JUDGMENT
1. On an application under Section 256(1) of the IT Act, 1961, the following questions are referred for the opinion of this Court :
Question in RA No. 57/Jp/1981
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the assessment including the property income upto the period 17th March, 1967, was made on the assessee in the status of individual and not as legal heir of late Maharaja Shri Harishchandraji, and thereby, ordering exclusion of property income from the assessment relating to asst. yr. 1967-68.”
Question in RA No. 66/Jp/1981
“Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the receipts attributable to the portion (the word ‘operation’ wrongly used by the Revenue in the proposed question No. 3) of the palace, which remained in the occupation of the assessee are exempt under Section 10(19A) of the IT Act, 1961.”
Thereafter, a miscellaneous application has been moved and that miscellaneous application was allowed and the question referred in RA/66/Jp/1981 was withdrawn.
Therefore, before us the only question which we have to answer is question referred in RA No. 57/Jp/1981.
2. For the asst. yr. 1967-68 returns were filed by Shri Inderjeet Singhji, legal heir of late HH Shri Harish Chandraji. In response to the notice under Section 143(2), the directions are not complied with, then AO has passed the order under Section 144 and he assessed the income at Rs. 54,250. Subsequently it was also brought to the notice of the AO that late HH Shri Harish Chandraji expired on 17th March, 1967, year ending 31st March, 1967, for the asst. yr. 1967-68. Therefore, the income should be taxed in the hands of legal heir of late HH Shri Harish Chandraji and income should not be taxed taking the status of Inderjeet Singh as ‘individual’.
3. Thereafter an order under Section 154 was passed by the ITO on 17th March, 1979 correcting its earlier order and clarified that in the earlier order passed under Section 144, the status of Shri Inderjeet Singhji was taken as ‘individual’ but as Inderjeet Singhji has filed the return as legal heir of HH Shri Harish Chandraji, the assessment should have been read as has been passed in the case of Shri Inderjeet Singhji, legal heir of late HH Shri Harish Chandraji, Jhalawar.
4. The Tribunal did not, accept it and said that in the assessment order, the status of Shri Inderjeet Singhji has been taken as ‘individual’, therefore, the income of late HH Shri Harish Chandraji uptil 17th March, 1967, cannot be taxed in the hands of the assessee Shri Inderjeet Singhji in his ‘individual’ capacity and he directed that the income of late HH Shri Harish Chandraji uptil 17th March, 1967, should be excluded from the income of late HH Shri Harish Chandraji individual.
5. It appears that the Tribunal has committed error in taking the view that
income uptil 17th March, 1967, be excluded from the assessment of income of
Inderjeet Singhji, legal heir of late HH Shri Harish Chandraji, Jhalawar on the
ground that income has been taxed taking the status of assessee, Inderjeet
Singhji as ‘individual’.
6. Heard learned counsel for the parties.
7. We perused the material on record. The first order: for the asst. yr. 1967-68 was passed by the AO under Section 144 on 24th March, 1972. The perusal of that order shows that though in the assessment order, the status has been shown as ‘individual’ but against the name of the assessee, in the assessment order, it has been clearly stated that assessee Inderjeet Singhji is the legal heir of late HH Shri Harish Chandraji, Jhalawar, therefore, assessee was not Inderjeet Singh in his ‘individual capacity’ but he was the legal representative of HH Shri Harish Chandraji, Jhalawar and even the confusion regarding status has been removed by the ITO in his order dt. 17th March, 1979 and in order under Section 154.
The ITO has clarified that the status of Shri Inderjeet Singhji has been taken as ‘individual’ while Shri Inderjeet Singhji is legal heir of late HH Shri Harish Chandraji so far income of HH Harish Chandraji uptil 17th March, 1967, is concerned. Therefore, the assessment for the income of HH Shri Harish Chandraji uptil 17th March, 1967 be taken as income taxable in the hands of Shri Inderjeet Singhji, as legal heir of HH Shri Harish Chandraji. Therefore, there is no need to exclude the income while it has been categorically stated that income of late HH Shri Harish Chandraji prior to his death i.e. uptil 17th March, 1967, is taxable in the hands of legal representative of HH Shri Harish Chandraji i.e., Inderjeet Singhji. The Tribunal, therefore, has committed error in excluding the income which was taxable in the hands of late HH Harish Chandraji prior to his death. Now that has been taxed in the hands of Shri Inderjeet Singhji as legal representative of late HH Shri Harish Chandraji.
8. There is nothing wrong in the order of AO. The AAC as well as the Tribunal both have committed error in directing for exclusion of the income taxable in the hands of Shri Inderjeet Singhji legal representative of late HH Shri Harish Chandraji.
9. In the result, we answer the question referred in negative i.e. in favour of the Revenue and against the assessee.
10. It is also made clear that the income from the estate property left by HH Shri Harish Chandraji has rightly been taxed in the hands of Shri Inderjeet Singhji as legal heir of late HH Harish Chandraji in the asst. yr. 1967-68.
The reference so made stands disposed of accordingly.