1. JUDGMENT : H. N. Seth, J. - Briefly stated the facts giving rise to this petition u/Art. 226 of the Constitution by Smt. Kalawati Devi are as follows : Petitioners husband Sri Shankar Lal Omar, who was being assessed to income-tax in his individual capacity, died on 29-8-1968. On 17-4-1973, the IT Authorities searched business premises No. 49/90 Naughara, Kanpur. They seized assets worth Rs. 9,60,422 which included an amount of Rs. 4,44,742 in cash. The petitioner alongwith her three sons, namely, Sheo Nath, Vishwa Nath And Ram Gopal filed a settlement application before the CIT explaining the source of some of the assets and made an offer that the remaining accumulation may be brought to tax as profits of the business carried on by late Sri Shanker Lal. It is said that eventually a settlement was arrived at between the Department and the legal representatives of Sri Shankar Lal Omar.
2. On 29-11-1973 the ITO issued notices addressed to late Sri Shankar Lal Omar though the legal representatives Smt. Kalawati Devi, Sheo Nath, Vishwa Nath and Ram Gopal in forming them that he had reasons to believe that their income chargeable to tax for the asst. yrs. 1965-66 to 1969-70 had escaped assessment and called upon them to file revised returns of their income in prescribed from for purposes of reassessment. Sheo Nath then filed fresh returns for various years in accordance with the settlement that had been arrived at between the parties. The ITO accepted those returns and vide his order dt. 20-12-1973 he assessed the taxable income of late Sri Shankar Lal Omar for various assessment years thus :
3. At the same time, the ITO also directed that notices for levy of penalty u/ss 274/271(1)(a), 273(b) and 271(1)(c) of the IT Act be also issued to the assessees. On 28-1-1976 the IAC issued notice u/ss 274(2)/271(1)(c) of the IT Act for the yrs. 1965-66 to 1968-69 addressed to Sri Sheo Nath, Legal representative of late Sri Shanker Lal Omar, 49/90, Naughara, Kanpur, with copies of Sri Vishwa Nath, Sri Ram Gopal and Smt. Kalawati Devi legal representatives of late Sri Shankar Lal Omar, requiring them to show cause why penalty u/s 271(1)(c) for concealing the particulars of assessees income be not imposed. Eventually, the IAC passed orders imposing following penalty for various years in the name of Sri Sheo Nath and others, legal heirs of late Sri Shankar Lal Omar :
and notice of demand for the same were issued, accordingly.
4. The petitioner has now approached this Court for relief u/Art. 226 of the Constitution. She has impugned the validity of the assessment orders dated 20-12-1973 as also that of the orders imposing penalty mentioned above. She claims that in the circumstances of the case neither the tax reassessed nor the penalty imposed in the name of Sri Shankar Lal Omar can be recovered from her personally or from the assets belonging to her seized by the IT Authorities in the raid which took place on 17-4-1973 which assets they are still retaining with them.
5. Ld. Counsel appearing for the petitioner contended that notices u/s 148 issued by the ITO for reopening assessment of Sri Shankar Lal Omar for the yrs. 1965-66 to 1969-70 were vitiated inasmuch as they were addressed to a dead person. He urged that issuing of a valid notice u/s 148 is the foundation of the jurisdiction of the ITO to make reassessment u/s 147 of the IT Act. Consequently, the reopening of assessment of Sri Shankar Lal Omar as also initiation of penalty proceedings are vitiated and it is not open to the respondents to press the said demand against the petitioner. In support of this submission the ld. Counsel relied upon the case of Abdual Kadar v. ITO, Sagar (1958) 34 ITR 451 (MP) : AIR 1959 (MP) 101 and Sewa Lal Dega v. CIT, Calcutta (1965) 55 ITR 406 (Cal).
6. Sec. 159 of the IT Act, 1961 runs thus :
159 (1) where a person dies, his legal representative shall be liable to pay if he had not died, in the like manner and to the same extent as the deceased.
(2) For the purpose of making an assessment (including an assessment, reassessment or recomputation u/s 147 of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative. In accordance with the provisions of sub-s. (1) :
(a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may, be continued against the legal representative from the stage at which it stood on the date of the death of the deceased.
(b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and
(c) all the provisions of this Act shall apply accordingly.
(3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.
7. In view of the aforesaid provision, it is clear that the ITO was fully competent to even after the death of Sri Shankar Lal Omar, initiate the proceedings for reopening the assessment made against him, by taking action against Shankar Lals legal representatives and that he could do so by issuing notices for the purpose to those representatives. In the instant case the ITO issued identical notices for various assessment years on 29-11-1973. The notice issued for the year 1968-69 ran thus :
"To Late Sri Shankar Lal Omar through legal representatives Smt. Kalawati Devi, Sri Vihswa Nath, Sri Sheo Nath, Sri Ram Gopal, 49/90 Naughara, Kanpur.
