SHEO NARAIN JAISWAL Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) IN this writ petition, the petitioners have challenged the notices dated March 27, 1972, issued under Section 148 of the INcome-tax Act, 1961, relating to the assessment year 1955-56, purporting to reopen the assessment of the late Lakshmi Narain in respect of the aforesaid assessment year. The other reliefs asked for in the writ petition are consequential in nature. The petitioners herein are the heirs and legal representatives of the late Lakshmi Narain Jaiswal.

(2.) PETITIONERS Nos. 1 to 6 are his sons while respondent No. 7 is his widow. Their case is that till April, 1954, the late Lakshmi Narain was the member and karta of a joint Hindu undivided family governed by the Mitakshara school of Hindu law. The said joint Hindu undivided family was known as "Lakshmi Narain Ram Narain" and all the sons and members of the families of the late Lakshmi Narain and Ram Narain Jaiswal were its members. The family carried on business at Ranchi under the same name. The late Lakshmi Narain as the karta of the family borrowed money from various persons for the purpose of business. The Raja of Udaipur (Madhya Pradesh) had advanced loans to the said family which was duly recorded in the books of the family. A partition took place in the family on April 3, 1954, and all the members were allotted properties in accordance with their respective shares. Thereafter, the late Lakshmi Narain, the petitioners along with late Ram Narain and five other persons constituted a partnership firm which took over and continued the business of the family under the name and style of Lakshmi Narain Ram Narain. The loan received from the Raja Saheb of Udaipur was shown as a liability in the books of the partnership firm and amounted to Rs. 6,52,135 (principal and interest). The aforesaid partition was duly recognised and accepted under the provisions of the Indian Income-tax Act, 1922, and the firm was assessed under the Indian Income-tax Act, 1922, as a registered firm.

(3.) LEARNED counsel appearing on behalf of the petitioners submitted that in the instant case, the concerned Income-tax Officer did not apply his mind and form his own belief that the conditions precedent for the assumption of jurisdiction under Section 147 of the Act were satisfied. He merely acted under the directions and instructions of his superior officer, namely, the Commissioner of Income-tax. From the material on record, it is clear that the Income-tax Officer, on application of his mind, was of the view that the amount was not taxable at all and could not be brought to tax, but by reason of specific directions and/or instructions given by the Additional Commissioner of Income-tax and the Commissioner of Income-tax, he, in compliance with those directions and/or instructions, sent a proposal and issued notices under Section 148 of the Act, If the Income-tax Officer himself did not form the requisite belief, the purported proceedings were illegal, unjustified, unwarranted and without jurisdiction. The second submission urged on behalf of the petitioners was that the approval of the Commissioner of Income-tax and the Board was to initiate a proceeding under Section 148 of the Act against Lakshmi Narain Jaiswal, Hindu undivided family. The recorded reasons dated December 4, 1971, and the alleged approval thereupon was for reopening the assessment of the said Hindu undivided family. The notices under Section 148 of the Act had been issued by the Income-tax Officer upon the legal heirs of Lakshmi Narain Jaiswal, in the capacity of individual, otherwise, the notices could not have been served upon the legal heirs. If the approval of the Central Board had been obtained to initiate proceedings against the said Hindu undivided family, the purported notice could not be issued against the individual. In any event, even if it be assumed that in March, 1972, a fresh proposal was sent to the Commissioner of Income-tax and fresh approval was given by the Board to reopen the assessment against the individual, there were no fresh reasons recorded for proceeding against the individual nor were any such reasons disclosed when they were called upon to do so. There was, therefore, no recorded reasons on the basis of which the approval to reopen the case of the individual could be granted.