Case: Homely Industries Vs. The Sales Tax Officer, Sector V, Kanpur

been acceded to. We, however, express no opinion on the merits of their claim. 14. Mr. Dikshit appearing on behalf of the respondents strenuously contends that the word "may" in Section 7C (3) makes it optional for the Sales Tax Officer to give or not to give notice to the legal representative for production of documents after death of an assessee. We are unable to accede to this submission. 15. The scheme of the relevant provisions of the Act is as follows :"Omitting the non-essentials for the purpose of this case, under sub-section (1) of Section 7 a return is required to be submitted by a dealer showing his turnover. Under sub-section (2) of Section 7, if the Sales Tax Officer is satisfied that the return submitted by a dealer is correct and complete he shall assess the tax on the basis of that return. Under sub-section (3) of Section 7 read with the proviso, if, according to the Officer, the return submitted by a dealer is incorrect or incomplete, he shall make what is called, a best judgment assessment after making such enquiry as he considers necessary but must, under the proviso thereto give a reasonable opportunity to the dealer to prove the correctness and completeness of the return submitted by him." 16. So far as material for the purpose of this case, Section 7C (3), properly construed, provides, inter alia, that if a person dies after furnishing a return and his return, which was submitted, is not accepted by the Officer as correct or complete, the obligation to give a reasonable opportunity to prove the correctness and completeness of the return under Section 7 (3) read with the proviso cannot be given a go-by if the person who submitted the return dies without a notice having been given for such an opportunity. The word "may" is Section 7C (3) does not clothe the Sales Tax Officer with arbitrary power of assessment without notice to the legal representative to produce evidence or documents which, if the dealer were alive, he would have been entitled to do under Section 7 (3) read with the proviso. The submission of Mr. Dikshit is, therefore, devoid of substance. 17. In the view we have taken that no fresh notice to the legal representative was called for prior to the passing of the assessment orders in this case, we are not called upon to decide whether the legal representatives had waived their right to notice as urged in the alternative by Mr. Dikshit. 18. We may now deal with the second submission of Mr. Manchanda that no recovery proceedings could be instituted unless a notice of demand had been served on the legal representative under Section 8 of the Act. That section reads as under :"8. (1) The tax assessed under this Act shall be paid in such manner and in such instalments, if any, and within such time, not being less than fifteen days from the date of service of the notice of assessment, as may be specified in the notice. In default of such payment, the whole of the amount then remaining due shall become recoverable in accordance with sub-section (2). (2) Any tax or other dues payable to the State Government under this Act shall be recoverable as arrears of land revenue." 19. It is clear that before a certificate proceeding can be instituted under sub-section (2) of Section 8 a notice of demand under sub-s. (1) thereof is a condition precedent. There can be no recovery without service of a demand notice. It is admitted that such notice has not been served on the legal representatives. That being the position the recovery proceedings are not maintainable in law and are invalid and the same along with the certificates are liable to be quashed. 20. Mr. Dikshit has drawn our attention to a decision of this Court in Sahu Rajeshwar Nath vs. Income-tax Officer, C. Ward, Meerut, 72 ITR 617 and submitted that this decision is an authority for the proposition that no notice on the legal representative is required under the law prior to the institution of recovery proceedings by certificate. 21. In that case this Court was considering the liability of a partner of an unregistered firm which was the assessee and a notice under Section 29 of the Income-tax Act, 1922, had been served on the unregistered firm and all the tax assessed against the firm was sought to be recovered from the partner in proceedings under Section 46 (2) of the Income-tax Act. It was contended on behalf of the partner that a fresh notice of demand upon the partner was necessary under the law and in its absence the recovery proceedings were invalid. This Court repelled the contention holding that although the unregistered firm was the assessee the partner was liable under Section 25 of the Partnership Act and since the appellant, therein, conceded that he was a partner of that firm during the accounting year, no separate notice under Section 29 of the Income-tax Act upon the partner was necessary. It was further held