ORDER
Egbert Singh, Accountant Member
1. The appeal is by the assessee contending that the CIT(A) erred in holding that the notice of demand not signed by the ITO, is valid notice under Section 292B and that the CIT(A) had relied on a decision which was not relevant to the instant case,
2. Briefly speaking for the assessment year 1975-76, the assessing officer initiated proceedings under Section 147 and notice under Section 148 was issued. Notice was served and the return was filed. The ITO fixed the case for hearing under Section 142(2) and made the assessment ultimately under Section 143(3) read with Section 147(b). The income was computed as per assessment order at Rs. 3,13,800. The assessee was assessed as registered firm with three partners. After considering the firm’s tax, the balance of the income was distributed to the partners in their respective shares.
3. Thereafter, the assessee alongwith other grounds of appeal contended before the CIT(A) that the notice of demand accompanying the order of assessment was not signed by the ITO and as such the same was void. The assessee also challenged the initiation of the proceedings under Section 147. The other grounds of appeal were taken on merits also.
4. The CIT(A) heard the assessee and sustained the action of the ITO under Section 147(b) and the inclusion of Rs. 28,859 was sustained.
5. The CIT(A) dealt also with the point raised by the assessee that the notice of demand was unsigned and, therefore, the order was invalid. The assessee relied on the decisions of the Hon’ble Madhya Pradesh High Court in the case of Umashankar Mishra v. CIT [1982] 136 ITR 330 and also decided by the Hon’ble Assam High Court in Murlidhar Jalan v. ITO [1961] 41 ITR 80. The CIT(A) found that the decision in the case of Murlidhar Jalan (supra) was not relevant to the case because Section 292B was not on the statute at that time. In respect of the decision in the case of Umashankar Mishra (supra) relied on by the assessee, the CIT(A) stated that in that Madhya Pradesh case, penalty notice was unsigned and the Hon’ble High Court was of the opinion that this unsigned penalty notice was not curable under Section 292B as no opportunity of hearing was given. The CIT(A) found that the facts of the case were distinguishable. He, on the other hand, relied on the decision of the Hon’ble Karnataka High Court in the case of CIT v. R. Giridhar [1984] 145 ITR 246/17 Taxman 120 in which amongst other things, it was stated that tax calculation was made on a separate sheet of paper which was unsigned. It was held that since the assessment order was signed and the calculation sheet was based on that, there was no defect. The CIT(A) noted that if it was a defect, it was curable under Section 292B. In the circumstances of the case, the CIT(A) was of the view that in the present case, defect if any, was curable under Section 292B and this ground of appeal by the assessee cannot be accepted. The appeal by the assessee stood dismissed. Hence, this appeal by the assessee.
6. Before the Appellate Tribunal, the assessee has challenged the decision of the CIT(A) that the notice of demand not signed by the ITO was valid under Section 292B and that the decision/relied on by the CIT(A) was not relevant to the instant case. It is argued at length by the assessee’s learned counsel that on proper appreciation of the facts, vis-a-vis, the provisions of law in this respect as well as the ratio of the decisions relied on by the assessee, the CIT(A) committed an error on facts and in law in coming to the above conclusion. It is also submitted that not only the demand notice received was not signed by the ITO, but copy of the assessment order also was not signed although computation of income, computation of tax etc., were incorporated. After hearing the parties, the Appellate Tribunal adjourned the case in order to enable the learned Departmental Representative to bring the assessment records for verification. The learned Departmental Representative, on the next hearing, produced those records and furnished photostat copy of the original demand notice under Section 156, dated 29-10-1979 which contained the signature of the Assessing Officer. The assessment order as well as computation of tax contained the signature of the Assessing Officer. Photostat copies of these are placed in the paper-book and copies were given to the other side.
