JUDGMENT Rajes Kumar, J.
1. The Tribunal has referred the following question under Section 256(1) of the IT Act (hereinafter referred to as "Act") relating to the asst. yr. 1986-87 for opinion to this Court :
"Whether, on the facts and in the circumstances of the case, the Tribunal was legally right in confirming the order of the learned CIT(A) who held that the AO was not having jurisdiction to make an assessment on AOP of two members ?"
2. The brief facts of the case are as follows :
The assessing authority issued notice under Section 148 of the Act to Sri Ashok Kumar Bharti, Sri Vijay Kumar Goel and Sri S.P. Garg, members of AOP, through Shri Ashok Kumar Bharti, 31, Phool Bagh Colony, Meerut, calling upon to furnish return of "income of the AOP consisting of Shri Vijay Kumar Goel, Shri S.P. Garg and you". This notice is dt. 15th Feb., 1988. The return of income was filed on 30th March, 1988 wherein income of Rs. 16,340 was disclosed. Assessment was completed by the AO on 30th March, 1988 at an income of Rs. 1,61,934 made on the AOP comprising of two persons only, namely, Shri Ashok Kumar and Shri Vijay Kumar Goel, when the name of Shri S.P. Garg though duly mentioned in the assessment order as member of the AOP, but it was scored off. The assessee filed appeal before the CIT(A).
The learned CIT(A) noted that the assessment made is without assumption of jurisdiction by the AO, inasmuch as notice under Section 148 was issued to an AOP of three persons while the assessment was framed on AOP of two persons. He held that the assessee to whom the notice was issued/served was different from the assessee on whom the assessment was made. The learned CIT(A) held that having not served notice under Section 148 on the AOP in whose name the assessment was made, the AO did not get jurisdiction to make assessment on the assessee. He, thus, cancelled the assessment. The Revenue came in appeal before the Tribunal, which upheld the order of the learned CIT(A). The Revenue has come in reference.
3. Heard Sri Shambhu Chopra, learned standing counsel for the Revenue, and Sri R.R. Agarwal, learned Counsel for the respondent-assessee.
4. Learned standing counsel submitted that merely because the notice was issued to AOP consisting of Shri Ashok Kumar, Sri Vijay Kumar Goel and Shri S.P. Garg and the assessment was completed in the status of AOP consisting of Shri Ashok Kumar and Sri Vijay Kumar Goel, the assessment order cannot be held invalid. He submitted that in pursuance of the notice, Shri Ashok Kumar appeared and participated in the assessment proceedings, therefore, a proper opportunity was given and hence, the order passed in the status of AOP consisting of Ashok Kumar and Vijay Kumar Goel is valid. He relied upon the decisions in the case of Rajmani Devi v. CIT (1937) 5 ITR 631 (All), Chatturam and Ors. v. CIT (1947) 15 ITR 302 (FC), CIT v. Kanpur Coal Syndicate , Estate of Late Rangalal Jajodia v. CIT , G. Murugesan & Brothers v. CIT and Swaran Kanta v. CIT.
5. Learned counsel for the assessee submitted that the notice under Section 148 of the Act was a jurisdictional notice and the assessing authority could assume jurisdiction to proceed against the assessee only when proper notice under Section 148 of the Act would have been issued. In the present case, the assessment order in the status of AOP consisting of Sri Ashok Kumar and Sri Vijay Kumar Goel was passed without any notice under Section 148 of the Act inasmuch as the alleged notice issued under Section 148 of the Act was not to the AOP consisting of Ashok Kumar and Vijay Kumar Goel, but to AOP consisting of Ashok Kumar, Vijay Kumar Goel and S.P. Garg. He submitted that mere participation in the assessment proceedings could not validate the proceedings which is ab initio, illegal and without jurisdiction for want of valid notice. In support of his contention, he relied upon the Full Bench decision of this Court in the case of Laxmi Narain Anand Prakash v. CST 1980 UPTC 125. He further submitted that the AOP is a separate legal entity taxable under the IT Act. He submitted that an AOP is constituted by more than one person with the object to earn profit, therefore, one person can form numbers of AOPs along with various persons and each AOP consisting of different members constitutes a separate legal entity liable to assessment. In support of his contention, he relied upon the decisions in the case of CIT v. India Balkrishna (1969) 39 ITR 546 (SC), Khan Sahib Mohd. Oomer Sahib v. CIT , CIT v. Bibhuti Bhusan Mallick and Ors., (1987) 165 ITR 107 (Cal), CIT v. Ishwar Singh & Sons , P.M. Sasikumar and Ors. v. CIT , Gokul Chand v. ITO and CIT v. V.K. Adinareyana Murty .
