TaxTMI 
TaxTMI 
2019 (9) TMI 356
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....b) pending the admission, hearing and final disposal of this petition, to stay the implementation and operation of the notice at Annexure-A to this petition and stay the further proceedings for the Assessment Year 2011-12; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition." 3. The case of the writ-applicant in her own words as pleaded in the writ-application is as follows : 2.2 The petitioner filed return of income for the Assessment Year 2011-12 on 30.07.11 declaring total income at Rs. 4,56,090/- and the same was processed under section 143(1) of the Act on 21.09.11. 2.3 The petitioner, unfortunately, passed away on 27.9.16. Copy of Death Certificate of the petitioner is annexed herewith and marked as Annexure-C. 2.4 Thereafter, suddenly after a period of four years from the end of the relevant assessment year, the respondent issued the impugned notice dated 28.3.18 under section 148 of the Act on the email ID of the concerned Chartered Accountant (i.e. M/s. H.V.Vasa & Co.) for reopening the assessment for the year under consideration. ....
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....the assessee to file return of income in response to notice issued under section 148 of the Act. 2.12 The respondent, vide letter dated 6.9.18, supplied copy of reasons for reopening. A bare perusal of reasons recorded for reopening reveals that the case of the petitioner has been reopened broadly on the count that certain payments made towards booking a plot have not been reflected in the return of income. Briefly, it is the case of the respondent that certain information was received from the DCIT, Central Circle - 2(4), Ahmedabad vide letter dated 22.3.18 to the effect that the petitioner had paid money to the tune of Rs. 28,00,000/- (Rs. 20,00,000/- in cash and Rs. 8,00,000/- through cheque) towards booking of Plot No.66 in a project namely Dipal Palm developed by J.P.Iscon Pvt. Ltd. and its group concerns. Such payments are not reflected in the return of income of the petitioner. Hence, the respondent has reason to believe that income of the petitioner to the tune of Rs. 28,00,000/- has escaped assessment for the year under consideration. 2.13 The petitioner states that the impugned notice under section 148 of the Act is bad, illegal, barred by limitation and....
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....ad person. According to Ms.Bhatt, the writ-applicant, being the widow of the assessee, would step into the shoes of the assessee and it is open for the Assessing Officer to proceed thereafter for the purpose of re-opening of the assessment in accordance with law. 7. Ms.Bhatt laid much emphasis on the fact that issue of a notice to a dead person at best could be termed as a procedural defect or, to put it in other words, it could be termed as an irregularity, which is curable and it has been cured. 8. Ms.Bhatt, in support of her submissions, has placed reliance on few decisions of different High Courts. Ms.Bhatt first relied upon a decision of the Allahabad High Court in the case of Commissioner of Income Tax v. Trans Travels, reported in (250) CTR 89. The second decision relied upon by Ms.Bhatt is that of the Madhya Pradesh High Court in the case of Smt.Kaushalyabai v. Commissioner of Income-tax, reported in (1999) 238 ITR 1008 (Madhya Pradesh). The third decision relied upon is that of the Karnataka High Court in the case of Commissioner of Income Tax, Central Circle v. Sri Durga Enterprises, reported in 231 Taxmann 886. 9. Having heard the learned counsel appearing for t....
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....r standing counsel for the Revenue with her usual fairness submitted that there is no escape from the fact that the department issued notice to a dead person. However, Ms.Bhatt submitted by placing reliance on Section 292B of the Act that the impugned notice would not become a nullity or invalid merely by reason of some mistake/defect. In such circumstances, according to Ms. Bhatt, if a notice under Section 148 of the Act is issued to a dead person instead of upon his/her legal representatives, the same shall be valid in view of the provisions of Section 292B of the act. Ms. Bhatt further placed reliance on Section 159(2)(b) and Section 159(3) of the Act. She submitted that in view of Section 159(2) (b) and Section 159(3) of the Act, the legal representative of the deceased shall for all practical purposes be deemed to be an assessee. 6.00. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the notice issued by the department under Section 148 of the Act to a dead person could be termed a valid notice. 7.00. Both the submissions of Ms. Raval, the ....
