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Reassessment proceedings initiated by issuance notice on the deceased assessee quashed for want of jurisdiction.
Late Shri Bhura Ram (L/H Gasilal … vs Ito, Jaipur on 26 November, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE ‘A’ JAIPUR
BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM
ITA No. 989/JP/2015
Assessment Year :2006-07
Late Shri Bhura Ram The ITO
(Legal Heirs Gasilal, Phool Chand, Vs. Ward 7(2), Jaipur
Ram Prasad, Lallu Lal, Prahlad) S/o
Shri Fattaram, Vill.- Mangyawas,
New Sanganer Road, Jaipur
PAN/GIR No.: ABDPG9552F
Assessee by : Shri Mahendra Garyieya & Shri Rohit Tiwari (Adv.) Revenue by : Shri J. C. Kulhari (JCIT) & Shri Laxman Singh (AO) Date of Hearing : 30/08/2019
Date of Pronouncement: 26/11/2019
ORDER PER: VIKRAM SINGH YADAV, A.M.
This is an appeal filed by the assessee against the order of ld. CIT(A)-3, Jaipur dated 18.09.2015 for the assessment year 2006-07 wherein the assessee has taken the following grounds of appeal:-
“1. The very action taken u/s 147 r/w 148 is bad in law without jurisdiction and being void ab-initio, the same kindly be quashed. Consequently the impugned assessment framed u/s 144/148 dated 11.02.2014 also kindly be quashed.
- The impugned additions and disallowances made in the order u/s 147/144 of the Act dated 11.02.2014 are bad in law and on facts of the ITA No. 989/JP/2015 Late Shri Bhura Ram, Jaipur Vs. ITO, Jaipur case, for want of jurisdiction and various other reasons and hence the same kindly be deleted.
3.1 The ld. CIT(A) erred in law as well as on the facts of the case in confirming the assessment made u/s 144 by the AO without affording adequate and reasonable opportunity and even without complying with the mandatory statutory requirement of law. The impugned order so framed in gross breach of natural justice and confirmed by the Id. CIT(A), kindly be quashed.
3.2 The ld. CIT(A) erred in law as well as on the facts of the case in confirming the action of the AO alleging that notice/s u/s 142(1) was/were served upon the assessee which, remained un-complied. However, such allegation/s, is totally contrary to the facts in as much as no such notice was ever served upon the assessee or anyone else duly authorized by the appellant, in this behalf.
- Rs.53,10,110/-: The ld. CIT(A) erred in law as well as on the facts of the case in confirming the addition made by the AO of Rs.53,10,110/- as Long Term Capital Gain. The addition so made and confirmed by the ld. CIT(A), is contrary to the provisions of law and facts of the case. Hence, the same kindly be deleted in full.
- The AO & ld. CIT(A) both erred in law as well as on the facts of the case in charging interest u/s 234A, 234B, 234C & 234D of the Act. The appellant totally denies its liability of charging of any such interest. The interest so charged, being contrary to the provisions of law and facts, kindly be deleted in full.”
ITA No. 989/JP/2015 Late Shri Bhura Ram, Jaipur Vs. ITO, Jaipur
- Briefly stated, the facts of the case are that the assessment in the case of deceased assessee was completed u/s 147 read with section 144 on 11.02.2014 wherein the long term capital gain on sale agricultural land amounting to Rs. 53,10,106/- was brought to tax by the Assessing Officer. In appeal, the same has been confirmed by the ld. CIT(A). Hence, the present appeal through the legal heirs of the deceased assessee which has come up for adjudication before us.
- In ground Nos. 1 and 2, the legal heirs of the deceased assessee assessee have challenged the assumption of jurisdiction u/s 147 by issuing notice u/s 148 on the deceased assessee.
- In this regard, the ld. AR submitted that the issuance of valid notice is a foundation for the valid re-assessment proceedings. The notice prescribed u/s 148 is not a mere procedural requirement, but is a condition precedent to the validity of reassessment proceedings. If no notice is issued or if the notice issues is shown to be invalid, the proceedings initiated by the Assessing Officer would be invalid and void. In the instant case, it was submitted that the proceedings u/s 147 were initiated against the dead person who had expired on 26.11.2008 i.e. much prior to the issuance of notice u/s 148 on 20.03.2013. It was submitted that the impugned notice having been issued in the name of a dead person was an invalid notice and consequently such proceedings are void ab initio. It was further submitted that the AO did not issue any notice u/s 148 of the Act or 143(2) of the Act in the name of the legal heirs. Therefore, the assessment framed by the AO on the basis of the notice issued u/s 148 of the Act in the name of the deceased assessee was invalid and void ab initio.
