb., 1972 against the deceased in the status of an individual, and (5) that the legal heirs of the deceased were "stated to be his widow, Smt. Renukaben S. Munshaw, and their minor son". On the question of the knowledge of the ITO with regard to the death of Munshaw, the AAC found that the record and proceedings clearly indicated that the ITO knew about the death of the assessee and that he was proceeding on the assumption that Smt. Renukaben was his legal representative. In arriving at this conclusion, the AAC relied, inter alia, upon the following facts and circumstances : (1) on 21st Jan., 1971, that is to say, within two weeks of the death of Munshaw, Smt. Renukaben had filed an application describing herself as the legal heir of the deceased for extension of time to file a return of income for the asst. year 1970 71, and the return of income for the said assessment year was also filed by her in the same capacity on 30th March, 1971, these proceedings had, although they are in respect of a subsequent assessment year, taken place before the assessment order in question was passed on 23rd Feb., 1972; (2) in the record of assessment proceedings for the asst. year 1968 69, there were a number of tax deduction certificates on which tax credit had been given and three out of those tax deduction certificates were signed by Smt. Renukaben as the legal heir of Munshaw; and (3) since certain dividend warrants (tax deduction certificates ?) were not available, duplicates of those documents were obtained and filed and along with them an indemnity bond signed by Smt. Renukaben was also presented, which was accepted by the ITO. On the question of the validity of the continuation of the assessment proceeding and the making of the assessment order in the name of Munshaw after his death, even though the fact of such death was known to the ITO, the AAC found that S. 159(2) was an enabling provision which authorised the ITO to continue an assessment proceeding taken against the deceased against his legal representative and that thereunder it was no part of the responsibility of the legal representative to come forward and to give an express intimation to the ITO in regard to the death of the deceased. In the instant case, in any event, when the fact of the death of the assessee was within the knowledge of the ITO, he was not justified in proceeding further with the assessment against the deceased by totally ignoring the said fact merely because no formal intimation was sent by the legal representative. On the question whether, in spite of the aforesaid flaw, the assessment could still be held to be valid, having regard to the overall conduct of Smt. Renukaben, the AAC expressed the following view :

(3.) AT the instance of the CIT, the Tribunal has stated a case in respect of the following question :