Sambasiva Rao, C.J.
1. The point in these income-tax cases is about the notice under Section 148 of the I.T. Act, whether it should be given to the HUF as the assessee and about the period of limitation for issuance of such a notice ?
2. The material facts will have to be noted before the question is taken up for consideration. Certain land belonging to a HUF was acquired. Compensation of Rs. 3,57,025 was fixed and interest of Rs. 80,930 accrued on it. However, the joint family was never an assessee under the I.T. Act. The karta of the family was never being assessed. He was submitting only his individual returns. This compensation and interest were paid in the year 1954-55. But in 1967 the authorities concerned wanted to reopen the assessment and, for that purpose, gave a notice dated July 30, 1967, purporting to be one under s, 148 of the Act. It is very pertinent to note that this notice was issued in the individual name of the assessee. There was no reference at all to the joint Hindu- family or his capacity as the karta of the family or that the notice was being issued in view of the interest which the family had gained on the compensation amount. In response to the aforesaid notice, the assessee filed a return in his individual capacity on September 25, 1967. For reasons best known to themselves, the I.T. authorities kept quiet for nearly three years and eight months and then wrote on May 24, 1971, a letter to the assessee that he should submit his return as the karta of the joint family. That obviously was with the intention of bringing the interest of Rs. 80,930 into consideration which had been paid to the joint family in the year 1954-55. When no reply was received to that letter, the ITO had written another letter on August 5, 1972. When no reply was received, an ex parte assessment was made on March 27, 1974,
3. The assessee preferred an appeal to the AAC who allowed it holding that the family got divided long ago and, therefore, there could be no assessment of the family. This time the department preferred an appeal to the Income-tax Appellate Tribunal. The assessee took advantage of this appeal and filed cross-objections before the Tribunal, objecting to the validity of the notice under Section 148 which had been given to him, and also to the correctness of the ex parte assessment made against him. The Tribunal dismissed the revenue's appeal and allowed the cross-objections of the assessee. Thereupon, the revenue sought the Tribunal to refer the two following questions to the High Court :
'1. Whether, on the facts and in the circumstances of the case, the service of the notice under Section 148 is valid or not ?
2. Whether, on the facts and in the circumstances of the case, the Tribunal is justified in cancelling the assessment made under Section 144 of the I.T. Act, 1961 ?'
4. When the Tribunal declined to make the reference holding that no question of law arose, this application has been made by the revenue seeking reference of the same questions.
5. It may be noted here that the I.T. Act of 1961 prescribes a period of eight years for reopening the assessment. However, it can do so after obtaining the permission of the Central Board of Direct Taxes within a period of 16 years. In this particular case it is stated that such permission of the CBDT had been secured. Therefore, it is undoubted that the authorities concerned could Act under Section 148 within 16 years, but that 16 years from the year 1954 expired--this is common ground--with March 31, 1971.
6. Section 148 says that whenever proceedings are sought to be taken for reopening the assessment, notice should be given to the assessee. Here the notice given on July 30, 1967, was given to the assessee without any reference to his capacity as the karta of the erstwhile joint Hindu family. We may recapitulate that the family was never an assessee and all the time the karta was an assessee in his individual capacity. Therefore, the failure to mention anything about the joint family and the proposed reopening of the assessment with reference to the joint family gaining interest, gathers importance. The assessee had been receiving notices for his income-tax purposes for a very long time. Even for the year 1954-55, he submitted his return in his individual capacity and it was accepted by the department. It was this assessment that was sought to be reopened by issuing a notice on July 30, 1967. By no stretch of imagination could it be said that the reopening was in respect of the individual assessment of the assessee. Even the department does not contend that the interest on the compensation amount was paid exclusively to the assessee in his individual capacity.
7. Therefore, when the notice dated July 30, 1967, was sent to the assessee without mentioning anything, it could only mean that it was given to him in his individual capacity. Since he did not receive the interest in his individual capacity, he naturally filed the return on September 25, 1967, in his individual capacity. Therefore, it must be said that the notice (here the assessee whose assessment was sought to be reopened was the joint Hindu family and not the individual) could not be said to be in accordance with Section 148, in that it did not go to the real assessee.
8. Anyway, the assessee filed his individual return in response to the notice on September 25, 1967. The ITO kept quiet for nearly three years eight months thereafter and wrote a letter on May 24, 1971, clarifying the position that the return should be submitted by the assessee as the karta, of the joint family which had gained interest in the year 1954. The period of limitation for reopening the assessment was extended to 16 years by virtue of the permission granted by the CBDT. That period, however, expired by March 31, 1971. The letter written on May 24, 1971, was after that date, that is to say, after the expiry of the extended period of 16 years. Sri Rama Rao, learned standing counsel for the department, submits that this letter should be read with the notice of July 30, 1967. Even if it is thus read, the position becomes clear that what was sought to be reopened on May 24, 1971, under Section 148 was in respect of the family which was after the period of limitation.
9. Thus, the action taken by the I.T. department suffered from two vices. The notice to reopen given on July 30, 1967, was not to the assessee, whose assessment was sought to be reopened, viz., the joint family, but to the karta of the family in his individual capacity. This does not satisfy the requirement of Section 148. The second defect is that the required clarification that the reopening was in respect of the family was made after the extended period of 16 years. Because of these two vitiating circumstances, the Tribunal held, and rightly so in our opinion, that the reopening could not be done.
10. Sri Rama Rao for the revenue relies upon a decision of the Calcutta High Court in Mahabir Prasad Poddar v. ITO : 102ITR478(Cal) to contend that it was not necessary in the notice under Section 148 to describe the status of the assessee, whose assessment was proposed to be reopened, and the said clarification could be made later. But a close reading of the decision would show that the learned Judges of the Calcutta High Court made a distinction between cases where the status of the assessee was important and where that status was not important. We may as well quote what the learned judges observed on this aspect of the matter at page 490. That passage is as follows :
'If the status of the assessee was wrongly described, it can always be corrected by the Income-tax Officer in the course of the assessment proceedings, but that cannot affect the validity of the assessment proceedings. The position would of course be different where the status is so inextricably mixed up with the question as to who is the assessee that the description of the status one way would be referable to one assessee while the description of the status the other way would be referable to another assessee. Where such is the case, the description of the status may be indicative of the fact that a particular assessee is sought to be proceeded against and if sanction of the Commissioner is obtained for proceeding against that assessee, such sanction cannot be availed of for the purpose of initiating proceedings against another assessee who would be indicated by the description of the status the other way.'
11. This was a passage which the learned judges extracted from the decision of the Bombay High Court and the learned judges referred to the same with approval.
12. Now, the facts above stated would disclose that the status of the assessee is inextricably mixed up with the question as to who is the assessee. We have already noted that the joint family was never an assessee and it was only the karta who was all the time the assessee in his individual capacity. Therefore, when Section 148 notice of July 30, 1967, was given to the assessee simply, without clarifying that it was with reference to the joint family, that notice cannot be taken advantage of to start proceedings under Section 148 against the Hindu joint family.
13. In Mathura Prasad v. CIT : 60ITR428(SC) the Supreme Court held that the Tribunal is entitled to reject an application for reference, if the question of law, even though arising from its order, is academic or is concluded by a judgment of the highest court. The Tribunal relied on this Supreme Court's decision to reach the conclusion it arrived at. Therefore, we see no point in directing the reference of the questions to the High Court.
14. In the result, the two income-tax cases are dismissed but, in the circumstances, without costs.