1979 (8) TMI 21 - HC - Income Tax

Court rules assessment on Hindu Undivided Family invalid due to improper notice issuance

The High Court of Allahabad ruled in favor of the respondent-assessee in a case concerning the validity of an assessment made on a Hindu Undivided Family ... Notice, Reassessment Issues involved: Validity of notice under section 148 of the Income Tax Act, 1961 for assessment year 1963-64 and the subsequent assessment made on the respondent-assessee as an HUF.Summary:The High Court of Allahabad considered a case where a notice under section 148 of the Income Tax Act, 1961 was issued to an individual, but the return was filed by the karta of a Hindu Undivided Family (HUF). The court analyzed the validity of the assessment made on the HUF based on this notice. The Appellate Tribunal had upheld the cancellation of the assessment, leading to the reference to the High Court.The court examined the legal requirement of issuing a notice under section 148 before making an assessment, emphasizing that the validity of the assessment hinges on the proper issuance and service of such notice. The court considered the conflicting decisions of the Supreme Court in similar cases, one involving a return filed before a valid notice was received, and another where the notice was issued in a different status than the return filed.In this specific case, the notice was addressed to an individual, while the return was filed by the karta of an HUF, which are distinct legal entities. The court concluded that as no valid notice was issued to the HUF, the assessment made on it was not legally valid. Therefore, the court upheld the decision of the Appellate Tribunal, ruling in favor of the assessee and against the department.In conclusion, the High Court answered the reference question in the affirmative, supporting the assessee's position. The respondent-assessee was awarded costs amounting to Rs. 200.