Prakash Krishna, J. - (1.) The Tribunal, Allahabad, at the instance of the IT Department has referred the following question of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as the Act) for opinion to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that neither a notice under Section 148 of the IT Act, 1961, had been issued to the assessee nor it had been validly served ?"
(2.) The asst. yr. 1964-65 is involved in the present reference. The brief facts of the case are as follows : The proceedings giving rise the present reference arose out of reassessment proceedings under Section 147 of the Act. There was a Hindu joint family known as M/s Shital Prasad Kharag Prasad. This family consisted of Raja Sir Moti Chand, his younger brother, Gokul Chand, the sons of latter and the sons of predeceased brother, Shri Mangal Prasad. Raja Sir Moti Chand who was originally the Karta of the family died in 1934 leaving no male issue and was succeeded by Shri Gokul Chand as Karta, who also died in 1958. Ultimately, Shri J.B. Gupta became the Karta of the family. The family was enjoying income from business, house property and Zamindari properties spread over at different places including Varanasi, Delhi and Calcutta. After death of Sir Moti Chand in 1934, the business of family virtually came to a close and a separation took place between the two branches; one consisting of Shri Gokul Chand and his sons and the other consisting of Shri J.B. Gupta and sons. A dispute had arisen among the family members which led to the filing of the suit No. 49 of 1936 by Shri J.B. Gupta against his uncle, Shri Gokul Chand, in 1936. A preliminary decree for partition was passed. Ultimately, the matter went before the Supreme Court in appeal being MCA No. 1219 of 1969. One of the points involved was the date of separation. The matter was referred to arbitrator by the Supreme Court. On 29th April, 1973, the arbitrator gave the award which was confirmed by the Supreme Court on 18th July, 1973. The effect of this award was that the family was disrupted on the above date. The ITO on 27th April, 1976, passed an order under Section 143(3)/171 of the Act regarding the fact of partition of 18th July, 1973.
(3.) In the assessment proceedings for the asst. yr. 1967-68, a question arose with regard to the amount of capital gains in respect of property No. 22, Harding Avenue, let out to Union of India on requisition since 1942, for the purposes of establishing a Women's Polytechnic. The said property was acquired by the Land Acquisition Officer under the provisions of Land Acquisition Act, by the award dt. 26th Oct., 1966, which was confirmed by the Collector on 5th Dec., 1966. The ITO charged the capital gains on the said property in the asst. yr. 1967-68 as he was of the opinion that the date of award of the Land Acquisition Collector is the relevant date for charging the capital gains. However, this part of the order of the ITO was set aside by the Tribunal by the order dt. 20th June, 1974. The ITO found that the capital gain is chargeable with reference to the date when the possession of the property was transferred, in view of Section 45 of the Act. The transfer of property in the present case took place on 20th Dec., 1963, and, therefore, the ITO felt that the capital gains were taxable in the asst. yr. 1964-65. In the original assessment proceedings for the asst. yr. 1964-65, no capital gain was charged on such profit. After obtaining the Board's approval, a notice under Section 148 of the Act was issued on 20th of August, 1976. The said notice was addressed to M/s Shital Prasad Kharag Prasad, Azmatgarh Palace, Varanasi, and was served on 27th of August, 1976, on one Shri B.D. Agrawal Who had been looking to the affairs of the family from time-to-time and has a written authority in his favour from Shri J.B. Gupta. It may be noticed here that Shri J.B. Gupta had died on 13th Aug., 1974, consequently a plea was raised that after the death of Shri J.B. Gupta, no notice on his behalf could be received or served by Shri B.D. Agrawal whose authority had come to an end on account of the death of Shri J.B. Gupta. However, return was filed in pursuance of the notice by Shri Rajkumar on 7th of January, 1977.;