ORDER
M.A.A. Khan, Judicial Member
1. This is an appeal from the order dated 24-10-1990 whereby the ld. DC(A), Jodhpur cancelled the assessment as made by the Assessing Officer (AO) in the case of the deceased assessee for assessment year 1975-76.
2. The relevant facts are that the deceased Shri Ummedaram Chaudhary, assessee, was one of the 12 partners in the firm of M/s Ummed Industries and Land Development Co., Jodhpur which had come into existence w.e.f. 7-10-1971. This firm had purchased certain lands (39903 sq. yds.) from the Royal family of erstwhile State of Jodhpur. Shri Ummed Ram’s share of investment was at Rs. 17,178. However, the firm stood dissolved w.e.f. 21-5-1974 and consequently the individual members of the firm became absolute owners of the portions of the land to the extent of their respective shares. The land was compulsorily acquired by the Raj. Govt. under Raj. Urban Improvement Act, 1959 for Ummed Ind. and Sh. Ummeda Ram received a sum of Rs. 51 lakhs by way of final compensation for the land. The income so earned was liable to be taxed under the head “capital gains”.
3. During his lifetime, Sh. Ummeda Ram was regular assessee of the IT Department and had been filing his returns of income with ITO A-Ward, Jodhpur within whose jurisdiction he and his two sons Sri Ganpat Ram and Sri Madho Singh used to reside at Ratanada. He, however, died on 22-6-1978 without filing his return of income for the year under consideration. He was survived by his three sons, namely, Svs. Champatram, Bhanwar Lal and Madho Singh.
4. Some time in March 1984, the ITO D-Ward, Jodhpur had reasons to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under Section 139 for assessment year 1975-76, income chargeable to tax had escaped assessment for that year. He, therefore, issued a notice under Section 148 of the IT Act, 1961 (the Act) to the late assessee through his legal representative and son Shri Bhanwar Lal who was living at Ummed Bhawan, 1st Polo, Jodhpur. The case of Revenue is- that his notice was served upon the said L/R on 3-4-1984 but he filed no return of income for and on behalf of the deceased assessee. Since notice under Section 142(1) dated 23-3-1989 for 28-3-1989 was also not complied with, the Assessing Officer made exparte assessment order under Section 144 on 30-3-1989 at net income of Rs. 39,799. The assessee appealed to the DC(Appeals), Jodhpur.
5. Before the DC(Appeals), Jodhpur, the assessee appears to have assailed the ex parte assessment order on the grounds that (z) the ITO, D-Ward, Jodhpur had no jurisdiction to issue notice under Section 148 in the case; (ii) that the notice under Section 148 was ineffective as the same was neither issued in the names of all the LRs of the deceased assessee nor all the LRs were made parties to the assessment proceedings and were also not issued any notice under Section 142(1); (iii) that the notice under Section 148 was in fact served on Sri Bhanwar Lal L/R on 30-3-1984 and, therefore, the assessment made on 30-3-1989 was hit by limitation prescribed under Section 153(2)(a); and (iv) that if the notice under Section 148 is considered to have been served upon the assessee on 3-4-1984, then such notice was bad in law for having been served after the expiry of a period of 8 years as per provisions of Section 149(1)(a)(i) of the Act. The ld. DC(Appeals) recorded no findings on the first two grounds, as mentioned above. However, with regard to the last two grounds, the ld. DC(Appeals) following the order of the ld. CIT (Appeals) in the case of Shri Bhanwar Lal in which on identical facts it was held that service of notice under Section 148, effected on 30-3-1984 by affixture, was a valid service, that the proceedings initiated under Section 147(a) should have been completed by 31-3-1988 in view of the provisions of Section 153(2)(a) of the Act, that their completion on 30-3-1989 was barred by limitation and hence the assessment made was bad in law, cancelled the order of assessment.