- Another contention raised by the ld. AR was that impugned notice u/s 148 dated 20.03.2013 was never served on the deceased assessee nor on his ITA No. 989/JP/2015 Late Shri Bhura Ram, Jaipur Vs. ITO, Jaipur legal heirs. It was submitted that the objection to this effect was raised before the ld. AO vide letter dated 31.01.2014. Though the objections have been disposed off vide letter dated 04.02.2014 stating that the said notice u/s 148 was duly served through post. However, no details were provided as to the name of the person on whom service through post, if any was effected and whether that person is the deceased assessee or the legal heirs. It was further submitted that the ld. CIT(A) has also failed to appreciate the said fact that the notice has not been served on the deceased assessee and merely basis dispatch register wherein the notice to other parties have been issued by the Assessing Officer and duly served, the ld. CIT(A) came to the conclusion the notice has been served on the deceased assessee.
- In support, reliance was placed on the Co-ordinate Bench decision in case of Late Smt. Gulab Devi Sharma Th/L/h Brij Kishore Sharma vs. ITO (ITA No. 417/JP/2016 vide order dated 14.09.2016). Further reliance was placed on the Hon’ble Delhi High Court decision in case of Vipin Walia vs. ITO (2016) 382 ITR 19 (Del), Alamelu Veerappan vs ITO (2018) 95taxmann.com155 (Mad), CIT vs. Suresh Chandra Jaiswal (2010) 325 ITR 563 (All.) besides other decisions.
- Per contra, the ld. DR submitted that on the basis of the information available on record, action u/s 147 was initiated in the case of assessee and after taking prior approval from the competent authority, notice u/s 148 was issued on 20.03.2013 and served through post as mentioned in assessment order by the AO. Therefore, the proceedings initiated were as per law. The same has also been confirmed by the Ld. CIT(A). Issue regarding service of notice was also raised by assessee before the Id. CIT(A). The Ld. CIT(A) has also examined the assessment record as well as dispatch register and found that the notice was issued in time and the ground of assessee was dismissed.
ITA No. 989/JP/2015 Late Shri Bhura Ram, Jaipur Vs. ITO, Jaipur During the course of assessment proceedings, the assessee made objection which was duly disposed off by speaking order dated 04.02.2014. In the order, it was clearly mentioned that the assessee has not filed his return of income for the year under consideration or for the prior assessment years and was not having any PAN. In absence of any details, it was not possible to ascertain the existence of status of the assessee. Therefore, the notice u/s 148 was rightly issued in time and proceedings were as per law, as mentioned by the AO in his assessment order. He accordingly supported the findings of the AO and the ld CIT(A).
- We have heard the rival contentions and perused the material available on record. The undisputed facts are that the assessee, Shri Bhura Ram had expired on 26.11.2008 as per death certificate dated 11.02.2009 issued by Jaipur Municipal Corporation. The reasons for reopening the assessment u/s 147 were recorded on 15.03.2013 and thereafter the notice u/s 148 was issued in the name of assessee on 20.03.2013. Therefore, at the time of issuance of the notice u/s 148, the assessee had already expired and the notice was thus issued in the name of deceased assessee. Further, we find that there is no subsequent notice u/s 148 which has been issued by the Assessing Officer on the legal heirs of the deceased assessee. In this regard, we refer to the decision of Delhi High Court in case of Vipin Walia vs. ITO (supra) wherein referring to the provisions of section 159 of the Act, it was held as under:
“11. Section 159(2) of the Act makes a specific reference to a reassessment proceeding under Section 147 of the Act. While Section 159(2)(a) of the Act talks of a proceeding already taken against an Assessee ‘before his death’. Section 159(2)(b) of the Act envisages any proceeding which could have been taken against the deceased if he had survived. It permits such a proceeding to be taken against the LRs of the deceased Assessee even if it had not taken while the Assessee was ITA No. 989/JP/2015 Late Shri Bhura Ram, Jaipur Vs. ITO, Jaipur alive. Section 159(2)(b) is relevant as far as the present case is concerned.
