1958 (2) TMI 52 - HC - Income Tax

Court upholds tax notice validity on power of attorney holder, deems assessment legal.

The court affirmed the validity of service of notices under Sections 30(2) and 30(4) of the Hyderabad Income Tax Act, stating that notices served on a ... - Issues Involved:1. Validity of service of notices under Sections 30(2) and 30(4) of the Hyderabad Income Tax Act.2. Sufficient cause for the assessee not filing the return or producing accounts.3. Legality and justification of the assessment under Section 31(4) of the Hyderabad Income Tax Act.4. Validity of assessment for the income of the year 1356 F. under the Hyderabad Income-tax Act.Issue-wise Detailed Analysis:1. Validity of service of notices under Sections 30(2) and 30(4) of the Hyderabad Income Tax Act:The court examined whether the notices under Sections 30(2) and 30(4) were duly served on the assessee as required by law. The notices were served on A. S. Ahmed, who was the power of attorney holder of Haji Razack and the manager of his business. The court noted that the original power of attorney was not produced, and the case proceeded on the assumption that A. S. Ahmed did not hold a power of attorney from the old firm but only for Haji Razack. Despite this, the court concluded that the notices were properly served because under Section 56 of the Hyderabad Income-tax Act, all members of a dissolved firm are jointly and severally liable to assessment, and any notice served on any member of the dissolved firm is valid for the purposes of assessing the said firm. Therefore, the answer to question No. 1 is in the affirmative.2. Sufficient cause for the assessee not filing the return or producing accounts:The court considered whether the absence of due and proper service of notices or other circumstances constituted sufficient cause for the assessee not filing the return or producing accounts. The court found that the assessee's power of attorney agent, A. S. Ahmed, engaged in lengthy correspondence from 1948 to 1951, promising to submit returns and taking time. It was only at a late stage that the plea of invalid service of notice was raised. The court concluded that the assessee had sufficient time to produce the accounts and submit them. Therefore, the answer to question No. 2 is in the negative.3. Legality and justification of the assessment under Section 31(4) of the Hyderabad Income Tax Act:The court examined whether the assessment under Section 31(4) was illegal, unjustified, and untenable. The Income-tax Officer made a best-judgment assessment on a total income of Rs. 6,10,500/- and rejected the assessee's contentions. The court noted that once a valid notice has been given, a subsequent notice, even if superfluous, does not invalidate the proceedings already validly commenced. Therefore, the answer to question No. 3 is in the negative.4. Validity of assessment for the income of the year 1356 F. under the Hyderabad Income-tax Act:The appellant did not wish to press question No. 4 as it was concluded by the court's decision in Commissioner of Income-tax, Hyderabad v. Adilakshmi Devamma, AIR 1955 Hyd 225. The court affirmed that the income of the previous year (1356 F.) could be validly taxed in 1357 F. Therefore, the answer to question No. 4 is in the affirmative.Conclusion:The court answered question No. 1 in the affirmative, and questions 2 and 3 in the negative. The reference was answered with costs to the respondent fixed at Rs. 200/-.