JUDGMENT
1. This is an income-tax reference under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), and the following questions of law have been referred by the Tribunal for answer of this court, which read as under :
“(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessment order passed by the Income-tax Officer was, ab initio, void for omission to include the legal heirs of the deceased in the assessment order ?
(2) Whether the Tribunal was right in setting aside the order of the Appellate Assistant Commissioner and in not passing further order directing the Income tax Officer to proceed with the assessment against the legal representative of the assessee ?”
2. The brief facts giving rise to this reference are thus ; The assessee, the late H. C. Gupta, died on October 28, 1976, and the Income-tax Officer, Jabalpur, completed the assessment for the year 1970-71 on March 24, 1977, on an income of Rs. 45,000 without impleading the legal representatives of the assessee. Aggrieved against the order of the Income-tax Officer, Smt. Sundarbai Gupta, widow of the deceased assessee, filed an appeal before the Commissioner of Income-tax (Appeals) with the contention that the assessment was void ab initio since passed against a dead person and, therefore, it should be quashed. The Commissioner of Income-tax (Appeals) held that the assessment was completed on March 24, 1976, when the assessee did not appear before the income-tax Officer and nothing more remained to be done except passing the assessment order. Thus, the Commissioner of Income-tax (Appeals) upheld the order of the Income-tax Officer. Thereafter, an appeal was preferred before the Tribunal and the Tribunal quashed the assessment order and held that the assessment order was ab initio void as passed against a dead person. It was observed that the assessment had not been completed on March 24, 1976. It was also observed that in fact, on March 23, 1976, the Income-tax Officer required the assessee to furnish certain information and the case was fixed for hearing on March 24, 1976. The next date, i.e, on March 24, 1976, the Income-tax Officer had recorded that none appeared and assessed the income of the deceased assessee at Rs. 45,000. Therefore, it was held that the case was not fixed on March 24, 1976, for final disposal, but no proceedings took place and as such it cannot be said that the proceedings were concluded and only the assessment order remained to be passed. Therefore, the Tribunal held that the proceedings were incomplete ; hence under the provisions of Section 159(2) of the Income-tax Act, it was incumbent on the Income-tax Officer to have brought the legal heirs of the deceased assessee on record, but it was not done. Therefore, the Tribunal found that the order passed by the Income-tax Officer is ab initio void and the order passed by the Commissioner of Income-tax in appeal filed by the assessee is also bad for remanding the case back to the Income-tax Officer for de novo assessment. Hence, the Tribunal allowed the appeal. Thereafter, the Revenue approached this court for calling for the reference under Section 256(2) of the Income-tax Act, and
on that basis, reference was called and the aforesaid questions of law were framed for answer of this court.
3. We have heard learned counsel for the parties and perused the records. It is an admitted fact that the assessee died before the proceedings for assessment were completed. Since the proceedings had not been completed and it was yet to be completed, therefore, it was incumbent under Section 159(2) of the Act on the Income-tax Officer to have brought the legal representative of the deceased on record and proceeded from the stage where it was left at the time of death of the deceased. According to the findings of the Tribunal, the proceedings had not been completed before the death of the assessee ; therefore, the Tribunal has rightly held that the assessment should be completed under Section 159(2) of the Act. In this view of the matter, we are of the opinion that the view taken by the Tribunal is correct and both the questions are answered against the Revenue and in favour of the assessee.
4. Learned counsel for the Revenue has submitted that no order has been passed by the Tribunal for assessing the liability of the legal representative of the deceased assessee though the Tribunal in para 4 of the order has very clearly observed :
“In such circumstances, natural justice demands that the assessment should go back to the Income-tax Officer to give sufficient opportunity to the legal representatives of the deceased for stating their case.”
5. Therefore, the Tribunal was mindful of the fact that in such a situation, the case has to be remanded ; though the Tribunal has not very specifically mentioned this part presumably the Tribunal may have credited this much to the Income-tax Officer that he will initiate the action under Section 159(2) of the Act. Be that as it may, if it is now possible under the law, then it is open for the Income-tax Officer to proceed according to law under Section 159(2) of the Act. This reference is answered against the Revenue and in favour of the assessee.