1. These are appeals filed by the assessee relating to assessment years 1966-67, 1967-68, 1970-71 and 1971-72 and they are directed against the common order of the Dy. Commissioner (Appeals), B-Range, Hyderabad dated 22-9-1988. The appeals were purported to have been filed for and on behalf of a partnership firm called M/s. Jyothi Tin & Allied Industries, Shamsheergunj, Hyderabad.
2. The assessee is an unregistered firm in all these years. It comprised of three major partners and two minor partners, namely Suraj Prakash and Budhi Prakash. The two minor partners who are the sons of Shri Poonamchand Toshniwal were admitted to the benefits of partnership. The only point involved was that since the assessment orders for these four years were passed long ago and since they were served on the assessee after long periods of 14 to 17 years after the assessment orders were passed and since there was inordinate delay in communicating the assessment orders passed, the assessment orders became bad in law and unenforceable. The assessment year, the date of the assessment order, the total income determined, the tax determined and the date of the receipt of the assessment order are furnished in the table below for the sake of convenience:Asst.
Date of Total Income Tax Date ofYear asst.
determined determined receipt order of asst.
order1966-67 16-12-1970 Rs. 14,310 Rs. 1,854 23-12-19871967-68 25-10-1971 Rs. 27,737 Rs. 8,554 23-12-19871970-71 25-03-1972 Rs. 25,000 Rs. 4,675 23-12-19871971-72 29-3-1973 Rs. 20,000 Rs. 3,204 23-12-1987 In support of his contention that the inordinate and unreasonable delay in communicating the assessment orders make the demands invalid and make the assessment orders unenforceable was sought to be substantiated by the assessee's counsel by Citing the following decisions: Photostat copies of one of the above decisions are furnished before us.
In the second case as per the headnote, the following is what is held by the Andhra Pradesh High Court: Where, in exercise of the revisional powers under Section 20 of the Andhra Pradesh General Sales Tax Act, 1957, the Deputy Commissioner passed an order of revision within the time prescribed therein but served the order on the assessee only after the lapse of about l0 1/2 months: Held that the order would not bind the assessee inasmuch as the delay in serving the order of revision on the assessee was unreasonable and inordinate.
Though two decisions were cited, photostat copy of the second decision only was given out of which the headnote is already extracted above. It is well to remember that this decision is rendered in connection with the A.P. General Sales-tax Act and the ratio of the decision that inordinate delay in communicating the orders of the authorities is specifically held to relate to executive authorities. Now in this case, the Income-tax Officer while making the assessments was acting as quasi judicial authority and not merely as executive authority, and therefore, the ratio of the A.P. High Court's decision that due to inordinate delay in communicating the order, the assessment order does not itself bind the assessee should be confined only to the orders of the executive authorities but in our humble opinion it should not be meant applicable to quasi judicial authorities. There are decisions rendered under the Indian Income-tax Act, 1922 as well as the Income-tax Act, 1961 taking the position that delay in serving the assessment order does not affect the validity of the assessment order itself. The learned Departmental Representative cited before us the decision of the Mysore High Court in N. Subba Rao v. Third ITO [1963] 48 1TR 808. In that case, the business of the firm against which the order of assessment has already been passed had been discontinued. The Income-tax Officer wanted to take proceedings against a former partner of the firm for recovery of tax assessed on the firm. The Income-tax Officer took proceedings without issuing a notice of demand under Section 29 of the Income-tax Act and also without passing a fresh assessment order before issuing the demand notice against the erstwhile partner. When the matter came up in writ petition before the Mysore High Court one of the contentions raised against the notice of demand was that it was issued about 4 years after the assessment order was passed and, therefore, that notice of demand cannot be considered to be a valid notice. However, this contention was rejected by the Mysore High Court holding that the petitioner was asked to pay arrears of tax due not because there was an order of assessment against him as such.
His liability to pay the arrears of tax arises as a consequence of Section 44 of the Indian Income-tax Act, 1922. Under Section 44 of the Indian Income-tax Act, 1922 the partners are made liable for the payment of tax due from the firm which has discontinued its business.
