H.N. Seth, J. - (1.) CONTROVERSY in this reference under Section 256(1) of the I.T. Act, 1961, concerns the assessment of Lala Madan Lal Agarwal (Hindu undivided family) for the assessment year 1946-47.
(2.) AFTER obtaining approval of the Board for initiating proceedings to assess the escaped income of the assessee for the year 1946-47, the ITO, Aligarh, issued the following notice which was dated 29th September, 1962, to Sri Madan Lal Agarwal : "Whereas I have reason to believe that your income......chargeable to tax for the assessment year in respect of which you are assessable in 1946-47, has escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961 ; 1. therefore, propose to assess/reassess the income.....depreciation allowance for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income......in respect of which you are assessable for the said assessment year. 2. This notice is being issued after obtaining the necessary satisfaction of the Commissioner of Income-tax, U.P., Lucknow/the Central Board of Revenue. (Sd.) J. S. Agarwal, andnbsp; andnbsp; Income-tax Officer, B-Ward, Aligarh."andnbsp; andnbsp; andnbsp; andnbsp; andnbsp; On receipt of the notice, Sri Madan Lal Agarwal, on November 12, 1962, filed a return of his individual income pertaining to the assessment year 1946-47, under protest. The ITO thereupon informed Sri Madan Lal Agarwal that the notice dated 29th September, 1962, related to his HUF and that he should, instead of the return of his individual income, file the return of the income of his HUF. At a later stage the proceedings were, under the orders of the Commissioner of Income-tax, transferred to ITO, Special Survey Circle, Agra, who on 30th March, 1967, framed an assessment order determining the taxable income of the HUF for the assessment year 1946-47 as Rs. 3,87,763. However, as, before framing the assessment, the ITO, Special Survey Circle, Agra, did not give any notice or fresh opportunity to the assessee, the AAC, by his order dated 30th July, 1974, allowed the appeal filed by the assessee, set aside the assessment made by the ITO and remanded the case to him for making a fresh assessment in accordance with law. As, before the AAC, the assessee had also questioned the validity of the proceedings initiated tinder Section 147/148 of the I.T. Act and had claimed that those proceedings deserved to be quashed, and its plea in that regard had not been accepted, the assessee took the matter up in appeal before the Income-tax Appellate Tribunal, Allahabad, and raised the following five issues before it. 1. That the proceedings initiated against the assessee stood vitiated as no notice under Section 148 of the Income-tax Act, 1961, was ever served upon it. 2. That there was no Hindu undivided family styled as Lala Madan Lal Agarwal in existence in the relevant assessment year. 3. That the Revenue having earlier proceeded to assess Sri Madan Lal Agarwal as an individual was precluded from assessing him in the status of a Hindu undivided family. 4. That the requisite belief of the Income-tax Officer enabling him to initiate proceedings under Section 147 of the Income-tax Act was no belief in law, and
(3.) THAT the. Income-tax Officers at Aligarh and Agra had no jurisdiction in the matter. 5. Income-tax Appellate Tribunal repelled all the pleas raised on behalf of the assessee and upheld the order of the AAC remanding the case to the ITO for framing fresh assessment in accordance with law. The assessee then moved the Income-tax Appellate Tribunal under Section 256(1) of the IT, Act, and requested it to state the case and refer the following questions of law for the opinion of this court: "1. Whether, on the facts and in the circumstances of the case, the assessment and the proceedings purporting to be under Section 147(a) are legally valid and maintainable ? 2. Whether the Tribunal was correct in law in holding that the irregularity in the relevant notice issued under Section 148 did not vitiate and invalidate the said notice and the relevant reassessment proceedings ? 3. Whether, on the facts and in the circumstances of the case and having regard to the Tribunal's own finding that the action under Section 148 was based on some information obtained by the Income-tax Officer from the Directorate of Inspection, the Tribunal was correct in law in confirming the legality of the relevant reassessment proceedings initiated under Section 147(a) and not under Section 147(b)? 4. Whether, on the facts and in the circumstances of the case, the assessment and the proceedings purporting to be under Section I47(a) are without jurisdiction ? 5. Whether the Tribunal's decision regarding the validity of the proceedings under Section 147(a) in the present case is vitiated by irrelevant and inadmissible material and failure to consider the relevant material ? 6. Whether there is material for the Tribunal's conclusions that, (a) the alleged 'HUF existed in the relevant assessment year and had a joint nucleus', and (b) there existed an honest belief and material for the belief that the alleged income assessable in the hands of the HUF had escaped assessment in the present case? 7. Whether, on the facts and in the circumstances of the case, the present assessment and the relevant proceedings are illegal and void on ground of double assessment of the same income and/or the option to assess the same income in the hands of individual having been already exercised by the Department ? 8. Whether the Tribunal has acted contrary to law and principles of natural justice in proceeding to decide the case on the basis of an alleged report by the ITO, Special Circle, Amritsar, even though the assessee was neither confronted with it nor given any opportunity to have its say against the same ? 9. Whether, on the facts and in the circumstances of the case and having regard to the Tribunal's own directions that the basis and material relied upon by the Department for initiating the present reassessment proceeding against the alleged HUF should first be disclosed to the assessee, the Tribunal has acted contrary to law and principles of natural justice in adversely deciding the question of the validity of the relevant proceedings and not restoring that question to the lower authorities ?" ;