6. The ld. D/R took us through the relevant provisions of Section 149(l)(a)(z) and Section 153(2)(a) of the Act and submitted that the ld. DC(Appeals) seems to have fallen in error in holding that the assessment made was hit by Section 153(2)(a). He submitted that the ld. DC(Appeals) seems to have misread “Financial year” for the “assessment year” used in the language of Section 149(1)(a) and Section 153(2)(a). The ld. D/R stressed that in both the abovementioned provisions the period of limitation is to be reckoned from the end of relevant assessment year and not from the end of financial year as has been mistakenly understood by the ld. DC(Appeals). The ld. D/R could, however, make no affirmative or negative statement with regard to the rest of the points regarding the jurisdiction of ITO Ward-D to issue the notice under Section 148 and make assessment in this case or regarding the non-issuance of notices to the other LRs of the deceased assessee.
7. After having heard the parties at length we are of the opinion that the order of cancellation of assessment has to be sustained though for reasons somewhat different from those which found favour with the ld. DC(Appeals).
8. The issues which arise for consideration in this case are :–
(a) Was the notice under Section 148 issued within time as prescribed by Section 149 ?
(b) Was the assessment made within the period of limitation prescribed by Section 153(2) ?
(c) Did the ITO, Ward-D, Jodhpur have the jurisdiction to issue notice under Section 148 make assessment in this case ? and
(d) Is the assessment made after issue of notice under Section 148 and under Section 142(1) to only one of the three LRs of the deceased assessee, had in law ?
9. We would like to consider the abovementioned issues in the same order.
10. (a) Undisputedly the ITO had issued the notice under Section 148 in the case on the basis of his having reasons to believe that by reason of the omission or failure on the part of the assessee to make a return under Section 139 for assessment year 1975-76 to him, income chargeable to tax had escaped assessment for that year. Such basis attracted the provisions of Section 147(a) as it stood at the relevant time. The time limit for issuance of such notice was prescribed by Section 149, the relevant part of which stood as under at the relevant date :–
149(1). (1) No notice under Section 148 shall be issued–(a) in cases falling under clause (a) of Section 147–
(i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the case falls under Sub-clause (ii);
(ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year.
(2) The provisions of Sub-section (1) as to the issue of notice shall be subject to the provisions of Section 151.
Section 151 referred to in Sub-section (2) of Section 149 ran as under on the relevant date :–
151(1). No notice shall be issued under Section 148 after the expiry of eight years from the end of the relevant assessment year, unless the Board is satisfied on the reasons recorded by the ITO that it is a fit case for the issue of such notice.
(2) No notice shall be issued under Section 148 after the expiry of four years from the end of the relevant assessment year, unless the Commissioner is satisfied on the reasons recorded by the ITO that it is a fit case for the issue of such notice.
A plain reading of the provisions contained in Clause (i) of Sub-section (1)(a) of Section 149 conveys the message that the relative adjective “that” used in the language of that provision has reference to the words “assessment year” used in the opening lines of this Sub-clause (i). It suggests that the period of eight years is to commence from the end of the relevant assessment year. Nowhere in the language of Section 149(1)(a)(i) the term “financial year” has been used. The position has been made clear by the use of the same term of “assessment year” in the language of both Sub-sections (1) and (2) of Section 151. It is thus abundantly clear that the prescribed period of eight years or 16 years, as the case may be, is to be reckoned from the end of the relevant assessment year and not financial year.
11. Now, coming to the merits of the issue, in this case, the position is some-what confusing. The documents placed on our record show that the ITO had issued two notices under Section 148 simultaneously on 27-3-1984 and both were addressed to the deceased assessee through his L/R Shri Bhanwar Lal at his address at 1st Polo, Ummed Bhawan, Jodhpur. One of the notices was served on 30-3-1984 by affixture. The other had been sent by Regd. Post A/D and is said to have been served on 3-4-1984. The assessee relies on the service stated to have been effected on 30-3-1984 by affixture. Revenue has tried to build its case on the service effected on 3-4-1984 by Regd. Post A/D. After a close study of the material placed before us, we are satisfied that both the notices were issued before 31-3-1984 and whereas one of them was served on 30-3-1984 by affixture the other was served on 30-3-1984 by Regd. A/D. We hold accordingly.