In such a case there need not be vicarious liability cast specifically on the partners. What is being collected is the tax due from the partners of the firm. The notice of demand is based on the order of assessment made against the firm. Before issuing a notice under Section 29 there need not be necessarily an order of assessment on the partner against whom the notice is later issued. Section 29 of Indian Income-tax Act, 1922, as well as the definition of 'assessee' under Section 2(2) of the Indian Income-tax Act, 1922 after having been extracted in their judgment their Lordships held that a person against whom proceedings are taken in pursuance of Section 44 is also an 'assessee' within the meaning of the definition of that word found in Section 2(2). Adverting to the delay in serving the notice under Section 29 of the Indian Income-tax Act, 1922 and its effect against the validity of the assessment order, their Lordships observed at page 813 of the reported decision as follows: He strenuously urged that notice of demand issued four years after the assessment was made is clearly illegal. Section 29 does not prescribe any period of limitation for issuing a notice. Wherever the Legislature thought it necessary, it has prescribed period of limitation in the Act. No support for the contention of Sri Srinivasan can be gathered from the language of Section 29.
They relied upon an earlier decision of the Patna High Court in Rajendra Narayan Bhanja Deo of Kanika, in re AIR1925Pat 581, in which case also while considering Section 29 of the Indian Income-tax Act, 1922 it was held as follows : If it had been the intention of the Legislature to prescribe a period of limitation for such notices, I think that such an important provision would have found place in the body of the Act itself indicating that intention. In other sections of the Act we do find that where certain notices have to be given the period within which they have to be given is prescribed. But so far as Section 29 is concerned no period at all is prescribed in the Act.
Then at page 814 adverting to the observation of the learned Chief Justice in Rajendra Narayan Bhanja Deo of Kanika's case (supra) page 581 that although no time is prescribed for issuing the notice, notice must be issued within reasonable time which would depend upon the facts and circumstances of each case, the Mysore High Court made the following observations: This observation of the learned Chief Justice is clearly obiter. If the Legislature did not choose to prescribe any period of limitation, we very much doubt whether the court could step in and prescribe its own period of limitation by bringing in the idea of 'reasonable time'.
It would not be correct to assume that every claim to be valid must be made within some period and that if no period of limitation is prescribed by the statute, then it should be done within a reasonable time. Unless a period of limitation is prescribed, Courts are not justified in prescribing any period in the nature of limitation. Again our attention is drawn to the decision of the Calcutta High Court in CIT v. Karnani Industrial Bank Ltd. [1978] 113 ITR 380. In the above case also, the delay caused while issuing notice under Section 29 of the IIT Act, 1922 came to be considered by the Calcutta High Court. It held the following as per head note: The purpose of a notice of demand under Section 29 of the Act is to bring to the attention of and demand from the assessee the order of assessment and the amount of tax including interest and other items due from the assessee. It is a statutory duty of the Income-tax Officer concerned to issue this notice and there is no bar to the issue of such a notice if a proper or correct notice has not been issued earlier.
Though an assessment has to be completed within four years from the completion of the assessment year, a notice of demand under Section 29 of the Indian Income-tax Act, 1922, can be validly issued even after that period as there is no statutory limit for the issue of the notice of demand. The right to appeal against the demand arises from the date of service of the correct notice of demand and the assessee's right is not prejudiced in any way.
In that case for assessment year 1956-57, the assessment was completed and it was recorded in the assessment order that interest would be charged under Section 18A(6) of the Income-tax Act, 1922. However, under the notice sent to the assessee on 20-8-1960, the interest charged under Section 18A(6) was not included. In the second notice of demand dated 11-12-1964, the Income-tax Officer included a sum of Rs. 12,573.03 being interest not included in the earlier notice and this second notice was served against the assessee on 14-12-1964. One of the contentions was that the second notice of demand issued after expiry of 4 years is bad in law. While providing an answer, the Calcutta High Court held that there is no time limit prescribed for the issue of demand notice and there was no bar in the Indian Income-tax Act, 1922 for serving more than one notice or withdrawing an earlier notice and issuing a fresh notice and there was no time limit prescribed for service of such notice. The Calcutta High Court appears to have relied upon the earlier decision of the same High Court in Badri Prosad Bajoria v. CIT[1967] 64 ITR 362 (Cal.). In that case, the argument of the assessee was that the assessment order passed under Section 23(3) of the Indian Income-tax Act, 1922 not having been communicated to the assessee within 4 years after the end of the assessment year as provided under Section 34(3) was barred by limitation and invalid in law. This contention was negatived. The observation obtaining at page 364 was extracted by the Calcutta High Court which is as follows : An assessee's statutory obligation to move a higher Court or Tribunal against an order cannot be set in motion until the order is communicated to him. It cannot be denied that an order, before it is made effective, must be served on the person against whom the order is made. Thus, from the point of view of the person who is affected by the order, the order is made when it is communicated to him. But this does not mean that, until an order is communicated, the order is not made at all. Notice under Section 29 of the Income-tax Act pre-supposes an order of assessment under Section 23(1) or 23(3).