Whereas, I have reason to believe that your income chargeable to tax for the asst. yr. 1968-69 has escaped assessment within the meaning of s. 159 of the IT Act, 1961.
I, therefore, propose to reassess the income for the said assessment year and hereby require you to deliver to me within thirty days from the date of service of this notice, a return in that prescribed form of your income assessable for the said assessment year.
2. This notice is being issued after obtaining the necessary satisfaction of the CIT, Kanpur.
Sd/- L. K. Gore,
Income Tax, Officer
B Ward, Comps,
The form of address in the notice makes it absolutely clear that the notice was meant not for Sri Shanker Lal but that it was meant for his legal representatives, namely, Smt. Kalawati Devi, Sri Vishwa Nath, Sri Sheo Nath and Sri Ram Gopal. Those legal representatives were being informed that the ITO had reasons to believe that the income of Sri Shanker Lal Omar, chargeable to tax in the relevant assessment year, had escaped assessment and that the legal representatives should file fresh returns of the income of Sri Shanker Lal Omar for that year. These notices, in our opinion, are fully in accordance with the provisions contained in s. 159 of the IT Act and it cannot be said that reassessment proceedings in respect of the income of deceased Shanker Lal have been initiated without addressing notices for the purpose to the legal representatives of the deceassed.
8. In the case of Abdul Kadar v. ITO (1958) 34 ITR 451 (MP) : AIR 1959 (MP) 101 relied upon by the petitioner, the notice for reopening assessment of the deceased Shakir Hassan Abdul Kadar was, after his death, addressed thus :
"Sri Shakir Hasan Abdul Kadar, Damoh". Unlike the case before us, there was nothing in that notice to indicate that it were the legal representative of Sri Shakir Hasan Abdul Kadar who were being sought to be proceeded with in such capacity in respect of assessment of the deceased.
9. In Sewa Lal Daga v. CIT (1965) 55 ITR 406 (Cal), the original assessee was Chandra Bhan Johur Mall, in the status of an individual. In the notice the assessee was described as M/s. Chandra Bhan Johur Mall (Karta Sewa Lal Daga). In that notice not only the original assessee, namely, Chandra Bhan Johur Mall (individual) had been misdescribed the notice also did not indicate that it was being issued to Sewa Lal Daga as the legal representative of deceased Chandra Bhan Johur Mall.
10. The facts of the two cases, cited by the counsel for the petitioner, are quite different from the facts of the case before us. As already explained, the notices issued in the instant case clearly indicated that they were meant for legal representatives of the deceased Shanker Lal Omar and that they were being required to answer to notices in such capacity.
11. We are, therefore, of opinion that initiation of the proceedings is not vitiated because of the form in which the notices issued u/s 148 of the IT Act were addressed to the petitioner and other legal representatives of the deceased Shanker Lal Omar.
12. Ld. counsel for the petitioner next urged that in the instant case even if it be held that the notice u/s 148 of the IT Act was properly addressed to the legal representative of the deceased Shanker Lal Omar, it was served only on one of them, namely, Shri Sheo Nath. The notice was not served upon the petitioner who was thus precluded from participating in in the proceedings, Relying upon the decisions in the case of the First Addl. ITO v. M/s. Shushila Sada Nanda (1965) 57 ITR 168 (SC); ITO, Gudur v. Maramreddy Sulochanamma (1971) 79 ITR 1 : (AIR 1971 SC 37); Choharmal Wadhuram v. CIT (1971) 80 ITR 360 (Guj) and Jai Prakash Singh v. CIT (1978) 111 ITR 507 (Gau), the ld. counsel contended that any assessment made in respect of a deceased person, without notice to all the legal representatives, is void. However, in the view which we are going to take it is not necessary for us to deal with or to express any opinion on this submission.
13. It is, in this case, admitted by the petitioner that in the raid conducted on 17-4-1973 huge amount of cash amounting to over rupees four facs together with other assets counting to over Rs. 9,60,000 were found in possession of the petitioner and her three sons. Accordingly the petitioner along with her three sons. Accordingly the petitioner along with her three sons jointly filed a settlement petition before the CIT, Kanpur, Subsequently the settlement proceedings before the CIT were conducted by Sri Sheo Nath, the eldest son of the petitioner. During those proceedings a settlement was arrived at and Sri Sheo Nath agreed about the manner in which the amount agreed upon between the parties was to be reassessed as the income of the deceased Sri Shanker Lal Omar and of an association of person consisting of Sri Shanker Lal Omar and his wife and children. It is asserted by the ld. counsel for the petitioner that after the petitioner alongwith her three sons moved the application for settlement before the CIT, the CIT never informed her either about the further proceedings taken by him in that regard or about the ultimate order passed by him on her application, Sri Sheo Nath was not her authorized agent and any settlement arrived at between Sheo Nath and the Department could not be said to be a settlement which had been arrived at between the petitioner and the Department. The petitioner, therefore, contends that any assessment made on the basis of settlement arrived at between Sheo Nath and the Department is neither binding nor can it be enforced against the petitioner.
