COMMISSIONER OF INCOME TAX Vs. MANDAGI N A
LAWS(KAR)-1966-3-4
HIGH COURT OF KARNATAKA
Decided on March 16,1966

COMMISSIONER OF INCOME TAX Appellant
VERSUS
N.A.MANDAGI Respondents


Referred Judgements :-

TIRTHA LAL VS. BHUSAN MOYEE DASI [REFERRED TO]
ALFRED E VS. FIRST ADDITIONAL INCOME TAX OFFICER [REFERRED TO]
MUNIYAMMAL VS. INCOME TAX OFFICER THIRD ADDL [REFERRED TO]



Cited Judgements :-

COMMISSIONER OF INCOMETAX VS. NAWAB MUSHRAF HOSSAIN [LAWS(CAL)-1972-5-8] [REFERRED TO]
SAJJAN KUMAR SARAF VS. COMMISSIONER OF INCOME TAX [LAWS(CAL)-1978-3-7] [REFERRED TO]
CHOOHARMAL WADHURAM VS. COMMISSIONER OF INCOME TAX [LAWS(GJH)-1970-10-6] [REFERRED TO]
K P MATHEW VS. AGRICULTURAL INCOME TAX OFFICER [LAWS(KER)-1973-3-3] [REFERRED TO]


JUDGEMENT

- (1.)MR. A. A. Mandagi, who was the Asstt. Government Pleader in the State of Bombay, died in March, 1956, and after his death one of his four sons, MR. N. A. Mandagi, produced a return in August, 1960, disclosing an income of Rs. 48,999 during the asst. yr. 1956-57. This income represented the fee which he received as Government Pleader for conducting civil and criminal cases in the High Court of Bombay. The ITO made an order of assessment treating the income as an income from other sources to which s. 12 of the Indian IT Act, 1922, refers. MR. N. A. Mandagi, who produced the return, appealed to the AAC and contended that the assessment was illegal since not all the legal representatives of his deceased father had been brought on record and since there was no compliance with the provisions of s. 24B. He challenged the correctness of the view taken by the ITO that the income was an income from other sources. The AAC dismissed the appeal pronouncing against the appellant on all the questions raised before him.
(2.)BUT in the further appeal preferred to the Tribunal, the assessment was set aside. The Tribunal expressed the view that issue of a notice under s. 24B(2) of the Act was a condition precedent to the exercise of jurisdiction by the ITO for an assessment with respect to the income of the deceased. It was said that, since no such notice was issued, the assessment could not be supported. The Tribunal accepted the contention that the income was derived by the exercise of a profession and not from other sources. The CIT asked for a statement of the case to this Court under s. 66(1), and on that application the Tribunal has referred the following two questions for our decision :
"(1) Whether the service of a notice prescribed in sub-s. (2) of s. 24B of the Indian IT Act, 1922, is a condition precedent to the commencement of proceedings for exercising jurisdiction to assess the estate of the deceased ? (2) Whether the income could be assessed under the head 'other sources' ?"

It will be observed that the first question is not as clearly worded as it should have been. But there can be no doubt that the question of law posed by that question is whether, on the facts and circumstances before us, the ITO could not have made an assessment under s. 24B without in the first instance having served a notice under s. 22(2) as required by s. 24B(2). Now, the Tribunal was of the view that, since the notice to which s. 24B(2) refers should have been served on all the legal representatives of the deceased and there was no such service, the fact that only one of those legal representatives produced a voluntary return before the ITO did not clothe the ITO with the power to proceed to make an assessment on the basis of that voluntary return. The real question before us is whether the order of assessment made by the ITO without having served the notices required by s. 24B(2) on all the legal representatives is without the authority of law as stated by the Tribunal.

Mr. Rajasekhara Murthy, appearing for the CIT, and Mr. Venkataramiah, appearing for Mr. N. A. Mandagi, both agree that that is the real question of law which has been referred to us by the Tribunal and that the import of the first question has to be understood in that way. The elucidation made by the Supreme Court in Kusumben D. Mahadevia vs. CIT (1960) 39 ITR 540 makes it clear that, although s. 66 of the IT Act permits this Court to decide only the question of law which had been referred to it, if the question of law involves different approaches for its solution, this Court may amplify the question to take in all those approaches so long as the question which is to be answered by us was before the Tribunal and was decided by it.

(3.)WE were, therefore, asked by both sides to decide whether, in the case before us, it was incumbent on the ITO notwithstanding the voluntary return submitted by N.A. Mandagi to serve notices on all the legal representatives as required by s. 24B(2) before he could proceed to make an assessment. It was submitted for the CIT on the basis of the pronouncement of the Federal Court in Chatturam vs. CIT (1947) 15 ITR 302 (F.C.) that the issue of a notice under the IT Act is not the foundation of the jurisdiction of the ITO to make the assessment or of the liability of the assessee to pay the tax which is founded on ss. 3 and 4 of the Act which are the charging sections and that s. 22 and the other sections are the machinery sections to determine the amount of the tax. Kania J., as he then was, observed :
"The Income-tax assessment proceedings commence with the issue of a notice. The issue or receipt of a notice is not, however, the foundation of the jurisdiction of the ITO to make the assessment or of the liability of the assessees to pay the tax. It may be urged that the issue and service of a notice under s. 22(1) or (2) may affect the liability under the penal clauses which provide for failure to act as required by the notice. The jurisdiction to assess and the liability to pay the tax, however, are not conditional on the validity of the notice. Suppose a person, even before a notice is published in the papers under s. 22(1), or before he receives a notice under s. 22(2) of the IT Act, gets a form of return from the ITO and submits his return, it will be futile to contend that the ITO is not entitled to assess the party or that the party is not liable to pay any tax because a notice had not been issued to him."

Mr. Rajasekhara Murthy urged that since Mr. N. A. Mandagi submitted the return of the income of his father even without the service of a notice on him as required by s. 24B(2), the production of that return dispensed with the necessity of any such notice and made it possible for the ITO to proceed to make the assessment.



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