7. It is submitted by the assessee’s learned counsel that as far as the assessment records are concerned, the same are kept by the department, on which the assessee lias no control and no comment was given on those materials placed by the learned Departmental Representative before us. But the assessee’s learned counsel reiterates his stand that not only the demand notice but also the assessee order given to the assessee have not been signed. It is, therefore, urged that in the circumstances, the notice was void and cannot be acted upon. It may be mentioned here that before the CIT(A), the assessee had raised submissions in respect of the initiation of the proceedings under Section 147 as well as the addition etc., on merits. The CIT(A) has discussed above did not accept the contentions of the assessee in this respect also. But before the Appellate Tribunal, the assessee has taken only the above ground that the notice of demand was not signed and that the case law relied on by the CIT(A) was not applicable. It is seen that the reassessment was completed by the ITO under Section 143(3) read with Section 147(b). The CIT( A) did not accept the point of appeal by the assessee regarding the initiation of proceedings nor the addition of the amount made. In other words, the initiation of reassessment proceedings as well as the reassessment order are final and conclusive. In other words, the assessee before us did not challenge the reopening of the assessment nor the computation of income and the tax as computed thereon. That is to say upto the stage of reassessment as well as recomputation of tax, there is no dispute by either side. It can well be said that the reassessment order and the computation thereof was proper and valid.
8. The present dispute before us, however, is that the notice of demand received by the assessee was not signed by the ITO. The assessee, therefore, feels aggrieved and raises the contention that in view of this fact, the demand notice was void. Assuming that the notice of demand, which was unsigned, was void as such, then as a consequence, the assessee could not be treated as defaulter and no recovery proceedings could be started against the assessee. Section 156 of the Income-tax Act, 1961, provides that when any tax, interest, penalty, fine or any other sum is payable in consequence of any order passed under the Act, the ITO shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. It does seem that the notice of demand under Section 156 is a consequential action to be taken by the ITO as a result of any order passed under the Act in which any tax, interest, penalty etc., is determined to be payable by the assessee and once such tax, interest etc., is computed, is determined to be payable, then the ITO has the statutory obligation to serve on the assessee a notice of demand intimating the assessee that so much amount has been determined to be payable by the assessee which has to be paid within the specified period. Thus, it can be said that the notice of demand under Section 156 is a consequential notice as a result of the order passed by the ITO under Section 143(3)/147(b). The notice under Section 156 cannot be equated with the notice required to be issued under Section 148 of the I.T. Act, 1961 or Section 34 of the Indian Income-tax Act, 1922, with all the rigorousness of the requirement before issuance of such notice. Before notice under Section 148 is issued, certain pre-conditions are to be specified. The issuance of the notice under Section 148, would vest the ITO with a jurisdiction to start or re-commence the assessment proceedings in accordance with the provisions of the relevant section. There are various authorities on this point which we need not mention here as this is a settled principle of law. Unless a valid notice under Section 148 is issued, the ITO would not have jurisdiction to start the reassessment proceedings but before the assessment order is passed, notice under Section 148 should be served on the assessee. For this proposition, we may refer to the decision oftheHon’ble Supreme Court in the case of R.K. Upadhyayav.Shanabhai P. Patel [1987] 166 ITR 163/33 Taxman 229. But issuance of notice under Section 156 is only consequential action statutorily required to be taken by the ITO, intimating the assessee about the liability which has been determined. Of course, unless a valid notice is issued and served on the assessee, the assessee could not be treated as defaulter and recovery proceedings would not lie.
9. The assessee has placed reliance on the decision in the case of B.K. Gooyce v. CIT [1966] 62 ITR 109 (Cal.), in which it was held that the irregularity of serving a notice under Section 34 of the Old Act which did not contain the signature of the ITO was not valid and cannot be waived by the assessee or his counsel as the irregularity is not one of merely procedural nature and service of valid notice is necessary to invest the ITO with jurisdiction to take proceedings under the said section. The facts of the present case as narrated briefly above is thus distinguishable. In fact, in the present case the initiation of proceedings under Section 147(b) was sustained by the CIT(A) and is not now in appeal before us.