Notice under Section 29 can only be served after an order of assessment is made. Thus, the making or passing of an assessment order, the issue of notice under Section 29, and service of notice or communication of the assessment order are different stages or steps before an assessee pays the assessed tax. In other words, the date of making the order, the date of issue of notice and the date when the order is communicated need not necessarily be the same date. Admittedly, in the instant case, the order of assessment was made on 26-3-1959 which is a date within 4 years after the end of the assessment year.
The Calcutta High Court relied upon the Madras High Court's decision in Rm. P.R. Viswanathan Chettiar v. CIT [1954] 25 ITR 79, the decision of the Mysore High Court in N. Subba Rao's case (supra) as well as the decision in Badri Prosad Bajoria's case (supra), for the proposition that though the assessment has to be completed within four years from the completion of the assessment year, a notice of demand can be validly issued even after that period. In Sampath Iyengar's 'Law of Income-tax' 8th Edn. Vol. 4 page 4525, the following is stated to be the law: Since the demand notice arises in consequence of an order passed under the Act, which must have been passed before the issue of the notice of demand and its service gives a right of appeal to the assessee, though there is no statutory provision to that effect, it is desirable that the order on the basis of which the demand is raised is also served simultaneously on the assessee; however, the failure to do so will not render the assessment invalid.
Therefore, since we accept the contention of the learned Departmental Representative, which is based upon the authority stated above and which was cited by him, we are of the opinion that since the A.P. High Court's decision relied upon by the assessee is distinguishable and, in our opinion, does not apply to quash judicial orders and since the authority cited by the learned Departmental Representative are directly on the point, we hold that the delay if any caused in sending demand notice to the assessee does not invalidate the assessment order. For appreciation of facts on this matter, the learned Departmental Representative filed a paper book containing 20 pages. The copy of the assessment order maintained in the ITO's original records for assessment year 1966-67 is furnished at page 7. The demand notice in Form No. 7 for assessment year 1966-67 is furnished at page 9 of the paper compilation. The letter written by the assessee firm to Income-tax Officer, C-Ward. Circle III, Hyderabad dated 19-2-1971 was furnished at page 11 of the paper book. Extract of order sheet entries for assessment year 1967-68 were furnished at pages 13 to 15 of the paper compilation filed by the Departmental Representative. The assessment order kept in the files of the Income-tax Officer for 1970-71 dated 25-3-1972 is furnished at page 17 of the paper compilation. Similarly office copy of the assessment order for 1971-72 dated 29-3-1973 was furnished at page 19 of the paper compilation.
Letter dated 16-11-1983 addressed by Shri Poonamchand Toshniwal to the Income-tax Officer is furnished at page 20 of the paper compilation filed on behalf of the Department. As per the office copy of the assessment order for 1967-68 dated 25-10-1971, it can be seen that it bears a despatch seal which was duly initialled by the officer concerned noting the date on which it was despatched. From the despatch seal it is easy to be seen that the said assessment order was despatched to the assessee on 6-12-1971. The income-tax which was assessed against the assessee firm was duly furnished in the assessment order. Again a notice of demand for 1966-67 was sent on 17-12-1971 and it was served at least against two partners of the assessee. On 19-2-1971 the assessee firm addressed a letter to the Income-tax officer requesting that penalty notice under Section 273(b) may be dropped. The penalty relates to assessment year 1966-67. Thus we are satisfied from the evidence on record that the assessment order for 1966-67 was despatched to the assessee even as early as on 6-12-1971.
