R.R. Rastogi, J. - (1.) THE respondent, M/s. Ishwar Singh and Sons, was proprietary business of one Ishwar Singh. On his death in January, 1950, his eldest son, Arjun Singh, carried on that business and he was assessed on its income as an individual up to the assessment year 1957-58. THEreafter, no assessment was made for several years till the ITO received an information that business in the name of M/s. Ishwar Singh and Sons was still being carried on and it was having taxable income. On receipt of that information the ITO issued a notice under Section 148 of the I.T. Act, 1961 (hereinafter referred to as "the Act"), for the assessment years 1963-64 to 1966-67. In the present reference we are concerned with the assessment year 1963-64 only. For this year the notice was addressed to Sri Arjun Singh Johar, proprietor of M/s. Ishwar Singh and Sons. It was served on one Sri Maheshwar Singh on September 11, 1967. Pursuant to that notice Sardar Sampuran Singh, younger brother of Arjun Singh, filed a return in the name of M/s. Ishwar Singh and Sons, proprietor, Sardar Sampuran Singh. THE assessment was made on the respondent-assessee taking his status as that of an HUF.
(2.) THE assessee appealed to the AAC and challenged the validity of the notice on the ground that the notice had been issued to Arjun Singh who had no connection with the assessee-HUF since he had separated from the family in 1959 and hence no assessment could be made on the assessee on the basis of that notice. THE AAC accepted that contention and quashed the assessment. THE department took the matter in appeal before the Income-tax Appellate Tribunal. THE submission made on behalf of the department before the Tribunal was that the notice had been issued to the HUF and it was so understood by the assessee and hence the notice was not invalid. Since Arjun Singh was the eldest son of Ishwar Singh and had succeeded him in his business, notice for the assessment year under consideration was issued to the assessee through him. It was contended that the only mistake in the notice was that instead of Sampuran Singh, karta of the family, the name of Arjun Singh was mentioned. THE Appellate Tribunal did not accept this submission and found that there was nothing on the record to indicate that the ITO had intended to issue the notice to the assessee-HUF. THE matter was to be judged from the surrounding circumstances and it was found that the notice had been addressed to Sri Arjun Singh Johar, proprietor of M/s. Ishwar Singh and Sons. In the opinion of the Appellate Tribunal the way in which the notice had been addressed suggested that it had been addressed to Arjun Singh Johar, individual, and the last assessment, that is, for 1957-58, had been made on Arjun Singh in the status of an individual. In these circumstances, it could not be believed that the ITO intended to issue the notice to the assessee in the status of HUF and in any case there was no evidence to support that contention. It may be noted that the Appellate Tribunal placed reliance on the decision of the Supreme Court in CIT v. K. Adinarayana Murthy [1967] 65 ITR 607. In the result, the order of the AAC was confirmed. Now, at the instance of Commissioner of Income-tax in this reference under Section 256(1) of the Act, the following question has been referred to this court for its opinion; " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in upholding the Appellate Assistant Commissioner's order cancelling the assessment for the assessment year 1963-64? " On the facts found by the Appellate Tribunal it would appear that the notice under Section 148 of the Act had been issued to Arjun Singh Johar, proprietor of M/s. Ishwar Singh and Sons, in the status of an individual and the return on the basis of which the assessment was completed was filed by Sardar Sampuran Singh, karta of his HUF, M/s. Ishwar Singh and Sons. Now, Section 148(1) of the Act provides : " Before making an assessment, reassessment or recomputation under Section 147, the Income-tax Officer shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under Sub-section (2) of Section 139 ; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that section."
(3.) NO standard form is prescribed for a notice under this section. All that it requires is that a notice consisting of all or any of the requirements which may be included in a notice under Section 139(2) shall be sent. It hardly needs mention that for the validity of an assessment under Section 147 the issue of a notice under this section is a condition precedent. Hence, if no notice is issued or if the notice issued is invalid or is not served in accordance with law, the assessment would be bad. Thus, the question which falls for our consideration is as to whether the assessment made on the assessee on the basis of the return filed by Sardar Sampuran Singh, karta of the HUF, when the notice under Section 148(1) had been issued to Sardar Arjun Singh, proprietor of M/s. Ishwar Singh and Sons, was valid in law ? It was submitted before us on behalf of the revenue by Sri R.K. Gulati that since for the year under consideration the assessment could have been made by March 31, 1968, the return filed by the assessee on September 29, 1967, should be treated as a return filed under Section 139(4) of the Act and the assessment made on its basis was perfectly valid in law. Reliance was placed in support of this contention on the decision of the Supreme Court in CIT v. S. Raman Chettiar [1965] 55 ITR 630. In that case, the assessee, an HUF, had not filed any return for the assessment years 1944-45 and 1945-46. On April 3, 1948, the ITO issued notice under Section 34 of the Indian I.T. Act, 1922, for both the assessment years. At that time it was not necessary to obtain the sanction of the Commissioner and none was obtained. For the assessment year 1944-45, the assessee filed a return on September 4, 1948, showing an income of Rs. 4,053 which was below the HUF taxable limit of Rs. 7,200. The ITO hence dropped the proceedings for that year. For the assessment year 1945-46 also, the assessee filed a return and the ITO passed an order on October 27, 1950, determining the net taxable income at Rs. 1,20,603. In second appeal, the Appellate Tribunal held that out of the profits of Rs. 79,760 arising from the sale of certain properties, Rs. 33,000 was assessable in the assessment year 1944-45 and it was observed that the ITO was at liberty to take such action as he might be advised about that liability. This order was passed on November 19, 1952, and after having obtained the sanction of the Commissioner, the ITO issued a notice under p. 34 for the assessment year 1944-45 on February 27, 1953. The validity of that notice was challenged. That contention was repelled by the revenue authorities as also by the Appellate Tribunal. On a reference, the High Court of Madras took the view that notwithstanding that the return filed by the assessee on September 4, 1948, was the result of an invalid notice, the return itself could not be ignored or disregarded by the department and the department could not issue a further notice under Section 34(1)(a) on the assumption that there had been an omission or failure on the part of the assessee to make a return of his income under Section 22. There was an appeal by special leave filed before the Supreme Court which confirmed the view taken by the High Court. The ratio laid down by the Supreme Court was (p. 636); " We think that some confusion has crept into this branch of the income-tax law by the use of the words 'voluntary return' and a 'non-voluntary return'. Section 23(3) does not use this expression and whatever the impelling cause or motive, if a return otherwise valid is filed by an assessee before the receipt of a valid notice under Section 34, it is to be treated as a return within Section 22(3), for, it falls within the language of the sub-section." ;