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Judgment
D.G. Karnik, J.—We state below the question of law on which admission of the appeal is urged by Mr. Alok Sharma, learned Assistant Solicitor General appearing for the Revenue.
Whether, in the facts and circumstances, the Income Tax Tribunal (For short "Tribunal") was right in holding that in absence of warrant of authorization in the name of the Assessee and in absence of any satisfaction having been recorded by the Assessing Officer u/s 158-BD of the Income Tax Act, the Assessment was without jurisdiction?
Mr. Gopinath Manohar Wadi, the Assessee, who is the respondent before us, is assessed as an individual. Mr. Wadi is also a Member of Association of Persons (A.O.P.), which, at the relevant time, was carrying on business in the name and style as the "Mahendra Auto Services". There were in all 6 persons, who constituted the A.O.P. and the share of Mr. Wadi in the income of the Mahendra Auto Services, was only 10%. A search and seizure u/s 132 (1) of the Income Tax Act, 1961 was carried out in the business premises of the "Mahendra Auto Services" from 10th July 1997 to 11th July 1997. Cash of Rs. 1,75,540/- was found in the search out of which an amount of Rs. 1,50,000/- was seized as unaccounted income. Some other evidence of undisclosed income of the A.O.P. was also found. Assessment of the income of Mr. Wadi was made purportedly u/s 158-BC of the Income Tax Act by the Assistant Commissioner of Income Tax. After a partly unsuccessful appeal, the appellant as well as Mr. Wadi approached the Tribunal. The Tribunal held that the warrant of authorization was issued in the name of "Mahendra Auto Services" and no warrant of authorization was ever issued against Mr. Wadi, the respondent herein. The Tribunal further held that in the absence of any warrant of authorization in the name of the respondent and in the absence of any satisfaction having been recorded by the Assessing Officer, u/s 158-BD of the Income Tax Act, 1961,(for short the I.T. Act) qua the respondent, the impugned assessment order was without jurisdiction. The Tribunal accordingly allowed the appeal filed by the respondent and dismissed the appeal filed by the Revenue as in fructuous.
Mr. Sharma, learned Assistant Solicitor General, appearing for the Revenue, relying upon the provisions of Section 292-B of the I.T. Act, submitted that any error in the warrant of authorization issued in the wrong name of Mahendra Auto Services the A.O.P. instead of in the name of the respondent and any error in the order of satisfaction required to be recorded u/s 158-BD would not invalidate the proceedings in view of section 292-B of the I.T. Act. Section 292B of the I.T. Act reads as under:
292B. Return of income, etc., not to be invalid on certain grounds No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.
Section 292B of the I. T. Act lays down that no return of income, assessment, notice, summons or other proceedings furnished or made or issued or taken or purported to have been taken or furnished or made or issued or taken in pursuance of the I.T. Act shall be invalid merely by reason of any mistake, defect or omission in the return of income, assessment, notice or summons. In our view, Section 292B of the I.T. Act is not applicable to the present case. There is difference between a mistake in a notice or in an order of authorization and issuing the notice in the name of an altogether different person. The respondent is assessed to Income Tax as an individual and the Mahendra Auto Services is separately assessed to Income Tax as an A.O.P. They are separate "persons" as defined u/s 2 (31) of the Income Tax Act and are distinct "Assessees". If the notice had been correctly addressed and issued but contained but some error such as the date of notice or the amount or any other like defect that would not invalidate the notice in view of Section 292B of the I.T. Act. But if the notice is issued not to the respondent Assessee but to a stranger that cannot be regarded as a mistake curable u/s 292B of the I.T. Act. Here, we may mention that it is not the case that the respondent is the proprietor of Mahendra Auto Services. If the respondent had been the proprietor of the business of the Mahendra Auto Services then the things would have been different. Because notice issued in the business/trade name of a proprietor could be a notice issued to the proprietor himself, who carries on the business in the trade name. In the present case, admittedly Mahendra Auto Services is a different taxable entity. It files separate returns. It is an Association of Persons (A.O.P.) which consists of 6 persons and share of the present Assessee is only 10% in the income of the said A.O.P. This is also not the case where the notice of a firm is served on a partner. But this is a case of notice of a person served on the AOP. It may be possible to serve the notice of a firm on a partner, as the partner has an implied authority u/s 19 of the Partnership Act to act on behalf of the firm. However, a firm or an A.O.P. does not have any implied authority to act or represent any of the partners of the firm or the members of the A.O.P. in respect of their personal matters. A firm or an A.O.P. or any of its partners or members cannot be regarded as agents of other partners or members or of each other. Consequently, the service of the notice on the firm or the A.O.P. would not be regarded as a service on the respondent-assessee. Personal satisfaction of an Assessing Officer u/s 158-BD of the I. T. Act was in respect of the alleged undisclosed income of the Mahendra Auto Services which is an A.O.P. He was not satisfied and at least had not recorded that he was satisfied that the respondent had earned any undisclosed income. Consequently, we find no error in the view taken by the Tribunal that the authorization as also the satisfaction u/s 158-BD of the I.T. Act was invalid. There is no merit in the Appeal, which is hereby dismissed summarily.