2007 (6) TMI 233 - AT - Income Tax

Invalid Notice Renders Assessment Jurisdictionally Invalid; Tribunal Allows Appeal

The Tribunal found the notice issued under section 16(1) of the Gift-tax Act to be invalid as it did not comply with statutory requirements. Due to this ... Legal Representative Issues Involved:1. Validity of the notice issued u/s 16(1) of the Gift-tax Act.2. Jurisdictional validity of the assessment proceedings.3. Applicability of section 292B of the Income-tax Act.Summary:1. Validity of the notice issued u/s 16(1) of the Gift-tax Act:The Tribunal examined whether the notice issued u/s 16(1) of the Gift-tax Act was valid. The notice was issued to Smt. Jasbir Kaur after the death of her mother, Smt. Gurcharan Kaur, who allegedly made a deemed gift. The Tribunal found that the notice did not specify the status in which it was issued, whether to assess the mother through the assessee or the assessee as the donee. The Tribunal held that the notice should have been issued u/s 19 of the Gift-tax Act, which mandates serving notice to all legal representatives of the deceased donor. The notice was deemed invalid as it was not served on all legal heirs and did not conform to the statutory requirements.2. Jurisdictional validity of the assessment proceedings:The Tribunal addressed the jurisdictional validity of the assessment proceedings initiated based on the defective notice. It was argued that the entire assessment was vitiated due to the invalid notice. The Tribunal agreed, stating that the notice was a jurisdictional requirement, and its defectiveness rendered the entire proceedings invalid. The assessment made under the defective notice was consequently cancelled.3. Applicability of section 292B of the Income-tax Act:The Departmental Representative contended that the provisions of section 292B of the Income-tax Act, which allow for the rectification of technical mistakes in notices, should apply. However, the Tribunal rejected this argument, stating that the notice issued u/s 16(1) was not in conformity with the statutory provisions of the Gift-tax Act. The Tribunal emphasized that the requirements for a valid notice were not satisfied, and thus, section 292B could not be invoked to validate the defective notice.Conclusion:The Tribunal allowed the assessee to raise the additional ground of appeal regarding the validity of the notice. It concluded that the notice issued u/s 16(1) was defective, illegal, and without jurisdiction. Consequently, the assessment made under the defective notice was cancelled, and the appeal of the assessee was allowed.