6. Having heard the learned Counsel for the parties, we have perused the order of the Tribunal and the authorities below and given our anxious consideration to the submissions. On the facts and circumstances, we are of the opinion that there is no error in the order of the Tribunal. It is a settled principle of law that the notice under Section 148 is a jurisdictional notice. It is not a notice for the regular assessment and on the issue of the notice under Section 148 of the Act, the assessing authority assumes jurisdiction to proceed and pass assessment order. Therefore, the issue and service of valid notice under Section 148 of the Act to the assessee against whom the action is being proposed to be taken and finally, the assessment order is being passed is essential. It is settled that none of the party can provide any jurisdiction to the authority and even the waiver on the part of the assessee to issue or the service of the notice would not confer jurisdiction to proceed. The notice under Section 148 of the Act is not a mere procedural requirement. It is a condition precedent to the valid assessment order [vide Kishan Chand v. CST 1971 UPTC 13, Laxmi Narain v. CST 1971 UPTC 217, Y. Narayana Chetty and Anr. v. ITO and Ors. , Mahabir Singh v. Narain Tewari AIR 1931 All 490 (FB), CIT v. Thayaballi Mulla Jeevaji Kapasi (Decd.) , CST v. Manchandra 42 STC 432, Sewa Lal Daga v. CIT (1965) 55 ITR 406 (Cal), Benarsi Silk Palace v. CIT (1964) 52 ITR 220 (All) and Bhagwan Saraogi Devi and Ors. v. ITO and Ors.].
7. In the case of Laxmi Narain Anand Prakash v. CST (supra), the Full Bench of this Court held that the service of the notice under Section 21 which is equivalent to the notice under Section 148 of the Act, is a condition precedent to assume jurisdiction and mere knowledge or participation in the proceedings will not validate the proceeding which is not proper.
8. In the case of Sikri Brothers & Co. v. CST 1979 UPTC 1490, this Court held as follows :
"Invalidity of the notice goes to the very root of the matter and when once it is found that the notice instead of being addressed to the dealer who was to be made liable for the escaped turnover was addressed to an entity which did not exist, whole proceeding stands vitiated in law and defect in notice was fatal to assumption of jurisdiction by the STO."
9. In the case of Gokul Chand v. ITO (supra), the Division Bench of this Court held that where a person has a dual capacity as an individual as well as Karta of HUF, it is necessary to specifically mention in the notice of reassessment, the capacity in which the assessee is sought to be reassessed. In the absence of status being mentioned in the notice, it was held invalid.
10. In the case of CIT v. Ishwar Singh & Sons (supra), the Division Bench of this Court held that the notice under Section 148 of the Act is a jurisdictional notice and unless such a notice is issued, the ITO does not get jurisdiction to make the assessment to a particular assessee.
In this case, the notice under Section 148 of the Act was issued in the status of an individual. Return was filed by the brother of the individual as a Karta of his HUF. The assessment in the status of HUF has been held invalid for want of valid notice under Section 148 of the Act.
