COMMISSIONER OF INCOME TAX Vs. RANGA REDDY B

JUDGEMENT

(1.) THE point in these income-tax cases is about the notice under S. 148 of the IT Act, whether it should be given to the HUF as the assessee and about the period of limitation for issuance of such a notice ?

(2.) THE material facts will have to be noted before the question is taken up for consideration. Certain land belonging to an HUF was acquired. Compensation of Rs. 3,57,025 was fixed and interest of Rs. 80,930 accrued on it. However, the joint family was never an assessee under the IT Act. THE Karta of the family was never being assessed. He was submitting only his individual returns. This compensation and interest were paid in the year 1954-55. But in 1967 the authorities concerned wanted to reopen the assessment and, for that purpose, gave a notice dated July 30, 1967, purporting to be one under S. 148 of the Act. It is very pertinent to note that this notice was issued in the individual name of the assessee. THEre was no reference at all to the joint Hindu family or his capacity as the Karta of the family or that the notice was being issued in view of the interest which the family had gained on the compensation amount. In response to the aforesaid notice, the assessee filed a return in his individual capacity on September 25, 1967. For reasons best known to themselves, the IT authorities kept quiet for nearly three years and eight months and then wrote on May 24, 1971, a letter to the assessee that he should submit his return as the Karta of the joint family. That obviously was with the intention of bringing the interest of Rs. 80,930 into consideration which had been paid to the joint family in the year 1954-55. When no reply was received to that letter, the ITO had written another letter on August 5, 1972. When no reply was received, an ex parte assessment was made on March 27, 1974.

(3.) IT may be noted here that the IT Act of 1961 prescribes a period of eight years for reopening the assessment. However, it can do so after obtaining the permission of the CBDT within a period of 16 years. In this particular case it is stated that such permission of the CBDT had been secured. Therefore, it is undoubted that the authorities concerned could Act under S. 148 within 16 years, but that 16 years from the year 1954 expired--this is common ground--with March 31, 1971. Sec. 148 says that whenever proceedings are sought to be taken for reopening the assessment, notice should be given to the assessee. Here the notice given on July 30, 1967, was given to the assessee without any reference to his capacity as the Karta of the erstwhile joint Hindu family. We may recapitulate that the family was never an assessee and all the time the Karta was an assessee in his individual capacity. Therefore, the failure to mention anything about the joint family and the proposed reopening of the assessment with reference to the joint family gaining interest, gathers importance. The assessee had been receiving notices for his income-tax purposes for a very long time. Even for the year 1954-55, he submitted his return in his individual capacity and it was accepted by the Department. IT was this assessment that was sought to be reopened by issuing a notice on July 30, 1967. By no stretch of imagination could it be said that the reopening was in respect of the individual assessment of the assessee. Even the Department does not contend that the interest on the compensation amount was paid exclusively to the assessee in his individual capacity.