Law: Income Tax Act, 1922

Section: 35

Section 156 read with section 297 of the Income-tax Act, 1961 - Notice of demand - Assessment years 1956-57 to 1958-59 - Whether provisions of section 156 are mandatory - Held, yes - Whether where assessment of deceased-assessee was completed under old Act of 1922 and rectification order was passed after coming into force of 1961 Act, a notice of demand under section 156 had to be served on legal representatives of assessee - Held, yes FACTS The petitioner was the wife and legal representative of the deceased-assessee. For the assessment years 1956-57, 1957-58 and 1958-59, the assessee was assessed in his individual status and his share income from a firm was fixed. Subsequently, the assessment of the firm was completed and on the basis of that, the assessments of the assessee for the years 1956-57, 1957-58 and 1958-59 were rectified. As a result of this rectification, the assessee had to pay certain amount. On writ, the petitioner contended that no notice of demand as required was ever served on her. It was also further urged that as the rectification under section 35 of the 1922 was made only 7-3-1963, after the 1961 Act came into force, the notice of demand should be given under section 156. HELD Section 156 is clearly mandatory. Rule 15 of the Income-tax Rules, 1962, prescribed that subject to the provisions of rules 16 and 38, the notice of demand under section 156 shall be in Form No. 7. In the instant case, the order of rectification itself was passed after the coming into force of the 1961 Act. There was no proceeding pending which was already taken before the coming into force of the new Act for the recovery of the amount, for the simple reason that the order itself was passed after the commencement of the new Act. The amount due by the assessee and now payable by the petitioner had to be recovered under the provisions of the new Act, 1961. Therefore, a notice of demand under section 156 of the new Act in Form No. 7 given under rule 15 of the Income-tax Rules calling upon the petitioner to pay the amount due within 35 days of the service of the notice in that form had to be served by the ITO before he could take any further action for the recovery of…

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