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Hari Prasad Gopi Krishna vs Commissioner Of Income Tax

High Court Of Judicature at Allahabad|30 November, 2004

JUDGMENT / ORDER

JUDGMENT Prakash Krishna, J.
1. The Tribunal, Allahabad, at the instance of assessee 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 the Tribunal was legally correct in holding that the proceedings had been validly initiated under Section 148 in the instant case ?"
2. The asst. yr. 1971-72 is involved in the present reference. A notice under Section 148 of the IT Act was issued to the assessee which was a branch of M/s Gopi Krishna & Co. The validity of the notice was unsuccessfully challenged before the ITO. The case of the assessee was that the notice was not issued in the correct name. It was issued in the name of Hari Prasad Govind Krishna, which is a branch of M/s Gopi Krishna & Co. The notice should have been issued in the name of head office, i.e., Gopi Krishna & Co. However, the said plea of the assessee found favour with the AAC. The Tribunal has reversed the order of the AAC and found that the notice was correctly issued to the assessee and the proceedings under Section 148 of the Act are valid.
3. Heard Shri Vikram Gulati, the learned counsel for the assessee and Shri Shambhu Chopra, the learned standing counsel for the Revenue.
4. It was submitted that the issuance and service of a valid notice on an assessee is sine qua non for initiation of reassessment proceedings under Section 147 of the Act. The assessee being a branch office of M/s Gopi Krishna and Co., the notice issued in the name of Hari Prasad Gopi Krishna was, thus, invalid. Reliance has been placed by him on the following cases :
(i) ITO and Ors. v. Chandi Prasad Modi ;
(ii) Madan Lal Chowdhury v. ITO ;
(iii) Madan Lal Agrawal v.. CIT ; and
(vi) CIT v. Bibhuti Bhushan Mallick (1987) 165 ITR 107 (Cal).
5. In support of the submission that the notice was validly issued in the name of assessee, the learned standing counsel for the Department has placed reliance on the following two cases :
(i) CIT v. S. Raman Chettiar ; and
(ii) Mulchand Rampuria v. ITO .
6. There is no dispute vis-a-vis the status of the assessee. Therefore, the reassessment proceedings were validly initiated.
7. We have given careful consideration to the respective submissions of the counsel for the parties. The Tribunal has quoted certain portion from the partnership deed of the assessee. It is apt to quote them here also as it has some relevancy to the controversy involved in the present case :
"And whereas the aforesaid first, second and third parties agreed amongst themselves to carry on the business in gold ornaments and silver bullion with effect from Dashehra St, 2026 under the name and style of M/s Gopi Krishna & Co., Hindi Bazar, Gorakhpur and M/s Hari Prasad Gopi Krishna, Hindi Bazar, Gorakhpur (for gold ornament business) on various terms and conditions which are necessary to be reduced into writing so that there may not arise any dispute in future."
The partnership deed itself states the two names of the assessees as mentioned above. It also appears that the name of Hari Prasad Gopi Krishna was for gold ornaments business. In this factual background, the Tribunal has recorded a finding that there was no dispute with regard to the status of the assessee to whom the notice was issued. Indisputably, the name of the assessee's branch finds place in the notice and it is not its case that there is any other person such as Hari Prasad Govind Krishna. The partnership deed also supports the contention of the Department that the assessee-firm was running the business in two names.
In this view of the matter, it cannot be said that the notice was not correctly addressed to the assessee.
8. The cases relied upon by the learned counsel for the assessee are distinguishable on facts and have no bearing to the controversy involved in the case in hand.
9. The Chandi Prasad Modi's case (supra) is an authority for the proposition that the ITO's jurisdiction to reopen an assessment order would depend upon the issuance of a valid notice. If the notice issued by him is invalid for any reason then the entire proceedings that would be taken by him pursuant to such notice would be void for want of jurisdiction. A close analysis of the facts of Chandi Prasad Modi's case (supra) shows that the Department had accepted the partial partition of the HUF. The business was being carried on by the HUF and there was also a registered partnership firm under identical names of which the Department had the knowledge. In view of these facts, it was held that at the relevant time there were two concerns of the same name and at the same address. The ITO had full knowledge of the separate identity of the two concerns. But inspite of it, there was neither anything in the notice nor otherwise to show of which of the two concerns, the partnership firm or the HUF, the notice was directed. On these facts the notice was held to be illegal. The said proposition of law has no application in the present case inasmuch as here the assessee is one person and carrying on one business in two names. Also there is no dispute vis-a-vis with regard to the status of the assessee.
10. For the same reasons Madan Lal Chowdhury's case (supra) is also distinguishable.
11. The case of Madan Lal Agrawal (supra) is also inapplicable to the facts of the present case. The notice was intended to be issued to the assessee in the status of HUF. But the notice was not addressed to the assessee which was an HUF, an entity different from the assessee (individually). This Court took the view that the notice was vague and as such invalid. The vagueness of the notice did not require to file the return in the status of HUF. The proceedings initiated under Section 147(a) of the Act was held invalid against the assessee-HUF. Since there was a dispute of status, notice was issued in respect of a particular status of an assessee but the income was sought to be reassessed of the assessee of different status was held invalid. This case is also distinguishable as there is no dispute vis-a-vis the status of the assessee. On the same parity of reasoning the case of Bibhuti Bhushan Mallick (supra) is also not applicable. The assessee, Bibhuti Bhushan Mallick was assessed as HUF. The notice was issued to reopen the assessment in the name of Pancham Mallick and Bibhuti Bhushan Mallick.
12. In view of the foregoing discussion, we find that the notice was validly issued in the name of the assessee. The finding of the Tribunal on this issue is legally correct. We answer the question of law referred to us in affirmative, i.e., against the assessee and in favour of the Department. However, there shall be no order as to costs.
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Title

Hari Prasad Gopi Krishna vs Commissioner Of Income Tax

Court

High Court Of Judicature at Allahabad

JudgmentDate
30 November, 2004
Judges
  • R Agrawal
  • P Krishna