Income Tax Officer, "E" Ward and Others vs Chandi Prasad Modi

T.K. Basu, J.

5-9-1972

This rule is directed against a notice u/s 148 of the I.T. Act, 1961 (hereinafter referred to as "the Act"). The notice is dated the 18th March, 1965, and seeks to reopen the assessment for the assessment year 1948-49. The notice is addressed by the ITO, " E" Ward, District IV(I), Calcutta, to " M/s. Bhimraj Banshidhar of 180, Mahatma Gandhi Road, Calcutta".

It is the case of the petitioner that in July, 1947, there was a partial partition of an HUF, known as Bhimraj Banshidhar of 180, Mahatma Gandhi Road, Calcutta, whereby the business of the family and the assets and liabilities pertaining to those businesses were partitioned among the following members.

(1) Nagarmal Modi;

(2) Chandi Prasad Modi;

(3) Shankarlal Modi;

(4) Ramswarup Modi and

(5) Jagmohan Modi.

In the same month, the aforesaid members of the joint family formed a partnership firm under the name and style of Messrs. Bhimraj Banshidhar and carried on business at the same premises, viz., 180, Mahatma Gandhi Road, Calcutta. The fact of the partial partition and the constitution of the firm were accepted by the Income Tax department. Both the entities viz., the HUF after the partial partition and the partnership business which was a registered one, continued to be assessed by the same ITO at all material times.

On July 11, 1956, this firm was dissolved. Subsequent facts are not really material for the purpose of deciding the sole contention that was raised on behalf of the petitioner to which I shall advert presently.

Mr. Murarka, appearing on behalf of the applicant, submitted that the notice was vague because at the relevant time, for which the assessment is sought to be reopened, viz., the assessment year 1948-49, there were two separate and distinct entities as I have mentioned above, viz., the HUF and the registered partnership business, both having the same name of "Bhimraj Banshidhar " and having the same address, viz., 180, Mahatma Gandhi Road, Calcutta. The notice does not indicate as to which of these two entities the notice is addressed.

I may mention at this stage that the allegations with regard to the fact that both these entities were not only known to the Income Tax department but were being assessed by the same ITO at all material times has not been specifically denied in the affidavit affirmed on behalf of the revenue by Paresh Nath Ghosh on the 19th September, 1970.

My attention was drawn in this connection to an unreported decision of this court in the case of Madanlal Chowdhury v. ITO (Matter No. 495 of 1969) (since printed as Appendix at p. 351 (infra)). In that case, the judgment was delivered by Sabyasachi Mukharji on the 16th February, 1972. There, on very similar facts, Mukharji J. held, with reference to a very similar notice, that the notice was vague, and therefore, not a valid notice u/s 148 of the Act. In that judgment, his Lordship referred to an earlier decision of his own as also to a decision of a Division Bench of this court in the case of Sewlal Daga v. CIT [1965] 55 ITR 406 (Cal) and to a decision of the Supreme Court in the case of CIT v. Kurban Hussain Ibrahimji Mithiborwala [1971] 82 ITR 821. I feel it unnecessary to go into these authorities in detail. With respect, I am in entire agreement with the reasoning of Mukharji J. in the unreported decision and also his decision on this point.

Mr. Sengupta on behalf of the revenue sought to argue that though the notice does not contain any intrinsic evidence as to which entity it is addressed, in this case, the notice was served by registered post and the acknowledgment slip contained the file number of the HUF. This again on affidavits is not an admitted position and I cannot rest my finding on that.

According to the revenue, the person who received the notice was the constituted attorney of the HUF. According to the affidavit-in-reply filed on behalf of the petitioner, however, this gentleman who received the notice is an accountant who serves both the HUF and the partnership firm. In any event, even if the accountant can be imputed with the knowledge of the entity to which the notice was sought to be addressed, I fail to see how that knowledge can be imputed to the assessee itself.

Adopting the reasoning and decision of Mukharji J. in the aforesaid case of Madanlal Chowdhury v. ITO (since reported in [1979] 119 ITR 351 (infra)), I must hold that this impugned notice in the present case is vague and not a valid one and, therefore, incapable of being given effect to.

In view of my finding on the above question, I refrain from dealing with any other ground which has been taken in the petition as well as in the affidavits. I make it clear that I am not expressing any opinion on any other question except the one referred to above.

The rule nisi itself provided that the respondents would be at liberty to proceed with the assessment pursuant to the notice but will not communicate or enforce the order of assessment in any manner whatsoever. The rule further provided that the order of assessment shall abide by the result of this rule.

Mr. Sengupta for the revenue states that, pursuant to the liberty given in the rule nisi, the order of assessment in the present case has been completed. Since I am quashing the notice, the order of assessment would necessarily have to be quashed along with it.

In the view that I have taken, the application must succeed and the rule must be made absolute.

There will be a writ in the nature of mandamus directing the respondents to recall, cancel and withdraw the notice dated the 18th March, 1965, and to forbear from giving effect to the notice in any manner whatsoever.

There will also be a writ in the nature of certiorari, quashing and setting aside the order of assessment dated the 31st March, 1969, pursuant to the above notice.

There will be no order as to costs.