So also page 17 at which the office copy of the assessment order for 1970-71 was furnished, disclosed that whereas it was passed on 25-3-1972, it was despatched on 19-4-1972 to the assessee firm. Further the office copy of the assessment order for 1971 -72 dated 29-3-1973 discloses that it was despatched on 3-5-1973 since the initials of the concerned officer as well as the date of despatch appeared on the office copy of the assessment order. Therefore, we hold that there is tangible evidence on record to show that the assessment order for 1970-71 was despatched to the assessee firm on 9-4-1972 whereas for assessment year 1971-72, it was despatched on 3-5-1973. Notice under Section 221(1) was sent to Poonamchand Toshniwal in which tax demands due for assessment years 1967-68, 1966-67, 1970-71 and 1971-72 were demanded from him for the reason that the firm was dissolved and that as per the dissolution deed Shri Poonamchand Toshniwal undertook to pay taxes on behalf of minors and also to indemnify other partners and hence notices were put up in the name of Poonamchand Toshniwal. Copy of the said notice dated 5-12-1983 was furnished at page 1 of the paper compilation. Thus virtually there is no delay in serving notice of demand for assessment year 1966-67, 1970-71 and 1971-72. Only for assessment year 1967-68, it is not known whether the assessment order and demand notice were served. Since there is service of notice within reasonable time for assessment year 1966-67, 1970-71 and 1971-72, the argument that the demand notices were sent to the assessee long after the assessment orders were passed, has no merit and should be rejected as not correct. As regards assessment year 1967-68 we are of the view that following legal decisions in favour of the Department, we should hold that simply because there was delay in serving demand notice for assessment year 1967-68 we cannot accept the contention that the said delay would invalidate the assessment order passed.
3. In the result, we hold that the assessee has no case with regard to merits.
4. Now let us take up the objection of the learned Departmental Representative about the maintainability of the appeal itself. In Form No. 36 filed along with each of these appeals. Shri Poonamchand Toshniwal described himself as a partner of the assessee firm. The verification of Form No. 36 as well as verification provided under the grounds of appeal for each of the assessment years bear out our observation in this regard. The learned Departmental Representative contended that Shri Poonamcharid Toshniwal was not a partner at all in the firm as can be seen from the statement of allocation provided in the assessment order for each of these years and, therefore, he has no authority to file an appeal for and on behalf of the assessee firm. He invited our attention to Section 140(cc) of the Income-tax Act, Rule 45 of the Income-tax Rules as well as to Section 2(47) of the Income-tax Act. Section 140 deals with the subject as to who should sign the return. In Section 140(cc) the following is what is stated: In the case of a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to sign and verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor.
Rule 45(2)(cc) of the IT Rules as it stood prior to 18-5-1989 speak about the form of appeal to be filed before the Appellate Assistant Commissioner as well as the Commissioner (Appeals) and prescribed the procedure as to who should file the appeal for and on behalf of the firm. It states as under: In the case of a firm, by the managing partner thereof, or where for any unavoidable reason such managing partner is not able to sign and verify the return, or where there is no managing partner as such, by any partner thereof, not being a minor.
Thus it is the contention of the learned Departmental Representative that if it is an income tax return as per requirement of Section 140(cc) it should be signed either by the Managing Partner or in his absence by any partner not being a minor and if it is an appeal under Rule 45(2)(cc) of the IT Rules, 1962, then also, the appeal form namely, Form No. 35 should be signed and verified, in case the firm is the appellant by the Managing Partner of the firm or in his absence by any partner not being a minor. He strongly contended that there is no scope for any third party to file the appeal on behalf of the firm and since Shri Poonamchand Toshniwal filed Form No. 36 before the Tribunal describing himself as partner of the firm which is wrong and misleading and since he has no capacity whatsoever to file the appeals, they should be dismissed in limine as not maintainable and on that ground alone the appeals should be dismissed leave alone the merits of the case.
