Commissioner of Income Tax vs Legal Representatives of Mangi Lal

By way of this petition, the Revenue has sought review of the order dt. 16th Sept., 2011 as passed in IT Appeal No. 66 of 2004 whereby, a Coordinate Bench proceeded to dismiss the appeal considering it to have abated for failure on the part of the appellant to bring the legal representatives of the sole respondent on record. The order impugned, in its entirety, reads as under:

This appeal is pending since year 2004 and no process fees is being paid for issuance of notice to respondent assessee.

In the meantime, this appeal was also dismissed for want of prosecution and in non-compliance of the order earlier though the appeal was disposed of on 13th March, 2008 yet till date no process fee is paid for issuance of notice to respondent assessee. The appeal is pending in default since 2004 onwards till date.

That apart, the sole assessee (respondent herein) has also died way back in the year 2005 and this fact was also taken note by this Court in its order sheet dt. 25th July, 2005. No efforts are made to bring his legal representatives on record, though more than six years have been passed.

Therefore, no question of issuing any notice to sole respondent who died in the year 2005 as no application was made to bring his legal representatives on record.

Appeal therefore abates for not bringing legal representatives of sole respondent Badri Prasad.

Appeal thus fails and is dismissed as having become abated.

In brief, the relevant background aspects of the matter could be noticed in the following: In relation to the proceedings concerning the original assessee Mangi Lal Bhatia (since deceased) under s. 148 of the IT Act, 1961 (''the Act''), the notices were allegedly not issued to all his legal representatives but the AO proceeded to complete the assessment under the order dt. 27th Dec, 1990. In challenge to the order passed by the AO, the basic contention urged before the Commissioner of income tax (Appeals), Jodhpur [''the CIT(A)''] was that notices having not been issued to all the legal representatives of the original assessee Mangi Lal Bhatia, the proceedings suffered from fundamental and incurable infirmity, and were wholly without jurisdiction. The CIT(A) upheld such a contention and while allowing the appeal, annulled the assessment by his order dt. 26th Feb., 1993. Then, the appeal filed by the Revenue against the said order dt. 26th Feb. 1993 was dismissed by the income tax Appellate Tribunal, Jodhpur Bench, Jodhpur (''the Tribunal'') by its order dt. 7th Jan., 2004. The Tribunal affirmed the views of the CIT(A) and held that the proceedings were wholly without jurisdiction for want of notice to all the legal representatives of the deceased assessee.

Aggrieved by the order so passed by the Tribunal, the Revenue preferred the appeal under s. 260A of the Act, being D.B. IT Appeal No. 66 of 2004 that was admitted by this Court on 3rd Dec, 2004 on the following substantial questions of law:

Whether in the facts and circumstances, initiation of proceedings under s. 148 by issuing notice to only one of the LRs of deceased Mangi Lal Bhatia without issue of notices to other LRs was valid initiation of proceedings ?

In case the aforesaid question is answered in negative whether the completed assessment in such event becomes a nullity ?

In the memo of appeal as initially filed in this Court, the party-respondent was described as under:

Late Shri Mangilal through L/H Badri Prasad Bhatia C/o Radha Krishan Mangilal, Jaisalmer.

The notices for hearing of the appeal were issued and it transpired that the said Shri Badri Prasad Bhatia, who was on record as the legal representative of the original assessee Mangi Lal, had also expired. Then, the appellant moved an application (IT Appeal No. 241 of 2005) with reference to the provisions of Order 22, r. 4 of the CPC on 22nd Nov., 2005, seeking substitution of the legal representatives of late Shri Badri Prasad Bhatia as respondents.

Notices on the application for substitution of legal representatives so moved were ordered to be issued on 22nd Nov., 2005. Thereafter, the matter was being processed for service on the proposed legal representatives but, when the notices were received unserved and the appellant failed to put in the requisites within time, per the force of the peremptory order dt. 13th March, 2008, the appeal came to be dismissed. However, such dismissal was set aside by the order dt. 24th Nov., 2010 as passed in Restoration Appln. No. 3208 of 2009.

The appeal, restored as noticed above, further remained pending for want of service on the proposed legal representatives and again, for consistent defaults of the appellant as regards put in the requisites, the matter was again placed before the Court on 16th Sept., 2011 when the order impugned came to be passed, dismissing the appeal as having abated.