11. In the case of P.N. Sasikumar and Ors. v. CIT (supra), the Division Bench of Kerala High Court held that the notice under Section 148 of the Act is a condition precedent to the validity of the reassessment. It has been held that the notice for reassessment issued to individual(s) not specifying whether it was issued to principal officer or member of AOP consisting of (5) and others, the assessment order made in the status of AOP consisting of (5) and others has been held invalid.
12. In the case of G. Murugesan & Brothers v. CIT (supra), the Supreme Court observed as follows :
"For forming "AOP", the members of association must be done together for the purpose of producing income and "AOP" can be formed only when two or more individuals validly combine together for certain purpose, hence, violation on the part of the members of the association is an essential ingredient."
13. In the case of CIT v. Indra Balkrishna (supra), the apex Court held as follows :
"It is enough for our purpose to refer to three decisions : In re, B.N. Elias and Ors. (1935) 3 ITR 408 (Cal); CIT v. Laxmidas Devidas and Anr. (1937) 5 ITR 584 (Bom); and In re, Dwarakanath Harischandra Pitale and Anr. (1937) 5 ITR 716 (Bom). In re, B.N. Elias (supra) Derbyshire, C.J. rightly pointed out that the word 'associate' means according to the Oxford Dictionary 'to join in common members or to join in an action'. Therefore, AOP must be one in which two or more persons join in a common members or common action and as the words occur in a section which imposes a tax of income, association must be one the object of which is to produce income, profits or gains."
14. In view of the above principle of law laid down by the various Courts, it is settled that the notice under Section 148 of the Act is a jurisdictional notice and unless a proper and valid notice is issued and served, jurisdiction to make the assessment cannot be assumed. Notice under Section 148 of the Act has been held as a condition precedent for a valid assessment. It has also been held that in the notice the correct status should be mentioned and if the person has a dual capacity, the correct status of a person against whom reassessment order is proposed to be made is to be mentioned in the notice under Section 148 of the Act and in the absence of a notice to the assessee against whom reassessment order is proposed, the said order is held to be invalid.
15. In the present case, the reassessment order was proposed to be made and has been made in the status of AOP consisting of Shri Ashok Kumar Bharti and Sri Vijay Kumar Goel, while admittedly, the notice was issued to the AOP consisting of Shri Ashok Kumar Bharti, Shri Vijay Kumar Goel and Shri S.P. Garg. Perusal of the assessment order also shows that the entire material which has been considered for making the reassessment was relating to Shri Ashok Kumar Bharti and Shri Vijay Kumar Goel and it has been held that they have carried on the business of coal jointly as an AOP and the name of Shri S.P. Garg was nowhere referred or considered. In this view of the matter, the assessment made in the status of AOP consisting of Shri Ashok Kumar Bharti and Shri Vijay Kumar Goel was without notice under Section 148 of the Act. The notice on the basis of which the assessment order is alleged to have been made was issued in the name of three persons, namely, Shri Ashok Kumar Bharti, Shri Vijay Kumar Goel and Shri S.P. Garg in the status of AOP which could not be made basis for making the assessment in the name of Shri Ashok Kumar Bharti and Shri Vijay Kumar Goel in the status of AOP. AOP is an independent entity. One person can form more than one AOP with a different person to carry on the business to earn profit and each such association is an independent identity for the purposes of the assessment under the Act. In the circumstances, in the absence of notice under Section 148 of the Act to the present assessee, the Tribunal has rightly held the assessment order passed under Section 147 read with Section 148 of the Act invalid.
16. In view of the foregoing discussions, the submission of the learned standing counsel has no force. The cases cited by the learned standing counsel are not applicable to the facts of the present case. In the case of CIT v. Kanpur Coal Syndicate (supra), proceedings were not relating to Section 34 of 1922 Act or Section 148 of 1961 Act. The cases of G. Murugesan & Brothers v. CIT (supra), Rajmani Devi v. CIT (supra) and Chatturam and Ors. v. CIT (supra) are not relevant to the issue involved in the present case.
In the result, the question referred to us is answered in the affirmative i.e., in favour of the assessee and against the Revenue.