5. Shri Y. Ratnakar, the learned Advocate for the assessee filed a write up on this portion of his argument. He referred to Rule 47(1) of the Income-tax Rules prescribing form of appeal and the person who should sign the form of appeal. Rule 47(1) requires that the return shall be signed by the person specified in Sub-rule (2) of Rule 45 and Rule 45(2) requires that the form of appeal should be signed by the person authorised to sign the return of income under Section 140 of the Income-tax Act. Under Section 140(cc) if it is an appeal by the firm it should be signed by the managing partner or in his absence by any partner not being a minor. He contended that the word 'partner' is defined in Section 2(23) which includes a minor admitted to the benefits of partnership. Simply because Section 140(cc) or Rule 45(2) state that an appeal filed on behalf of the firm shall be signed by any partner not being a minor still a guardian of a minor has right of appeal to challenge the assessment made on the firm. He contends that it is always open to the minor to challenge a firm's assessment and such an appeal can be signed on behalf of the minor by his guardian. He elaborates his argument by submitting that an assessment made on the firm can also adversely affect a minor. For example, if the firm is assessed by making additions, even a minor is obliged to pay taxes on such enhanced income falling to his share. Law cannot deny the right of a minor to challenge such an assessment. The Courts jealously guard the interests of the minor. It would be illogical to suggest that though minor's interests are adversely affected, he has no right of appeal against the firm's assessment. Though Section 140(cc) precludes a minor from signing the appeal memo, it does not mean that his right of appeal to file the appeal is denied to his natural guardian. He further contends that there is no express prohibition in the Income-tax Act that the minor does not have right to challenge an adverse order passed on the firm whereby his interests are adversely affected. The right of appeal though a creature of statute should be construed in reasonable, practicable as well as liberal manner. If Section 140(cc) is not attracted, Clause (f) can be invoked in such an instance. The opening words of Section 246 and 253 state that any assessee aggrieved, may file an appeal. In this case the minors are the assessees who were aggrieved. Hence those sections themselves provide right to file an appeal. The Rules should be interpreted harmoniously with the section and cannot be read inconsistently with the meaning of the section. It would be inappropriate to state that a minor cannot challenge the assessment made on the firm. If for any reason, the Tribunal holds that a minor had no right of appeal and hence the natural guardian cannot also sign on their behalf, the Tribunal should permit the assessee to rectify the defect by an amendment to cause title for which separate petition is filed by Shri Poonamchand Toshniwal.
6. The matter was completely heard on 5-11 -1992 and when it is reserved for judgment Shri Poonamchand Toshniwal filed a petition seeking leave to file appeal and for amendment of appeal memo in which it is stated that the Tribunal may be pleased to permit the petitioner to present IT Appeals bearing Nos. 81 to 84/Hyd./1989 on behalf of his minor children, Suraj Prakash and Budhi Prakash who are admitted to the benefits of partnership, M/s. Jyothi Tin and Allied Industries and it may also permit the petitioner to amend the appeal memo to read that the appeal is filed on behalf of the minor children.
This petition is supported by an affidavit sworn in by Shri Poonamchand Toshniwal. The request to amend the appeal memo at this late stage was vehemently opposed by the learned Departmental Representative. The learned Departmental Representative argued that it is very essential to keep in mind that this is an appeal filed on behalf of the assessee firm and it is not an appeal filed arising out of the individual assessment made against the minor partners of the firm. Having thus kept in mind the above said important facts, the learned departmental representative invited our attention to Section 247 which is as follows : Where the partners of a firm are individually assessable on their shares in the total income of the firm, any such partner may appeal to the Deputy Commissioner (Appeals) or as the case may be, the Commissioner (Appeals) against any order of an Assessing Officer determining the amount of the total income or the loss of the firm or the apportionment thereof between the several partners, but he cannot agitate such matters in any appeal preferred against an order of assessment determining his own total income or loss.