that the notice contemplated under Section 29 of the Income-tax Act, 1922, was to the assessee or to any other person liable and "any other person liable under Section 29" meant "liable under the Income-tax Act" and not under any other law such as the Partnership Act. 22. That was a case where no question arose about the liability of the appellant therein under the provisions of the Income-tax Act such as Section 24B of the Income-tax Act, 1922, which is almost identical with Section 7C (1) of the Act and that because of that under Section 29 of the Income-Tax Act a notice of demand was obligatory as a condition precedent to the institution of certificate proceedings for recovery of the dues as arrears of land revenue. The aforesaid decision of this Court in Sahu Rajeshwar Naths case, 72 ITR 617 is, therefore, of no assistance to the learned Counsel.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]Section 7C (3) does not entitle the legal representatives to any notice which the deceased, if alive, would not have been entitled to under the provisions of the Act. Since there was no obligation under the Act for service of a second notice on the dealer, if he were alive, the legal representatives were not entitled to a notice as claimed under Section 7C (3) of the Act. The orders of assessment cannot, therefore, be held to be invalid on account of non-service of notice for production of documents upon the legal representatives in this case. Besides, we find that the legal representatives were aware of the proceedings and took several adjournments and if they did not choose to produce any further evidence it was entirely their fault and they cannot blame the Officer when the request for adjournment was not granted after so many requests had already been acceded to. We, however, express no opinion on the merits of their claim17. In the view we have taken that no fresh notice to the legal representative was called for prior to the passing of the assessment orders in this case, we are not called upon to decide whether the legal representatives had waived their right to notice as urged in the alternative by Mr. Dikshit18. We may now deal with the second submission of Mr. Manchanda that no recovery proceedings could be instituted unless a notice of demand had been served on the legal representative under Section 8 of the Act19. It is clear that before a certificate proceeding can be instituted under sub-section (2) of Section 8 a notice of demand under sub-s. (1) thereof is a condition precedent. There can be no recovery without service of a demand notice. It is admitted that such notice has not been served on the legal representatives. That being the position the recovery proceedings are not maintainable in law and are invalid and the same along with the certificates are liable to be quashed20. Mr. Dikshit has drawn our attention to a decision of this Court in Sahu Rajeshwar Nath vs. Income-tax Officer, C. Ward, Meerut, 72 ITR 617  and submitted that this decision is an authority for the proposition that no notice on the legal representative is required under the law prior to the institution of recovery proceedings by certificate21. In that case this Court was considering the liability of a partner of an unregistered firm which was the assessee and a notice under Section 29 of the Income-tax Act, 1922, had been served on the unregistered firm and all the tax assessed against the firm was sought to be recovered from the partner in proceedings under Section 46 (2) of the Income-tax Act. It was contended on behalf of the partner that a fresh notice of demand upon the partner was necessary under the law and in its absence the recovery proceedings were invalid. This Court repelled the contention holding that although the unregistered firm was the assessee the partner was liable under Section 25 of the Partnership Act and since the appellant, therein, conceded that he was a partner of that firm during the accounting year, no separate notice under Section 29 of the Income-tax Act upon the partner was necessary. It was further held that the notice contemplated under Section 29 of the Income-tax Act, 1922, was to the assessee or to any other person liable and "any other person liable under Section 29" meant "liable under the Income-tax Act" and not under any other law such as the Partnership Act22. That was a case where no question arose about the liability of the appellant therein under the provisions of the Income-tax Act such as Section 24B of the Income-tax Act, 1922, which is almost identical with Section 7C (1) of the Act and that because of that under Section 29 of the Income-Tax Act a notice of demand was obligatory as a condition precedent to the institution of certificate proceedings for recovery of the dues as arrears of land revenue. The aforesaid decision of this Court in Sahu Rajeshwar Naths case, 72 ITR 617  is, therefore, of no assistance to the learned Counsel