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H.P.G. KRISHNA versus C.I.T.

High Court of Judicature at Allahabad

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H.P.G. Krishna v. C.I.T. - INCOME TAX REFERENCE No. 40 of 1987 [2004] RD-AH 1547 (30 November 2004)


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Income Tax Reference No.40 of 1987

Hari Prasad Gopi Krishna      Vs.      Commissioner of Income Tax.

Hon'ble R.K. Agrawal, J

Hon'ble P.Krishna, J

(Delivered By Hon. P.Krishna, J)

The Income Tax Appellate Tribunal, Allahabad at the instance of assessee has referred the following question of law under section 256 (1) of the Income Tax Act 1961 (hereinafter referred to as the Act) for opinion to this Court:-

"Whether the Tribunal was legally correct in holding that the proceedings had been validly initiated under section 148 in the instant case?"

The assessment year 1971-72 is involved in the present reference. A notice under section 148 of the Income Tax Act was issued to the assessee which was a Branch of M/s. Gopi Krishna & Co. The validity of the notice was unsuccessfully challenged before the Income Tax Officer. The case of the assessee was that the notice was not issued in the correct name. It was issued in the name of Hari Prasad Govind Krishna, which is a branch of M/s. Gopi Krishna & Co. The notice should have been issued in the name of Head Office i.e. Gopi Krishna & Co. However, the said plea of the assessee  found favour with the Appellate Assistant Commissioner of Income Tax. The Tribunal has reversed the order of the Appellate Assistant Commissioner and found that the notice was correctly issued to the assessee and the proceedings under section 148  of the Act are valid.

Heard Shri Vikram Gulati, the learned counsel for the assessee and Shri Shambhu Chopra, the learned standing counsel for the Revenue.

It was submitted that the issuance and service of a valid notice on an assessee is sine quanon for initiation of reassessment proceedings under section 147 of the Act. The assessee being a Branch Office of M/s. Gopi Krishna and Co., the notice issued in the name of Hari Prasad Gopi Krishna was, thus, invalid. Reliance has been placed by him on the following cases:-

1. (1979).119 ITR, 340, Income Tax Officer, E. Ward vs. Chandi Prasad Modi.

2. (1979), 119 ITR 351 Madan Lal Chaudhary  Vs. Income Tax Officer.

3. (1983), 148 ITR 745 Madan Lal Agrawal Vs.   CIT Kanpur.

4. (1987), 165 ITR 107 CIT   vs. Vibhuti Bhushan Mallick.

In support of the submission that the notice was validly issued in the name of assessee, the learned standing counsel for the Department has placed reliance on the following two cases:-

1. (1965),55 ITR 630 CIT vs. S.Raman Chettiar.

2. (2001) 252 ITR 758 Mool Chand Rampuria vs.  Income Tax Officer.

There is no dispute vis-à-vis the status of the assessee. Therefore, the reassessment proceedings were validly initiated.

We have given careful consideration to the respective submissions of the counsel for the parties. The Tribunal has quoted certain portion from the partnership deed of the assessee. It is apt to quote them here also as it has some relevancy to the controversy involved in the present case:-

"AND WHEREAS the aforesaid First, Second and Third parties agreed amongst themselves to carry on the business in Gold ornaments and Silver Bullion with effect from Dashehra St, 2026 under the name and style of M/s. Gopi Krishna & Company, Hindi Bazar, Gorakhpur, and M/s. Hari Prasad Gopi Krishna, Hindi Bazar, Gorakhpur (for gold ornament business) on various terms and conditions which are necessary to be reduced into writing so that there may not arise any dispute in future."

The partnership deed itself states the two names of the assessee as mentioned above. It also appears that the name of Hari Prasad Gopi Krishna was for gold ornaments business. In this factual background the Tribunal has recorded a finding that there was no dispute with regard to the status of the assessee to whom the notice was issued. Indisputably the name of the assessee's branch finds place in the notice and it is not its case that there is any other person such as Hari Prasad Govind Krishn. The partnership deed also supports the contention of the department that the assessee Firm was running the business in two names.

In this view of the matter it cannot be said that the notice was not correctly addressed to the assessee.

The cases relied upon by the learned counsel for the assessee are distinguishable on facts and have no bearing to the controversy involved in the case in hand.

The Income Tax Officer vs. Chandi Prasad Modi (Supra) is an authority for the proposition that the Income Tax Officer's jurisdiction to reopen an assessment order would depend upon the issuance of a valid notice. If the notice issued by him is invalid for any reason then the entire proceedings that would taken by him pursuant to such notice would be void for want of jurisdiction. On a close analysis of the facts of Chandi Prasad Modi's case shows that the Department had accepted the partial partition of the HUF. The business was being carried on by the HUF and there was also a registered partnership Firm under identical names of which the Department had the knowledge. In view of these facts it was held that at the relevant time there were two concerns of the same name and at the same address. The Income Tax Officer had full knowledge of the separate identity of the two concerns. But in spite of it there was neither any thing in the notice nor otherwise to show of which the two concerns, the partnership Firm or the HUF the notice was directed. On these facts the notice was held to be illegal. The said proposition of law has no application in the present case in as much as here the assessee is one person and carrying on one business in two names. Also there is no dispute vis-à-vis with regard to the status of the assessee.

For the same reasons (1979), 119 ITR 351 Madan Lal Chaudhary vs. I.T.O. (supra) is also distinguishable.

The case of Madan Lal Agrawal vs. C.I.T. (Supra) is also inapplicable to the facts of the present case. The notice was intended to be issued to the assessee in the status of  HUF. But the notice was not addressed to the assessee which was an HUF, an entity different from the assessee (individually). This court took the view that the notice was vague and as such invalid. The vagueness of the notice did not require to file the return in the status of HUF. The proceedings initiated under section 147 (a) of the Act was held invalid against the assessee HUF. Since there was a dispute of status, notice was issued in respect of a particular status of an assessee but the income was sought to be reassessed  of the assessee of different status was held invalid.  This case is also distinguishable as there is no dispute vis-à-vis the status of the assessee. On the same parity of reasoning the case of C.I.T. vs. Vibhuti Bhushan Mallick (Supra) is also not applicable.  The assessee, Vibhuti Bhushan Mallick was assessed as HUF. The notice was issued to reopen the assessment in the name of  Pancham Mallick and Vibhuti Bhushan Mallick.

In view of the foregoing discussion we find that the notice was validly issued in the name of the assessee. The finding of the Tribunal on this issue is legally correct. We answer the question of law referred to us in affirmative i.e. against the assessee and in favour of the Department. However, there shall be no order as to costs.

Dt. 30.11.2004



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