Income Tax Appellate Tribunal - Chandigarh
Gift-Tax Officer vs Jagir Singh on 12 March, 1982
Equivalent citations: 1982 2 ITD 576 Chd
ORDER S.K. Chander, Accountant Member
1. This appeal by the revenue and cross-objection by the assessee are directed against the order of the Commissioner (Appeals), Jullundur, dated 23-6-1980, relating to the assessment year 1973-74. Before we set out the respective grievances of the parties in the appeal and the cross-objection, we record the facts which lie in a short compass.
2. Shri Bir Singh son of Shri Jodh Singh of village Jodhan, District Ludhiana, died on 1-8-1974. On 9-2-1979, the return of gift-tax was filed by son of Shri Jagir Singh, Banta Singh and Machhetar Singh, sons and legal heirs of Shri Bir Singh. The status declared in the return was that of a HUF. The GTO, during the course of assessment, noted that they were the legal heirs of Shri Bir Singh and also noted that there was a claim before him that the land was ancestral and the legal heirs received it through a Court decree dated 1-3-1973, by way of a family settlement. The GTO, however, rejected the claim made in the return by the assessee that it was a HUF because, according to him the Jat Sikh families are governed by the customary law. Not only this, the GTO adopted the status of an individual, as against the status of HUF shown in the return. It is common ground before us that no notice had been issued calling for a return in the status of an individual. The gift-tax assessment framed on 20-6-1979, on the basis of the return filed on 9-2-1979 in the status of HUF, has adopted the status of individual and the assessee is shown as "Shri Bir Singh S/o Shri Jodh Singh, village Jodhan, Distt. Ludhiana".
3. In appeal, the AAC had to consider the objection raised before him that the GTO was not justified in taking the status of an individual as against the status of HUF claimed in the return. According to him, the claim of HUF status was justified. However, he set aside the gift-tax assessment made by the GTO for the purpose of verifying whether the property in question was really ancestral and belonged to the HUF. There was an objection raised with regard to the assessment having been made on a dead person. On this issue, he observed that this contention was of no consequence because he had accepted the claim of the status of HUF and HUF never dies. Now, out of the above, the grievance of the revenue is that he erred in granting the status of HUF to the assessee without verifying whether the assessee had inherited the properties, before or after the coming into force of the Hindu Succession Act, 1956. In the cross-objection, the assessee in ground No. 1 has stated that without prejudice to other grounds taken by the objector before the AAC it is submitted that the learned GTO framed the assessment order on 20-6-1979 on a dead person, i.e., Shri Bir Singh, who died on 1-8-1974 and as such, the assessment is bad in law and a nullity, and should be annulled. In order to support this it has been pointed out in the grounds of cross-objection that the AAC in the case of the wealth-tax assessment of Shri Bir Singh has already annulled the wealth-tax assessment on this ground vide appeal Nos. 979 and 983-WTL/78-79, dated 2-6-1980.
4. Before us, the revenue contended that the AAC should not have allowed the status of HUF without verification of the relevant facts. It was further contended that, the question of status was not before the Tribunal and the Tribunal could not go beyond the scope of the appeal. Relying upon the ratio of the judgment in the case of CIT v. Sumantbhai C. Munshaw [1981] 128 ITR 142 (Guj.), it was contended that assessment on a dead person is not always a nullity though gross irregularity or inadvertence may be involved on the part of the assessing officer. The assessment would still be valid and effective qua the legal representatives. Replying to this, the learned counsel for the assessee submitted that the case relied upon by the revenue was entirely different on facts and, therefore, not applicable to the facts before us. It was also submitted that when the assessee files the return in a particular status, the GTO cannot change the status without calling for a return in that status. Since the return had been filed in the status of HUF and the assessment is framed in the status of an individual, it is bad in law in view of the judgment of the Chandigarh Bench of the Tribunal in the case of Inder Singh v. ITO [IT Appeal Nos. 743 to 745 of 1979, dated 31-1-1981]. It was further argued that the GTO was very much aware that Shri Bir Singh died long ago and he in fact was proceeding on the basis of the return filed by the legal heirs in that capacity. Therefore, his adopting the status of individual in the name of Shri Bir Singh, deceased, is a deliberate act and no omission or inadvertence is involved in this case which takes it even out of the ratio of the judgment relied upon by the revenue. The assessment on these facts on a dead person is apparently bad in law and deserves to be cancelled.
5. We have given careful consideration to the rival submissions and we find that we have to first determine whether the GTO could adopt the status of individual when the legal heirs had filed the return in the status of HUF. The revenue is of the opinion that we cannot go into this issue but at the same time it is making a grievance in Ground No. 1 that the AAC erred in granting the status of HUF to the assessee. It has been held by the Chandigarh Bench of the Tribunal in the case of Inder Singh (supra), cited on behalf of the assessee, that in view of the judgment of the Supreme Court in the case of CIT v. K. Adinarayana Murty [1967] 65 ITR 607, the ITO/WTO/GTO is not competent to assess an assessee in the status different from what is declared in the return without serving such an assessee with a notice calling for a return in the status that he wants to adopt. Thus, if the legal heirs had filed the return before the GTO in the status of a HUF and he wanted to assess them in the status of an individual by changing the status shown in the return, it was incumbent upon him in law to serve notice to file return in the status of an individual. It has not been shown to us that such a notice was served, calling for a return in the status of an individual. Therefore, the status adopted by him could not be taken for purposes of assessment and on this ground alone the assessment is bad in law.
6. Now, the GTO was abundantly clear in his mind that Shri Bir Singh had died and he was dealing with his legal heirs. This is crystal clear from the body of the assessment order made by him on 20-6-1979. Yet the assessment has been raised on Shri Bir Singh, deceased. This case, therefore, is clearly out of the ratio of the Gujarat High Court judgment in the case of Sumantbhai (supra). In that case, the person on whom the assessments were raised died after filing the returns, but in the case before us the return had itself been filed by the legal representatives long after the death of the deceased. They had not known during the course of assessment proceedings that the GTO is going to adopt the status of an individual as they have been making a claim that they constitute a HUF. Therefore, the deliberate act of the GTO in making an assessment on a dead person cannot be brought within the ambit of the ratio of the Gujarat High Court judgment. On this count also the assessment is bad in law.
7. We annul the assessment on each of the above counts. In the result, the appeal of the revenue is dismissed and the cross-objection of the assessee is allowed.
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