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....hi High Court in the case of Sky Light Hospitality LLP v. Assistant Commissioner of Income Tax, (2018) 405 ITR 296 (Delhi), wherein the court has held thus: "17. In the context of the present writ petition, the aforesaid ratio is a complete answer to the contention raised on validity of the notice under section 147/148 of the Act as it was addressed to the erstwhile company and not to the limited liability partnership. There was no doubt and debate that the notice was meant for the petitioner and no one else. Legal error and mistake was made in addressing the notice. Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated April 11, 2017. They had objected to the notice being issued in the name of the company, which had ceased to exist. However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was replied and dealt with by them. The fact that notice was addressed to M/s. Sky Light Hospitality Pvt. Ltd., a company which had been dissolved, was an error and technical lapse on the part of the respondent. No prejudice was caused." 6.5. It was pointed out ....
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....of the provision not complied with, but certainly not void or illegal. Following the said decisions, the court held that in the facts and circumstances of the case, the orders of assessment made by the Income Tax Officer without notice to all the legal representatives are not null and void in law, but are merely irregular/defective proceedings which can be set right by remitting the matters to the Income Tax Officer for making fresh assessments with notice to all legal representatives. 6.7. Reliance was placed upon the decision of this court in the case of Commissioner of Income Tax v. Sumantbhai C. Munshaw, (1981) 128 ITR 142, wherein though the notice was issued to the deceased person, the proceeding was continued against the legal representative who participated in the proceeding and also filed return of income without raising any objection as to the validity of the assessment proceedings. The legal representative had, therefore, submitted to the jurisdiction of the Assessing Officer. The court held that if the legal representative is present before the taxing authority in some capacity or voluntarily appears in the proceeding without service of notice or upon ....
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....t and drew his attention to the earlier letter dated 27.04.2018 informing him about the death of his father and requesting him to drop the proceedings. The attention of the Income Tax Officer was further invited to the provisions of section 159 of the Act, to submit that the proceedings are required to be initiated against a legal representative and not against the deceased and, therefore, the notices issued to the dead person are invalid. Reliance was placed upon the decision of this court in Jaydeep Kumar Dhirajlal Thakkar v. Income Tax Officer, (2018) 401 ITR 302 (Guj.) and Vipin Walia v. Income Tax Officer, (2016) 381 ITR 19 (Delhi). 9. Thereafter, by a notice dated 03.08.2018 issued under section 142(1) of the Act, the respondent called upon the petitioner as legal heir of deceased Shri Jayantilal Harilal Patel to furnish the documents mentioned therein. In the annexure thereto, the petitioner is called upon to show cause as to why penalty proceedings under section 217F of the Act should not be initiated in his case as he had not furnished return of income in response to the notice under section 148 of the Act and stating that this may be treated as notice under secti....
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....backdrop of the aforesaid facts, it is an admitted position that the notice under section 148 of the Act was issued to a dead person. The petitioner being the heir and legal representative of the deceased, upon receipt of the notice, immediately raised objection against the validity of the impugned notice and did not submit to the jurisdiction of the Assessing Officer by filing a return of income, but kept on objecting to the continuation of the assessment proceedings pursuant to the impugned notice. The Assessing Officer, however, instead of taking corrective steps under section 292B of the Act and issuing notice to the heirs and legal representatives, insisted on continuing with the proceedings pursuant to the impugned notice which was issued in the name of a dead person. Since strong reliance has been placed by the learned counsel for the respondent on the provisions of section 2(7) and 2(29) read with sections 159 and 292B of the Act, reference may be made to the said provisions, which read as under: "Section 2(7) "assessee" means a person by whom any tax or any other sum of money is payable under this Act, and includes - (a) every person in respect of whom an....
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....y in relation to a legal representative. (6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub-section (5), be limited to the extent to which the estate is capable of meeting the liability." "292B. Return of income, etc., not to be invalid on certain grounds. - No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act." 13. Thus, the expression "assessee" includes every person who is deemed to be an assessee under any provision of the Act. Sub- section (3) of section 159 of the Act, postulates that the legal representative of the deceased shall, for the purposes of the Act, be deemed to be....
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....ction (2) of section 159 of the Act, the proceeding pursuant to the notice under section 148 of the Act issued to the dead person, cannot be continued against the legal representative. 16. On behalf of the revenue, it has been contended that issuance of the notice to the dead assessee is merely a technical defect which could be corrected under section 292B of the Act. Reliance has been placed on the above referred decisions of the Supreme Court as well as the High Courts for contending that the proceedings would not be null and void merely because the notice has been issued against a dead person as the legal representative had received the notice and has objected to the validity of the notice and further continuation of the proceedings. In the opinion of this court, here lies the distinction between those cases and the present case. In the relied upon cases, the legal representative, in response to the impugned notice, filed return of income and participated in the proceeding and then raised an objection to the validity of the proceeding and, therefore, the court held that this was a case of waiver and that a technical defect can be waived; whereas in this case, right from....
