JUDGMENT
A.K. Mathur, J.
1. The petitioner, by this writ petition, has prayed that order dated December 22, 1978 (annexure “B”), passed under Section 143(1) of the Income-tax Act, 1961; notice under Section 148 of the Income-tax Act, dated March 26, 1984 (annexure “F”); notice of demand (annexure “G”) and final notice (annexure “I”) may be quashed. It is also prayed that the Respondents may be directed not to press for the recovery of the amount of Rs. 18,161 as the petitioner cannot be deemed to be an assessee in default.
2. The petitioner, Smt. Shantidevi, is a partner in the firm, Hiralal Gulabchand Sethi, Ashok Nagar, District Guna. We are concerned with regard to the assessment year 1976-77 and the relevant accounting year ended on Diwali, 1975. The petitioner submitted a return of total income before respondent No. 1-Income-tax Officer, C-Ward, Sagar, showing a total assessable income of Rs. 14,358 which included a share income from the partnership firm, Hiralal Gulabchand, amounting to Rs. 17,692. In the statement attached to the return, a note was given that her two minor daughters, namely, Ku. Lalita and Meena, were admitted to the benefits of partnership in the firm, Anandilal Dhannalal Sethi. An amendment was introduced in Section 64 of the Income-tax Act with effect from April 1, 1976, and according to that, a minor’s income should be included in the income of the individual. The petitioner thought that this will not be applicable in her case for the assessment year 1976-77. As such the minor children’s income was not shown in the return. Respondent No. 1 made an assessment under Section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”), on a total income of Rs. 48,181 including the income accruing to such two minor daughters in the income of the petitioner.
3. Aggrieved by the aforesaid order dated December 21, 1978, passed by respondent No. 1 under Section 143(1) of the Act, the petitioner moved an application in Form No. 6A under Rule 14B read with Section 143(2)(a) of the Act and objected to the assessment that the addition of income of the minor is not justified. Respondent No. 1 did not pass any order oh the said application which was mandatory upon him to do so. A separate assessment was made by respondent No. 1 of the minor daughters. Subsequently, the case was transferred to respondent No. 2, who issued a notice on March 26, 1984, under Section 148 of the Act proposing to reassess the income of the petitioner. According to respondent No. 2, the petitioner’s income was underassessed or it has escaped assessment within the meaning of Section 147(a) of the Act. The aforesaid notice dated March 26, 1984 (annexure “F”), was served on the petitioner. A recovery notice dated April 5, 1980 (annexure “G”) was issued to the petitioner. The petitioner filed a reply and submitted that since the objections filed by the petitioner to the assessment under Section 143(1) have not been decided she cannot be treated as a defaulter nor is there a case of suppression of facts or escaped assessment or underassessment. The petitioner, filed this petition challenging both the notices/orders (annexures “F” and “G”).
4. Shri B.L. Nema, learned counsel for the petitioner, has submitted that both the notices/orders (annexures “F” and “G”) are bad because Section 147(a) of the Act can only be invoked on account of an omission or failure on the part of the assessee to make a return under Section 139 of the Act for an assessment or to disclose fully and truly all material facts necessary for assessment for that year. The petitioner has filed a return under Section 139 of the Act disclosing all the facts. Learned counsel also submitted that no recovery can be enforced as the petitioner has objected to the assessment under Section 143(1) of the Act and learned counsel submitted that no assessment can be made beyond the period of two years.
5. A reply has been filed by the respondents and the respondents have submitted that the writ petition is not maintainable against the notices/ orders. All these facts, the petitioner can disclose in reply to notice and the authorities can consider the matter. The submission of learned counsel for the respondents could have been upheld by me if the matter had been decided earlier. But since the matter is pending before this court since 1984 after a lapse of ten year’s to remand this case back to the respondent will not be justified as it will be unfair to drive the petitioner from pillar to post.
6. It is an admitted fact that the petitioner has already filed an application under Section 143(2)(a) of the Act as it stood at the relevant time. According to this, a duty is cast on the Assessing Officer to dispose of this application. The proviso further lays down that where any assessee objected to the assessment by an application under Clause (a) then the assessee shall not be deemed to be a defaulter in respect of the whole or any part of the tax demanded in pursuance of the assessment. Therefore, it cannot be said that the petitioner is a defaulter. It was the duty of the Assessing Officer according to the provision to Section 143 which was existing at the relevant time to have decided the matter within a reasonable time and that was not done and the matter remained pending for years and then thereafter in 1984, the respondents woke up to give a notice to the petitioner under Section 147 of the Act. Section 147 of the Act which stood at the relevant time before it was amended on April 1, 1989, notices could have been issued under the aforesaid section if there was omission or failure on the part of the assessee to make a return under Section 139 of the Act for the assessment year to the Assessing Officer or fail to disclose fully and truly all material facts necessary for the assessment or if there is omission or failure or an information within the possession of the Assessing Officer which led to believe that income chargeable to tax will escape assessment for the assessment year, then the notices could be given. But, in the present case, all the facts have been truly and correctly disclosed while filing the return under Section 139 of the Act. When the assessment was made, objections were also raised that the income of the minor children could not be included in the income of the petitioner individually ; but the Assessing Officer did not wake up to decide the matter and allowed the objections to remain dormant. Therefore, it is not a case for issuing a notice under Section 147 of the Act as none of the conditions mentioned in the section are present. The notice (annexure ‘F’) issued by the authority is apparently without jurisdiction.
7. Learned counsel has submitted that no assessment can be made beyond two years under Section 153(i)(a)(iii) of the Act as it stood at the relevant time and, consequently, no recovery could be made. The argument of learned counsel appears to be justified. The application filed by her under Section 143(2)(a) was not decided. If that application of the petitioner was decided and the income of the petitioner was assessed by including the income of her minor children within time then it was open for the respondents to effect the recovery. But it was not done and they only woke up while issuing notice under Section 147 of the Act. But by that time more than two years lapsed. A taxpayer cannot be allowed to suffer on account of negligence of the Department. The notice (annexure “G”) to the petitioner for effecting the recovery as a defaulter also lapses. Hence, no recovery in pursuance of this order (annexure “G”) could be made.
8. In the result, this writ petition is allowed. The notices/orders (annexures “F” and “G”) are quashed and all other orders consequent to that are also quashed. The amount of security deposited, if any, shall be refunded to the petitioner.