This petition seeking review has been filed by the appellant Revenue with the submissions, inter alia, that the observations as made in the order dt. 16th Sept., 2011 are not in conformity with the record of the case. It is submitted that the original assessee Shri Mangi Lal had, in fact, died even earlier and the said Shri Badri Prasad Bhatia was on record as his legal representative, and when Shri Badri Prasad Bhatia also expired, an application had indeed been moved for substitution of his legal representatives. It is submitted that the notices on such application were to be filed but, in the given status of record, it could not have been concluded by the Court that the appeal had abated for not moving of the application for bringing on record the legal representatives of the sole respondent. So far filing of the notices is concerned, it is submitted that, of course, there had been a default on the part of the appellant but that had been for inadvertent and bona fide mistake, and for such a default, the appeal could not have been dismissed as abated.

In this petition for review, notices were ordered to be issued on 26th April, 2012. The learned counsel Mr. Vipul Singhvi has put in appearance for the non-petitioners, who are, in fact, the proposed legal representatives in the application moved in Appeal No. 66 of 2004.

Opposing the prayer for review, the learned counsel Mr. Vipul Singhvi appearing for the non-petitioners submitted that in any case, the appeal as filed in this matter remains totally bereft of merits because all the legal representatives of the original assessee were not served with the notice under s. 148 of the Act, and for want of such notice, the proceedings were wholly without jurisdiction. Therefore, according to the learned counsel for the non-petitioners, no useful purpose would be served with review and recall of the order dt. 16th Sept., 2011, as passed in IT Appeal No. 66 of 2004.

Having considered the matter in its totality, we are clearly of the view that the contentions as urged by the learned counsel for the non-petitioners are not relevant, so far the subject-matter of the present review petition is concerned. Herein, the core question is as to whether the impugned order dt. 16th Sept., 2011 suffers from any error apparent on the face of the record and thus, calls for review. In our view, it does.

A bare look at the impugned order dt. 16th Sept., 2011 makes it clear that the learned Co-ordinate Bench proceeded to consider the appeal as having abated for the legal representatives of the sole respondent having not been brought on record. The observations have been made even to the effect that the appellant Revenue had not moved any application seeking substitution of the legal representatives of the sole respondent. It is but clear that while passing the aforesaid order dt. 16th Sept., 2011, the facts got overlooked that the appellant Revenue had indeed moved an application seeking substitution of the legal representatives of respondent Badri Prasad way back on 22nd Nov., 2005 and that the matter was being processed upon the said application only, and the notices were ordered to be issued on 22nd Nov., 2005 to the proposed legal representatives. The observations in the order dt. 16th Sept., 2011 are also indicative that the said Badri Prasad Bhatia was himself taken to be the sole assessee though he was on record only as the legal representative of the original assessee Mangi Lal. In any case, the appeal, in the given status of record, could not have been considered as having abated and hence, the order impugned dt. 16th Sept., 2011 is required to be recalled.

Of course, it is noticed that there had been defaults on the part of the appellant where the requisites for service of notice to the proposed legal representatives were not put in, and we might have considered the effect of this aspect of the matter but now, when the learned counsel Mr. Vipul Singhvi has put in appearance on behalf of the proposed legal representatives, of course, in this review petition, there does not appear any reason to enter into this aspect of the matter any more.

However, it is considered appropriate and hence observed that so far the prayer seeking substitution of the legal representatives of the sole respondent Badri Prasad Bhatia is concerned, it remains to be examined and considered in appeal. The appearance on behalf of the non-petitioners in this petition could only be considered as made on behalf of the proposed legal representatives. In other words, it would remain open for the non-petitioners herein to raise all their objections in regard to the application seeking substitution in the appeal, and the question as to whether they are to be substituted in the appeal, shall be examined in the appeal on its own merits. Needless to add that further processing of the appeal shall also depend on the order to be passed on the application seeking substitution of the legal representatives. Subject to the observations foregoing, this review petition is allowed. The impugned order dt. 16th Sept., 2011 is recalled. IT Appeal No. 66 of 2004 shall stand restored to its number. The proposed legal representatives in the appeal shall be considered as having been served with appearance of the learned counsel Mr. Vipul Singhvi on their behalf. Office to proceed accordingly.