Andhra Pradesh H.C : Whether the assessment is vitiated by non-service of notice on all the legal representatives of the deceased ?

High Court Of Andhra Pradesh

K.G. Gopal Rao vs. Commissioner Of Wealth Tax

Sections WT 17

Asst. Year 1966-67, 1968-69

Dr. Motilal B. Naik & M. Narayana Reddy, JJ.

Case Refd. No. 277 of 1991

13th February, 2002

Counsel Appeared

K. Raja Reddy, for the Assessee : S.R. Ashok, for the Revenue

JUDGMENT

Dr. Motilal B. Naik, J. :

These two referred cases have come up before us on a reference made by the Tribunal, at the instance of the assessee, framing the following question of law for the opinion of this Court, viz., “Whether the assessment is vitiated by non-service of notice on all the legal representatives of the deceased ?” Since a common question of law involved in these two referred cases, we decide the same by the following common order. Before we proceed to answer these references, a few relevant facts leading to the references, are traced hereunder : The late Gopal Rao who is the wealth-tax assessee died on 9th Nov., 1973, leaving behind his widow, Rajeswari Bai, two sons, viz., Srinivasa Rao and Ramakrishna Rao and two married daughters, viz., Timmabai and Sarada and mother, Timmabai. He also executed a will on 2nd Nov., 1973, giving his property to his widow and his four grandsons through the sons, namely, Gopala Krishna Rao, Gopala Rao, Murali Krishna and Mohan Krishna. For the asst. yrs. 1966-67,1967-68,1968-69 and 1973-74, the WTO issued notices dt. 27th March, 1975 under s. 17(1)(a) of the WT Act, 1957, on the late Gopal Rao’s widow, Rajeswari Bai, who filed the returns. For the asst. yr. 1971-72, reassessment notice was served on 9th Sept., 1972 under s. 17(1)(a) of the Act on Gopal Rao who filed return pursuant to the same. During the pendency of the assessment proceedings and reassessment proceedings, Rajeswari Bai died on 7th April, 1978. Therefore, notices of hearing were served only on Srinivasa Rao and not on the other legal representatives under the will. The assessment proceedings on the widow for 1974-75 as also the assessment proceedings on the late Gopal Rao for all these years including the reassessment for 1971-72 were completed on 31st March, 1979, by the same WTO. The will which was executed by the late Gopal Rao was also filed before the officer prior to the completion of these assessment proceedings which is clear from the assessment order of Smt. K. Rajeswari Bai for 1974-75.

During the pendency of the assessment relating to the HUF, as the Karta as well as his wife died, one of the legal heirs was served notice pursuant to which he participated in the proceedings before the assessing authority. Tax liability was determined by the assessing authority and the matter was carried in appeal before the AAC by the assessee against the assessment order made by the assessing authority for the asst. yrs. 1966-67, 1967-68 and 1968-69. The AAC, after considering the contentions raised on behalf of the assessee, partly allowed the appeal granting certain concessions with regard to certain claims made by the assessee. Thereafter, the matter was carried before the Tribunal by the assessee aggrieved by the decision of the AAC in declining to grant certain relief on certain items. During the pendency of the appeal before the Tribunal, the assessee raised an additional ground before the appellate authority contending that all the legal representatives of the Karta of the HUF should have been brought as legal representatives instead of Srinivasa Rao who is one of the legal heirs. The appellate authority, having regard to the facts and circumstances of the case, came to the conclusion that though therepresentatives and he also did not object to the assessment being made on him in the capacity of a legal representative. The Tribunal, therefore, held that it was the duty of Sri Srinivasa Rao to have brought to the notice of the WTO about all the legal representatives so that proper assessment notices could be issued to them and having failed to do that, at the present stage, the assessee is not entitled to challenge the validity of the assessment on the ground that the assessment notices were not served on all other legal representative. Thereafter, the assessee approached this Court in WTC Nos. 7 of 1984 and 70 of 1985 under s. 27 (3) of the WT Act requiring this Court to direct the Tribunal for referring the question of law as framed by the assessee while stating the case to this Court and thus, these two references have come up before us for consideration.

4. In CIT vs. Jai Prakash Singh (1996) 132 CTR (SC) 262 : (1996) 219 ITR 737 (SC) the Supreme Court held thus : “An omission to serve or any defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where such liability is created by distinct substantive provisions (chargingsections). Any such omission or defect may render the order irregular— depending upon the nature of the provision not complied with—but certainly not void or illegal.” In this case, the Tribunal placed reliance on a decision of the Kerala High Court in K.P. Mathew vs. Agrl. ITO (1974) 96 ITR 121 (Ker), wherein it was held as under : “The petitioner received the notice as a legal representative of his father and he did not point out that there were other legal representatives nor did he object to the validity of the assessment proceedings on that ground. He could not object to the validity of the assessment on such a ground, firstly, because he was a party to the assessment proceedings, and secondly, because he was estopped by conduct from raising such an objection. The assessment was valid as far as the petitioner was concerned and he was liable to pay tax under the assessment out of that part of the estate of the deceased person which had vested in him or come to his possession.”

5. Applying the principle emerging from the two decisions cited supra to the facts of this case, we must say, the Karta of the HUF was undoubtedly represented by Sri Srinivasa Rao who is one of the legal heirs of the Karta of HUF. He participated in the proceedings before the assessing authority and later filed appeal before the AAC which was partly allowed. Thereafter, the matter was carried before the Tribunal and at that stage, the said Srinivasa Rao raised the additional ground by contending that the other legal representatives of the Karta of the HUF were not served with notices. Having regard to the facts and circumstances of the case and in the light of the decisions cited supra, we declare that the assessment is not vitiated by non-service of notice on all the legal representatives of the deceased. We accordingly answer the reference in favour of the Revenue and against the assessee.

[Citation : 258 ITR 361]

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