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of <h1>Court invalidates assessment due to improper notice service; Income deemed from profession, not 'other sources'; Commissioner to cover costs.</h1> <h3>Commissioner of Income-Tax, Mysore Versus NA Mandagi.</h3> Commissioner of Income-Tax, Mysore Versus NA Mandagi. - [1967] 63 ITR 173 Issues:1. Assessment of income of deceased Government Pleader.2. Requirement of serving notice under section 24B(2) of the Indian Income-tax Act, 1922.3. Classification of income as 'income from other sources.'Analysis:Assessment of Deceased Government Pleader's Income:- Mr. A. A. Mandagi, a deceased Government Pleader, had his income assessed posthumously by the Income-tax Officer.- His son, Mr. N. A. Mandagi, produced a return disclosing the income earned during the assessment year 1956-57.- Initially, the Income-tax Officer treated the income as 'income from other sources' under section 12 of the Income-tax Act, 1922.- The Appellate Assistant Commissioner upheld this assessment.- However, the Appellate Tribunal set aside the assessment, stating that the notice under section 24B(2) was a prerequisite for the Income-tax Officer's jurisdiction.- The Tribunal also recognized the income as derived from a profession rather than 'other sources.'Requirement of Notice under Section 24B(2):- The key issue was whether the Income-tax Officer could assess the deceased's income without serving notices on all legal representatives as required by section 24B(2).- The Appellate Tribunal emphasized the necessity of serving notices on all legal representatives for a valid assessment.- Legal representatives' proper representation before the Income-tax Officer was deemed essential under section 24B.- Previous judicial interpretations, including the High Court of Madras, supported the view that all legal representatives must be involved in such assessments.Classification of Income:- The second question revolved around whether the income of the deceased Government Pleader should be classified as 'income from other sources.'- The Court determined that the income earned by Mr. A. A. Mandagi was derived from his profession as a Government Pleader, not from 'other sources.'- The Court concluded that the income was not appropriately assessed under the head of 'other sources.'Conclusion:- The Court ruled that the Income-tax Officer could not proceed with the assessment without serving notices on all legal representatives, as mandated by section 24B(2).- Additionally, the income of the deceased Government Pleader was correctly classified as income derived from his profession, not 'other sources.'- The Commissioner was directed to bear the costs of the reference, including the advocate's fee.
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