Thus it can be clearly seen that Section 247 precludes an individual partner of the firm to agitate in any appeal filed by him against his own individual assessment on all the matters referred to in that section, namely, (i) the determination of the income or loss of the firm and (ii) apportionment of such income or loss between several partners. The reason for putting such a clog is apparent. The Act contemplates that either both these two matters should be agitated in an appeal filed on behalf of the firm and not in an appeal filed against an individual partner's assessment order. Thus in this case the appeals are filed challenging the quantum assessed in the hands of the assessee U.R.F. Relief sought for in each of these appeals is correct determination of the income of the firm. It can be done only in an appeal preferred for and on behalf of the firm and it cannot be permitted in an appeal filed on behalf of the partners arising from out of their individual assessments. Therefore, firstly since Poonamchand Toshniwal is not a partner of the assessee firm which he falsely represented at the time of filing the appeals before the Tribunal, he should not now be allowed to change his front and contend that, he should be permitted to represent his minor sons in these appeals. The minor sons by themselves cannot file the appeals since they cannot be considered as partners of the firm. For this proposition he relied upon the decision Aruppukottai Chandra Bus Lines v. CIT [1973] 87 ITR 154 (Mad.). In that case a partnership firm was found to have been comprised of more than 20 persons including the minors. The question was whether such a firm was entitled for registration. It was held that under Section 11 (2) of the Companies Act, the partnership consisting of more than 20 persons for the purpose of carrying on any business or gain is prohibited and while considering the number of partners minors are to be eliminated since they are incompetent to enter into contract.
Only adult partners should be counted and if they are less than 20 in number they are entitled for registration of the firm. Thus, when minors are prohibited to file appeals on behalf of the firm, much less his guardian who is representing him can do so and therefore, the guardian is also incompetent to file appeal for and on behalf of the firm. We have already stated that the learned Departmental Representative filed a paper book containing 20 pages. At page 3 a reply to the letter dated 16-11-1983 filed by Shri Poonamchand Toshniwal (found at page 20 of the paper book) despatched on 25-11-1983 after noting down the outstanding income-tax dues and after stating that a show-cause notice under Section 221 was issued to Shri Poonamchand Toshniwal and after adverting to his letter dated 5-11-1983, whereunder he categorically stated that he was never a partner of the assessee firm and that the notice was wrongly served and, therefore, the proceedings under Section 221(1) should be dropped against him, the Income-tax Officer stated the following: In this connection, I am to state that two minors Shri Budhi Prakash and Shri Suraj Prakash were the two partners in the above firm for whom, you were the guardian and onyour instance they were admitted to the benefits of partnership. I also invite your attention to the dissolution deed dated 20-1-1971 wherein you were made as party No. 5 as "indemnifier and witnesseth" and in the above deed it is clearly stated and agreed upon by him as follows: The party No. 5 shall pay the Sales-tax or the Income-tax on behalf of party No. 3 and 4 and shall be also personally liable to indemnify the party No. 1 and 2.
Under the above circumstances, it is difficult to understand how you deny your liability to pay the income-tax arrears of the above firm as per the dissolution deed.
As per the above reply sent by the Income-tax Officer himself, it is clearly seen that under the dissolution deed dated 20-1 -1971, Shri Poonamchand Toshniwal undertook to pay income-tax arrears for and on behalf of the minor as well as major partners of the firm and thus he stepped into the shoes of all the partners of the firm and having regard to the true facts obtaining in this case we have to see whether in such circumstances Shri Poonamchand Toshniwal is entitled to file the appeal for and on behalf of the firm as a person who stepped into the shoes of the firm and is a person who himself made liable for all the tax arrears of the firm. In this connection, the learned Departmental Representative sought to argue that even then Shri Poonamchand Toshniwal cannot have the right of appeal. He cannot be considered as a successor of the firm. He invited our attention to the decision of the Calcutta High Court in CEPT v. Ramnath Bajoria [1951] 19 ITR 79. In that case the assessment to excess profits tax was made on an unregistered firm in respect of the chargeable accounting period commencing from 1st May and ending on 30-4-1945. In July, 1946, the firm sold its business to 'B' under an agreement which provided inter alia that all income-tax and excess profits tax in respect of the business made and outstanding for the year 1-5-1945 to 30-4-1946 would be on account of the purchaser. The demand notice in respect of the period 1-5-1944 to 30-4-1945 was served on 'B'. The question before the Calcutta High Court was whether the said demand can be realised from 'B'. In that connection, the Calcutta High Court held the following at page 83: It is, however, suggested that by reason of Clause 7 of the agreement Bajoria may be liable, but that is an entirely indefensible proposition. Clause 7 only says that Bajoria would be liable to excess profits tax for the year beginning with 1-5-1945, and ending on 30-4-1946. The demand to which I have referred is not for that period for an earlier period namely from 1-5-1944, to 30-4-1945. Even if Bajoria was liable under Clause 7 of the agreement the Income-tax authorities could not take advantage of the provision of that agreement and make Bajoria liable.