14. We are unable to accept this submission. After the petitioner alongwith her three sons jointly made the application for settlement, it was for her and her three sons to have pursued the matter before the CIT. The CIT was not bound to issue notices to each of the applicants requesting them to appear before him and to settle the manner in which the assets discovered in the raid were to be dealt with. The fact that it was Sheo Nath alone who attended the office of the CIT itself leads to an inference that he was doing so with the consent of and for and on behalf of all the applicants. If it had not been so, the petitioner and her other sons would themselves have taken independent steps to appear before the Commr, and would have pursued the matter themselves. In the circumstances, we have no doubt that Sri Sheonath had, during the settlement proceedings, been acting for and on behalf of petitioner as well and that the settlement arrived at between him and the Department is binding on the petitioner also. Since in these proceedings Sheo Nath was acting for and on behalf of the petitioner, it was not at all necessary for the CIT to communicate the order passed by him to the petitioner separately.
15. It is also not disputed that ultimately reassessment order has been passed on the basis of and in accordance with the settlement arrived at between the parties which, as we have stated in case of Gopal Das Mohta v. Union of India (1954) 26 ITR 722 (SC) : AIR 1955 SC 1 wherein the validity of assessment order passed on the basis of a settlement arrived at between the parties was being challenged before the Supreme Court by means of a petition u/Art. 32 of the Constitution. The Supreme Court ruled that such a petition was not maintainable. In our opinion where an assessment order has been made on the basis of a settlement arrived at between the parties, it would not be proper exercise to discretionary jurisdiction u/Art. 226 of the Constitution to scrutinise as to whether the assessment order has been passed after strictly complying with the procedure prescribed under the Act. In such cases, the Court would be fully justified in refusing to exercise its jurisdiction u/Art. 226 for quashing the assessment order on the ground that the procedure prescribed for making such an order was not strictly complied with.
16. Ld. counsel for the petitioner next contended that the re-assessment orders were void inasmuch as they had been made against a dead person. In support of this submission he relied upon a decision in Maharaja of Patiala v. CIT (1943) 11 ITR 202 (Bom) : AIR 1943 Bom 102. Copies of the re-assessment order have been filed as annexures 17 to 21 to the Writ petition. In all these orders the assessee had been described as "Late Sri Shanker Lal Omar through L/H Sri Sheo Nath, 42/90 Naughara, Kanpur, in the status of an individual. The description of an assessee properly interpreted would mean that it was the income derived by the deceased Sri Shanker Lal Omar in the relevant year which was being assessed in the hands of the legal heirs. This is perfectly in accordance with what has been laid down in s. 159 of the IT Act. In the circumstances it cannot be said that the assessment order has been made against a dead person and is as such invalid.
17. In the end ld. counsel for the petitioner contended that the IT Act does not contemplate imposition of penalty for furnishing inaccurate particulars of income on the legal representatives of the assessee furnishing such return. He contended that it is only the person furnishing wrong particulars in the return, to explain the circumstances in which he furnished particulars. The legal representatives are not expected to offer any explanation.
18. In support of his submission he relied upon a decision of this Court (AP-Sic) in the case of Smt. Yawarunnissa Begum v. WTO (1975) 100 ITR 645 (AP) wherein it has been held that penalty for furnishing wrong return in WT proceedings cannot be imposed upon the legal representatives of the decreased assessee.
19. It is significant to note that like the provisions contained in the WT Act, s. 24B of the IT Act. 1922 imposed a liability on the legal representatives only in respect of the tax payable by the deceased and not in respect of penalty or any other sum. However, s. 159(1) of the IT Act which runs thus :
"Where a person died, his legal representative shall be liable to pay any sum which deceased would have been liable to pay if he had not died in the like manner and to the same extent as to the deceased,"
clearly makes the legal representatives liable not only for the tax payable by the deceased assessee but also for all other sums which the deceased would have been liable to pay had he not died. This clearly makes the legal representatives of the deceased assessee liable for the penalty which would have been payable by the deceased assessee had he not died. In our opinion, u/s 159 of the It Act, 1961 penalty proceedings for a default committed by deceased can be started or continued against the legal representatives.
20. In view of this clear legislative provision, it is not possible u/s 271 of the IT Act could not be taken against the legal representatives of the deceased assessee who had furnished inaccurate particulars in the return filed by him. The case of Smt. Yawarunnissa Begum v. WTO (1975) 100 ITR 654 (AP) relied upon by the petitioner, related to penalty imposable under the provisions of the WT Act which Act does not contain a provision similar to that contained in s. 159 of the IT Act. The ratio decidendi of the said decision is, therefore, not applicable to the present case.
21. As all the submissions made by the ld. counsel for the petitioner for impugning the validity of the assessment and the penalty orders have been found to be void on merit, the petition fails and is dismissed with costs.