In Deen dayal Kothari v. ITO, the single bench of the Income Tax Appellate Tribunal (ITAT) Chennai ruled that a HUF and an individual are two different persons for the purpose of Income Tax Act and therefore, notice to assessee in his “HUF” status cannot be deemed as a notice to ‘individual’.
The assessee, filed return in the status of ‘HUF’. On scrutiny of the returns, the Assessing Officer found that the assessee had purchased a land during the year under consideration and the same has not shown in the return.Accordingly, notice u/s 148 was issued against the assessee.
During the course of proceedings, the assessee maintained that the transaction was effected in his individual status. The Department, thereafter completed assessment against the assessee in the status of individual. The first appellate authority confirmed the order.
Before the ITAT, the assessee contended that the order of the assessment passed against the assessee in the capacity of an ‘individual’ is invalid since the notice was issued to the assessee as a ‘HUF’. They contended that once assessment proceedings has been started in the status of HUF, it ought to have been concluded only in the status of HUF and not as an individual.
Allowing the contention, the bench noted that there was no issue of notice on the assessee in his status as individual either under sections 148 nor 143(2) of the Income Tax Act.
“Thus once ld. Assessing Officer reached a opinion that assessment was to be done only in the status of ‘individual’ and not in the status of ‘HUF’, he was bound to issue a notice to the assessee in his individual status. An ‘individual’ and an ‘HUF’ are different persons under the Income Tax Act, and notice to one cannot be deemed as notice to the other. Section 2(31) of the Income Tax Act clearly brings out this differentiation. In the case before us, there was a clear failure to issue notice to the assessee in his individual status. Sec. 292BB of the Act can cure only were a notice is claimed by a assessee not to have been served on him or served on him out of time or served in an improper manner. It cannot cure a situation were there was no issue of notices u/s.148 or u/s.143(2) of the Income Tax Act.”
Read the full text of the order below.