- What was sought to be done by the ITO was to initiate proceedings under Section 147 of the Act against the deceased Assessee for AY 2008-09. The limitation for issuance of the notice under Section 147/148 of the Act was 31st March 2015. On 27th March 2015, when the notice was issued, the Assessee was already dead. If the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31st March 2015 by issuing a notice to the LRs of the deceased. Beyond that date it could not have proceeded in the matter even by issuing notice to the LRs of the Assessee.”
- Similar view has been taken earlier by the Hon’ble Allahabad High Court in case of CIT vs. Suresh Chandra Jaiswal (supra) wherein it was held as under:-
“In the present case, the notice u/s 148 was addressed to an assessee who was already dead even on the date of issue of notice. The notice was issued on 28th March, 1985, while the assessee, Ganga Prasad Jaiswal had died on 20th March, 1985. The notice was not served upon the legal representatives of Ganga Prasad Jaiswai but it was served on one Keshav Ram, munim. Even the name of the deceased assessee was not correctly mentioned in the notice. The notice was addressed to Ganga Prasad Jaiswai while the correct name of the assessee was Ganga Ram Jaiswal. The Tribunal was right in holding that the defects in the notice under s. 148 were not cured by s. 292B. “
- Similar view has been taken by the Hon’ble Madras High Court in case of following the decision of the Hon’ble Delhi High Court in case of Vipin Walia, wherein it was held as under:
ITA No. 989/JP/2015 Late Shri Bhura Ram, Jaipur Vs. ITO, Jaipur “14. The issue, which falls for consideration, is as to whether the impugned notice under Section 148 of the Act issued in the name of the dead person – the said Mr.S.Veerappan is enforceable in law and the subsidiary issue being as to whether the petitioner, being the wife of the said Mr.S.Veerappan, can be compelled to participate in the proceedings and respond to the impugned notice. The fact that the said Mr.S.Veerappan died on 26.1.2010 is not in dispute. If this fact is not disputed, then the notice issued in the name of the dead person is unenforceable in the eye of law.
- The Department seeks to justify their stand by contending that they were not intimated about the death of the assessee, that the legal heirs did not take any steps to cancel the PAN registration in the name of the assessee and that therefore, the Department was justified in directing the petitioner to co-operate in the proceedings pursuant to the impugned notice.
- The settled legal principle being that a notice issued in the name of the dead person is unenforceable in law. If such is the legal position, would the Revenue be justified in contending that they, having no knowledge about the death of the assessee, are entitled to plead that the notice is not defective. In my considered view, the answer to the question should be definitely against the Revenue.
- This Court supports such a conclusion with the following reasons : Admittedly, the limitation period for issuance of notice for reopening expired on 31.3.2017. The impugned notice was issued on 30.3.2017 in the name of the dead person. On being intimated about the death, the Department sent the notice to the petitioner – his spouse to participate in the proceedings. This notice was well beyond the period of limitation, as it has been issued after 31.3.2017. If we approach the problem sans complicated facts, a notice issued beyond the period of limitation i.e. ITA No. 989/JP/2015 Late Shri Bhura Ram, Jaipur Vs. ITO, Jaipur 31.3.2017 is a nullity, unenforceable in law and without jurisdiction. Thus, merely because the Department was not intimated about the death of the assessee, that cannot, by itself, extend the period of limitation prescribed under the Statute. Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration.
- In such circumstances, the question would be as to whether Section 159 of the Act would get attracted. The answer to this question would be in the negative, as the proceedings under Section 159 of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being otherwise, the provisions of Section 159 of the Act have no application.
- The Revenue seeks to bring their case under Section 292 of the Act to state that the defect is a curable defect and on that ground, the impugned notice cannot be declared as invalid.
- The language employed in Section 292 of the Act is categorical and clear. The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. Undoubtedly, the issue relating to limitation is not a curable defect for the Revenue to invoke Section 292B of the Act.”
- In view of the aforesaid legal proposition so laid down by the various Courts, in the instant case, the notice issued u/s 148 in the name of the deceased assessee is a nullity in the eyes of law. Further, no notice u/s 148 has been issued in the name of the legal heirs and therefore, the provisions of ITA No. 989/JP/2015 Late Shri Bhura Ram, Jaipur Vs. ITO, Jaipur section 159 cannot be invoked in the instant case. Consequently, the present reassessment proceedings initiated by issuance notice on the deceased assessee are being quashed for want of jurisdiction. In view of the above, rest all grounds taken by the assessee have become academic in nature and the same are dismissed as infructuous.
In the result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 26/11/2019.