CHANDMULL PANNALAL Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question of law raised in the reference has been referred to us under the order of the High Court of Judicature at Calcutta dated the 3rd June, 1960. THE relevant year of assessment is 1952- 53 and the corresponding accounting period is the Diwali year 2008. THE ITO has made the assessment under the provision of s. 22(4) of the IT Act, 1922, on account of the failure on the part of the assessee to comply fully with the notice under s. 22(4) issued by him. In the assessment order the assessee was described as "M/s Chandmull Pannalal, Prop. : Pannalal Juniwal", and the assessment was made in the status of an individual. Being aggrieved by the assessment, an appeal was filed before the AAC by "Chandmull Pannalal", the grounds of the appeal having been verified as Pannalal, the Karta of the HUF. THE AAC dismissed the appeal and confirmed the assessment by its consolidated order dt. 10th Feb., 1958. THEreafter, a second appeal was filed by "Chandmull Pannalal" before the Tribunal, but the memorandum of appeal was verified by Pannalal Juniwal describing himself as the Karta of the HUF. A preliminary objection was taken before the Tribunal on behalf of the Department to the effect that as the appeal was filed by "Chandmull Pannalal", an HUF, through Pannalal Juniwal, the Karta of the HUF, the appeal was incompetent. THE Tribunal found that the assessment had been made on "Chandmull Pannalal" in the status of an individual and as such, the appeal filed by "Chandmull Pannalal", the HUF, was not maintainable and, accordingly, the appeal was dismissed on the said preliminary point. On the above facts, the following question of law has been referred to the High Court : "Whether, in the facts and circumstances of the case, an appeal lay by the HUF against the order of the ITO assessing the individual ?"

(2.) IT may be noted that the preliminary point of law has been raised for the first time by the Revenue before the Tribunal, although the memorandum of appeal before the AAC against the assessment of the ITO had been made by Pannalal as Karta of Chandmull Pannalal, an HUF. Under s. 33 of the Act appeals to the Tribunal can only be filed by an assessee objecting to an order passed by the AAC within 60 days of the date on which such order is communicated to him. "Assessee", under s. 2(2) means a person by whom income-tax or any other sum of money is payable under the Act, and includes every person in respect of whom any proceeding under the Act has been taken for the assessment of his income or of the loss sustained by him or of the amount of refund due to him. Now, in this particular case, the assessment has been made against "M/s Chandmull Pannalal, Prop. : Sri Pannalal Juniwal", as an individual. According to the Revenue, the appeal should have been filed by the said Chandmull Pannalal Juniwal in his individual capacity and not by him as the Karta of "Chandmull Pannalal", an HUF. There is some force in this contention inasmuch as the appellant before the Tribunal cannot strictly be called the "assessee" within the meaning of s. 33. But in our opinion, the objection raised is of a highly technical nature and is more one of form than of substance. Notice under s. 22(2) was served on "Chandmull Pannalal, Prop. Chandmull Pannalal Juniwal". The ITO has made the assessment in the name of "Chandmull Pannalal, Prop. Chandmull Pannalal Juniwal". The order of the AAC has also described the assessee as "M/s Chandmull Pannalal, Prop. Sri Pannalal Juniwal". Neither the Department nor the AAC at the stage questioned the maintainability of the appeal although under s. 30, the appeal before the AAC has not duly been filed by the person against whom the assessment order has been made by the ITO. The obvious reason why no objection has been made at that stage is because there was no mistake as to the identity of the assessee although the description of the assessee has not been correctly made. IT is unfortunate that this preliminary point has been raised for the first time before the Tribunal and the Tribunal without deciding the merits of the appeal dismissed the same on such preliminary ground. Apart from this reference, there are three more references pending before us where the similar point of law has been referred to the High Court for different asst. yrs. A similar point was raised in L.N. Gadodia and Co. vs. CIT (1958) 34 ITR 416 (Punj) : TC6R.129, where Falshaw J. has stated : "The point raised is a highly technical one and it would certainly appear to involve great hardship on the assessee if he were not only to be denied any further relief to which he might be entitled without any hearing on the merits of his appeal by the Tribunal, but were also to be deprived of the relief granted to him by the AAC, including his recognition as a registered firm instead of a HUF, simply on the ground that the appellants have not been correctly described in the memorandum of appeal preferred to the AAC."

(3.) FOR the reasons stated above, the answer to the question will be in the affirmative and in favour of the assessee. Each party shall bear and pay the costs of this reference.