12. It is almost well settled that for the purposes of application of the provisions of Section 149, a notice under Section 148 should be issued and served within the time prescribed by Section 149. For proper administration of Sections 149 and 153 and to satisfy the legislative intention in enacting those provisions, the words ‘issued’ and ‘served’ used in the language of Sections 149 and 153 respectively should be regarded and interpreted as inter-changeable. It is difficult to accept that the Legislature would have intended that the issuance of notice under Section 148 within the period of limitation prescribed by Section 149 without there being the effective service of such notice as required by Section 153 within the prescribed period, would satisfy the precondition for making a valid assessment as per provisions of Section 147, read with Sections 149 and 153. Such an interpretation of the word ‘issued’ in the language of Section 149 would be too oppressive for the assessees. For decision to issue notice under Section 148 is taken by the ITO behind the back of an assessee as there is no requirement of law to hear the assessee before issue of a notice under Section 148 to him. If the meaning of the word ‘served’ as used in Section 153 are not considered to be hidden in the meaning of the word ‘issued’ used in the language of Section 149, and vice versa, it may lead to unwanted consequences. For, before the end of eight or sixteen years, as the case may be, from the relevant assessment year, an ITO may issue a notice under Section 148 and allow it to be kept in his file for an indefinite period for the period of limitation prescribed by Section 153 for completing the assessment is to commence from the date of service of the notice under Section 148 and not before. The ITO may thus keep a sword of Democles, hanging on the head of an assessee for an indefinite period. Such could not be the intention of the Legislature in enacting the provisions of Sections 149 and 153 of the Act. Both the Sections prescribe limitation for integrated purpose. They should, therefore, be read together in order to meet that purpose.
13. It, therefore, logically follows that the word ‘issued’ used in the language of Section 149 is required to carry the meaning of the expression ‘issued and served’ within the prescribed period of limitation. This view of ours, we think, finds support from the cases of Banarsi Dehi v. ITO [1964] 53 ITR 100 (SC), Induprasad Devshanker Bhatt v. J.P. Jani, ITO [1965] 58 ITR 559 (Guj.), Shanabhai P. Patel v. R.K. Upadhyaya, ITO [1974] 96 ITR 141 (Guj.) and [1976] 105 ITR 489 (Sic).
14. Reverting to the point on hand, it may be noted that the relevant assessment year in this appeal is 1975-76 which came to an end on 31-3-1976. The starting point of limitation under Section 149(1)(a) was 1-4-1976 and the eighth year from that date expired on 31-3-1984. Since the notice under Section 148, according to the assessee himself, was served on him by affixture on 30-3-1984, the notice issued and the assessment proceedings initiated on the basis of such notice were not hit by the provisions of Section 149 of the Act. Since service of notice under Section 148 on 30-3-1984 is proved, the subsequent service on 3-4-1984 of another notice of the same type would not adversely affect the validity of the notice served on 30-3-1984 and the limitation of the assessment proceedings based on that notice. We, therefore, held that the notice issued in this case under Section 148 was quite valid and not hit by the provisions of Section 149. Now coming to the issue of time limit for completion of assessment/reassessment, we may take note of the provisions contained in Section 153, the relevant part of which ran as under on the relevant date :–
153(2). No order of assessment, re-assessment or recomputation shall be made under Section 147–
(a) where the assessment, or re-computation is to be made under Clause (a) of that section, after the expiry of four years from the end of the assessment year in which the notice under Section 148 was served;
(b) where the assessment, re-assessment or recomputation is to be made under Clause (b) of that section, after–
(i) the expiry of four years from the end of the assessment year in which the income was first assessable, or
(ii) the expiry of one year from the date of service of the notice under Section 148, whichever is later.