10. The assessee’s learned counsel has further placed reliance on the decision in the case of Umashankar Mishra (supra) in which a notice asking the assessee to show cause why penalty should not be imposed under Section 271(1)(a) was not signed by the ITO. It was held by the Hon’ble Madhya Pradesh High Court that signature is not a mere inconsequential technicality. It was observed that Section 282 of the Act provides that notice under this Act may be served on the person named therein as if it were a summon issued under the Civil Procedure Code. In that Madhya Pradesh High Court case, it was held that the notice to show cause should be signed by the ITO and the omission to do so invalidated the notice. It is seen that inthecaseof Umashankar Mishra (supra) the assessee was asked to show cause why penalty should not be imposed under Section 271(1)(a). In other words, the proceedings for imposition of penalty is started and the assessee has to be informed as to what was the charge or offence which was committed by the assessee, who was sought to be penalised. In the instant case, notice under Section 156 is not to call upon the assessee to show cause or challenge the computation of income or calculation of tax thereon. But it is an intimation to the assessee that the income was so computed on which tax was worked out and the assessee is informed that he should pay the same. In fact, the assessee in the present case accepted that notice, though unsigned, alongwith other enclosures on the basis of which an appeal was filed by him before the CIT(A). Filing of the appeal under Section 246 would be valid, only after the assessee has been served with a notice etc., against which the assessee may raise any ground of appeal. In other words, the assessee before us has accepted the notice to be a proper one and that was why appeal was filed which was disposed of by the CIT(A) as indicated earlier on the basis of which the present appeal has been brought before the Appellate Tribunal. Of course, it can be said that accepting a wrong notice cannot be treated or assumed that the assessee has waived the irregularity or otherwise or such notice. As mentioned above, the learned Departmental Representative has stressed the point that the assessment order as well as the computation of the tax and also the notice of demand under Section 156 were signed by the assessing officer concerned at that time, copies of which have been given in the paper-book, as stated earlier. It thus can be seen that the assessment order and the notice of demand supplied to the assessee are copy of the original assessment order and copy of the original demand notice under Section 156. The fact that theoriginal assessment order and the original noticeof demand Under Section 156 having been signed as indicated above has not been challenged before us. In the present case, a demand of Rs. 68,994 appears to have been raised as payable by the assessee as per demand notice. Obviously, the ITO must have supplied the challans for depositing of the money. The Bench raised a query whether challan supplied to the assessee was also unsigned. But the Bench was informed that information cannot be given as payment must have been made separately. Ordinarily, challans must have been signed and appropriate columns having been filled up and thereby money was received by the Bank.
11. In the impugned order, the CIT(A) has placed reliance on the decision in thecase of R. Giridhar (supra) in which amongst other things, it was observed that determination of the tax payable by the assessee in the assessment order is mandatory and non-compliance with the provision would vitiate the assessment order. This dispute is not before us. It was further held in that case that where the assessment order passed by the ITO contained only the computation of income, which was signed by the ITO, but the computation of tax was made on a separate sheet of paper, which was not signed by the ITO, which was held as forming part of the assessment order, it was held that the assessment order could not be said to be invalid under Section 143(3). it was indicated that the assessment order was made after the introduction of Section 292B by the Taxation Laws (Amendment) Act, 1975. According to the assessee, the CIT(A) has wrongly relied on the decision in the case of R. Giridhar (supra) as the facts of the present case were different. In the present case, on the basis of the materials placed before us, it is seen that office copy of the assessment order as well as the demand notice were signed but the copies supplied to the assessee were not signed. As stated earlier, notice under Section 156 is issued in consequence of passing of a valid assessment order. In our opinion, the CIT(A) did not commit an error in holding that the notice under Section 156 was not invalid as any omission, mistake in the return, notice etc., would not be invalid, if such notice etc., is in substance and effect in conformity with or according to the intent and purpose of this Act. In this connection, we may usefully refer to a decision of the Income-tax Appellate Tribunal, Nagpur Bench, in the case of Vijay Trading Co. v. ITO [1985] 13 ITD 526, in which, the facts of that case were that copies of accounts, F. No. 12 were signed by the partners but the return of income accompanying such statements etc., was not signed. The Appellate Tribunal in that Nagpur case held that omission to sign the return was purely a mistake contemplated under Section 292B and that it could not be denied that the defect is purely a procedural defect and was not a deliberate omission on the part of the assessee (at page 533). In the present case before us, it is seen that the original assessment order, original demand notice etc., were signed by the assessing officer but the copies of the assessment order and the demand notice supplied to the assessee with challan were not signed. Thus, it can be said that issue of demand notice and copy of assessment order formed part of the procedural matter of communicating the assessee, the amount payable by him or refundable to him, as the case may be and such omission in signing copy of the demand notice meant for the assessee would certainly attract the provisions of Section 292B of the Act as the issue of the said notice etc., is in substance and effect in conformity with or according to the intent and purpose of the Act.