The last sentence in the quoted passage is stressed upon by the learned Departmental Representative in support of his argument that even in spite of presence of such an undertaking in the dissolution deed, the tax demands cannot be realised from out of Shri Poonamchand Toshniwal and, therefore, ex-hypothesi cannot also be considered as a person who stepped into the shoes of the firm or the partners of the firm, and therefore, he cannot maintain appeals.
7. However, we came across a latter Calcutta High Court decision in CIT v. Southern Bank Ltd. [1979] 120 ITR 92. In that case the assessments against Southern Bank Limited for assessment years 1961-62, 1962-63, 1963-64, 1964-65 and 1965-66 were pending with the Income-tax Officer.
The Southern Bank Ltd. was amalgamated with U.I. Bank Limited on 22-4-1964 under Section 44 of the Banking Companies Act 1949 and the entire business of the assessee Bank (Southern Bank Ltd.) was taken over by U.I. Bank. The Income-tax Officer made the assessments for 1964-65 and 1965-66 and closed the assessments for 1961-62, 1962-63 and 1963-64 on the ground that the assessments for 1962-63 and 1963-64 should be dropped as the assessee could not be found. Since some refunds are due to the Southern Bank Ltd. for those two assessment years 1962-63 and 1963-64, appeals were filed. The appellant before the Appellate Asstt. Commissioner was shown as Southern Bank Limited whereas the appeal memoranda was signed on behalf of G.I. Bank Limited.
The question was whether such appeal at the instance of G.I. Bank Limited is competent and in that connection, the scheme of amalgamation prepared, the provisions of the scheme etc. were all examined by the Calcutta High Court. In the provisions of the scheme inter alia, it is recorded that from such prescribed date all liabilities, duties and obligations of the Southern Bank Ltd. would become the liabilities, duties and obligations of the United Industrial Bank Ltd. In that connection the Calcutta High Court considered the question whether by reason of succession by the United Bank Limited, the Southern Bank Liniited was competent to proceed with the appeal thereafter. The Calcutta High Court decided the question as follows : The findings of the Tribunal that it was the Southern Bank Ltd. who had filed the appeals and that it was the United Industrial Bank Ltd. which continued to proceed with the appeals have not been challenged by the revenue. We also note that the assessment proceedings of Southern Bank Ltd. were pending till the 30-1-1965, when they were disposed of by the ITO. On that date under the scheme it was the United Indu strial Bank Ltd. which could continue the proceedings and necessarily had the right to file appeals therefrom.
Now in this case also, the Income-tax returns for these for assessment years in question were filed by the assessee firm. By the date of filing of these appeals, the firm was dissolved as per deed dated 20-1 -1971 and as per the obligation undertaken Shri Poonamchand Toshniwal undertook the obligation to pay the income-tax arrears due on behalf of the partners of the firm and therefore, he stepped into the shoes of the partners of the firm. As a successor in interest of the partners of the firm who specifically undertook to discharge their income-tax arrears on their behalf and applying the ratio of the Calcutta High Court's decision in Southern Bank Ltd. 's case (supra) we are of the opinion that Shri Poonamchand Toshniwal is entitled to file the appeals and he has got requisite competence to maintain the appeals. In our opinion Ramnath Bajoria's case (supra) which is relied upon by the learned Departmental Representative is distinguishable and the ratio of the said decision cannot apply. It is also our opinion that the observation of the learned Judge in that decision on which great reliance is placed by the learned Departmental Representative is only obiter and for that reason also we prefer to follow the latter Calcutta High Court's decision in Southern Bank Ltd. 's case (supra) than the earlier decision in Ramnath Bajoria's case (supra). We, therefore, hold that the assessee is entitled to file and continue the appeals.
However, on merits of the case, we hold that simply because there was delay, in serving the assessment orders as well as demand notices, the assessments themselves cannot become invalid and unenforceable.