15. Section 153(2) mandates that the assessment, reassessment etc. under Section 147(a) is to be made within a period of four years after the service of notice under Section 148. This section too talks of the assessment year in which the notice under Section 148 is served on the assessee. The notice under Section 148 as held above, was served on 30-3-1984. The period of four years would expire on 31-3-1988 if reckoned from 1-4-1984. That would be the position when the date of service is taken as 3-4-1984. But if the date of service is taken as 3-4-1984 as is the case of Revenue, then, of course, the period of four years would expire on 31-3-1989 and the assessment made, ignoring the validity of the notice as per provisions of Section 149 shall have to be taken within time and hence valid in law. But (sic) we have proceeded on the basis that notice (sic) served on the assessee on 30-3-1984, (sic) that the assessment was made beyond the period of limitation prescribed by Section 153(2) of the Act. We hold accordingly.
The issue relating to the jurisdiction of ITO , D-Ward was raised before the ld. DC(Appeals), but not decided by him. Since the words might have changed during the long period of time involved in this case, we decide the issue against the assessee.
It was not disputed before us that Shri Ummeda Ram Chaudhary had died on 22-6-1978 leaving behind him three major sons, S/Sh. Ganpat Ram, Bhanwar Lal and Madho Singh, as his L/R survivors. It is also not in dispute that since the ITO had initiated certain proceedings for levying capital gains tax against the partners of the dissolved firm, which partners included some of the LRs of the deceased also. There is thus sufficient evidence on record to show that the ITO very well knew that the deceased assessee had left LRs also other than Sh. Bhanwar Lal to whom only he issued notice under Section 148 in this case. He did not issue even notices under Section 142(1) to S/Sh. Ganpat Ram and Madho Singh.
16. It is the well settled proposition of law that the estate of a deceased person should be well represented before levy of any liability is imposed upon his estate. The provisions of Section 159 of the Act clearly cast the liability on the LRs of the deceased to pay any sum which the deceased assessee would have been liable to pay, if he had not died. But the LR is made liable to pay such sum in the like manner and to the extent as the deceased. It is, therefore, gathered that in order to make the recovery of the liability fruitful, the estate of the deceased should be properly represented. Proper representation means that all the concerned LRs must be made parties to the proceedings particularly in those cases where the liability devolved is collective and inseparable, depending upon the nature of estate devolved upon the LRs. It is, therefore, proper if notice under Section 148 is served on all the LRs of the deceased assessee. Since the estate to the extent it had fallen in the hands of a particular LR may be held to be properly represented by one of the LRs only in whose possession the estate of the deceased may be at the relevant time, but in order to make an order effective to realize the entire sum due from the deceased assessee, all of his LRs should be given an opportunity of being heard by issue of notice under Section 142(1) of the Act. For their rights and interest in the estate of the deceased cannot be taken away from them without giving them a proper opportunity of defending their such rights and interest. In the instant case the ITO, despite having knowledge of other LRs of the deceased assessee, did not issue either the notice under Section 148 to them or the notice under Section 142(1) with a view to hear them. We think we are fortified in our view by the cases reported in Chooharmal Wadhuram (Decd) v. CIT [1971] 80 ITR 360 (Guj.), Jai Prakash Singh v. CIT [1978] 111 ITR 507 (Gauhati) and Smt. Kamala Devi Todi v. CIT [1988] 174 ITR 414 (Gauhati). The assessment order, had it not been hit by the provisions of Section 153(2) as discussed above, would have been vitiated for this reason.
17. Since the ld. DC(Appeals) had not decided this issue also, we would have considered to send it back to him for his decision according to law, without expressing our opinion. But we noticed that the curable irregularity committed by the ITO in not issuing either a notice under Section 148 or under Section 142(1) to S/Shri Ganpat Ram and Madho Singh cannot now be cured by him by issuing the said notices due to the relevant provisions governing the period of limitation, the remand of the issue was to serve no purpose at all. That apart, we have also held that the assessment made was hit by the provisions of Section 153(2). That also resisted us from setting aside this issue to the ld. DC (Appeals). To sum up, we decide this issue against Revenue.
18. In the result this appeal fails and is hereby dismissed.