12. In the present case, there has been a valid assessment order under the Act after the CIT(A) has disposed of the appeal and then notice has to be issued under Section 156 as a consequence thereof. For completion of reassessment, there is a time limit prescribed but there is no time prescribed for service of demand notice. In the case of Misri Bai v. ITO [1964] 51 ITR 487 the Hon’ble AndhraPradesh High Court noted that the provisions for service of a proper notice of demand are mandatory and must be complied with before recovery proceedings are taken up. It was held on the facts of the case that proceedings for recovery of the tax due under the rectified order of assessment, cannot be taken without duly serving on the assessee, a notice of demand under Section 156.
13. In the case of N. Bella Gowder v. Tahsildar [1969] 71 ITR 26, the Hon’ble Madras High Court on the facts of that case held that the petitioner being aware of the recovery proceedings and having participated in them cannot object to the proceedings on the ground that no notice as required under Rule 2 of Part I of the second Schedule to the Income-tax Act, 1961, had been given. In the present case, the assessee had accepted the said impugned notice and had actually participated in filing the appeal before the CIT(A) whose order has given rise to the present appeal before the Appellate Tribunal.
14. In the case of Pranavi Ram Baruva (No. 2) v. ACED [1976] 102 ITR 580, the Hon’ble Gauhati High Court has held on the facts of that case that in order to assume jurisdiction to impose penalty for default in payment of estate duty, a demand notice in the prescribed form must be served on the accountable person. It was also observed that where the notice of demand served on the accountable person did not contain Clauses 3 and 4 of the prescribed form No. 7, the notice of demand would not be valid and the penalty imposed was unsustainable.
15. The facts and the dispute before us are, however, different. The present assessee has not been treated or deemed to be defaulter in respect of the payment and in fact no penalty was imposed. In a similar situation in the case of Murlidhar Jalan (supra), the Hon’ble Assam High Court on the facts of that case and under the provisions of the Indian Income-tax Act, 1922, held, amongst other things, that if a notice of demand is not in a proper form, the assessee cannot be regarded as defaulter and no question of recovery would arise. From the facts of the case narrated in the preceding paragraph, it would be seen that the same are distinguishable as the assessee had not been treated as defaulter nor recovery proceeding was started.
16. As indicated earlier, the Nagpur Bench of the Income-tax Appellate Tribunal has held on the facts of that case that omission to sign the return by the assessee concerned is only a clerical omission and did not invalidate the return as such. We are also of the view in the present context of the dispute before us that notice served on the, which was not signed by the ITO, would not invalidate the notice as such. The notice is, therefore, valid in view of the statutory provision of Section 292B. In fact, the assessee has not been misled by the unsigned notice as it, in fact, had filed an appeal before the CIT(A).From whatever angle we may look at the issue, we find that the CIT(A), on the facts of the case and on the materials available has rightly held that the notice was valid. His order is, therefore, sustained.
17. In the result, the appeal by the assessee on the points are dismissed.