COMMISSIONER OF INCOME-TAX, ANDHRA PRADESH, HYDERABAD Vs. TRUSTEES OF H E H NIZAMS SECOND SUPPLEMENTAL FAMILY TRUST

JUDGEMENT

(1.) The trustees of late Nizam Supplemental Family Trust, Hyderabad, filed income-tax returns for the year 1962-63 on behalf of the beneficiaries on April 2, 1964, along with the application under s. 237 of the I.T. Act for the refund of the tax of Rs. 20,050.52 deducted at source on interest on government securities and dividends. But the refund application was not disposed of. The trustees, therefore, reminded the ITO on June 17, 1964, for the disposal of the refund application. On June 22, 1964, the ITO gave a reply stating that the refund cannot be granted to the trustees unless the reference on the same question for the preceding assessment years filed by the trustees are disposed of by the High Court. On September 23, 1966, the assessee once again reminded the ITO for the grant of refund but there was no reply from the ITO. The ITO issued a notice under s. 148 of the I.T. Act requiring the trustees of file a return for the assessment year 1962-63. The assessee filed a return on July 3, 1970, in compliance with the notice given under s. 148 declaring that the amount of Rs. 6,26,200 is a long-term capital gain. The Department accepted it and made the assessment on July 3, 1970, under s. 143(3) read with s. 147. After receiving the assessment order, the assessee wrote on July 13, 1970, to the ITO that the return filed by the assessee along with refund application on April 2, 1964 was still pending and, hence, the proceedings initiated under s. 147 are invalid. The assessee also claimed that the assessment made pursuant to the notice made under s. 148 on July 3, 1970, was equally invalid. Then the ITO gave a reply to the trustee on July 16, 1970, stating that the return filed on April 2, 1964, was disposed of on November 10, 1965, by a note recorded by the ITO in his file. The assessee then filed an appeal before the AAC questioning the validity of the reassessment made on July 3, 1970.

(2.) The AAC took the view that the ITO has not passed final orders and it was not disposed of. He, therefore, held that the reassessment made by the ITO pursuant to the notice under s. 148 is invalid and, accordingly, cancelled it. Then the Department took the matter in appeal to the Tribunal.

(3.) Before the Tribunal, two questions were raised by the Department, which are to the following effect :