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.... Act and consequently, the provisions of section 292B of the Act would not be attracted. In the opinion of this court, the decision of this court in the case of Rasid Lala v. Income Tax Officer, Ward-1(3)(6) (supra) would be squarely applicable to the facts of the present case. Therefore, in view of the provisions of section 159(2)(b) of the Act, it is permissible for the Assessing Officer to issue a fresh notice under section 148 of the Act against the legal representative, provided that the same is not barred by limitation; he, however, cannot continue the proceedings on the basis of an invalid notice issued under section 148 of the Act to the dead assessee. 19. In the facts of the present case, as noticed herein above, the notice under section 148 of the Act, which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has not complied with the same. The legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned not....
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....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 alive. Section 159(2)(b) is relevant as far as the present case is concerned. 12. 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. 13. Learned counsel for the Revenue sought to place reliance on the decision of the Supreme Court in CIT v. Jai Prakash Singh [1996] 219 ITR 737/85 Taxman 407 in support of his contention that the ITO was justified in initiating proceeding under Section 147 of the Act even....
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....ssessee died on 2nd December 2009. It is also an admitted fact that the notice under Section 148 of the Income-tax Act, 1961 to re-open the assessment for Assessment Year 2009-2010 has been issued against the dead person i.e., the deceased assessee. Thus, the re-assessment proceedings have been initiated after the death of the assessee. Though it was pointed out by the heir of the deceased assessee that the assessee has expired long back, and therefore, the notice issued in her name and/or against a dead person is not valid, instead of taking corrective measures as provided under Section 292 [b] of the Income-tax Act, 1961 and to issue fresh notice against the legal heirs of the deceased, the Assessing Officer has continued with the re-assessment proceedings against the dead person. Section 159 of the Income-tax Act which has been relied upon by the learned counsel for the Revenue shall not be applicable to the facts of the case on hand. 7. In the present case, admittedly, the reassessment proceedings have been initiated against the dead person and that too after a long delay, therefore, even if Section 159 of the Act is attracted, in that case also, the notice was require....
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....2), reported in (2010) 321 ITR 344 (Raj), in context with the notice issued under Section 148 of the Act to a dead person, had observed as under : "So far as the question framed that notice to the dead person has been issued, is concerned, notices have no doubt been issued to the dead person. It is settled principle of law that the case cannot be decided in the absence of the affected party. Therefore, notice to the dead person was illegal." 16. The Madras High Court, in the case of Alamelu Veerappan v. The Income Tax Officer, Non Corporate Ward 2(2), Chennai (Writ Petition No.30060 of 2017, decided on 7th June 2018), has observed as under : "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....
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....s of Section 159 of the Act have no application. 19. 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. 20. 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. 21. All the above reasons are fully supported by the decision in the case of Vipin Walia. (supra). In that case, the notice dated 27.3.2015 was issued under Section 148 of the Act to the assessee, who died on 14.3.2015. The validity of the said notice was put to challenge. The Income Tax Officer took a stand that since the intimation of death of the assessee on 14.3.2015 was not received by her, the notice was issued on a dead person. However, the fact regarding the death of the assessee could not be disputed by the Department. The Department continued the proceedings under Section 147/148 of the Act and at that s....
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....spitality LLP. Case (supra) 25. On a perusal of the factual position therein, the Court came to the conclusion that the defect was curable because it was held that the notice was not addressed to the correct name and that the PAN mentioned was also incorrect. The factual background was taken into consideration and the Court held that errors and mistakes cannot and should not nullify the proceedings, which are otherwise valid and that no prejudice had been caused, as this being the mandate of Section 292B of the Act. The decision in the case of Sky Light Hospitality LLP case (supra) is clearly distinguishable on facts and it does not support the case of the Revenue." 17. The Supreme Court, in the case of Commissioner of Income-tax, Bombay City I, Bombay v. Amarchand N.Shroff by his heirs and legal Representatives, reported in AIR 1963 SC 1448, has discussed about the legal personality of a deceased assessee in context with Section 24B of the Income Tax Act, 1922. We may quote the relevant observations thus : "4. It was argued by counsel for the Commissioner of Income-tax that on a correct interpretation of S.24B the amounts which were received by the heirs and l....
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....-section (1) provides that where a person dies his heirs and legal representatives are liable to pay out of the estate of the deceased the tax assessed as payable by the deceased or any tax which would have been payable under the Act by the deceased if he had not died. According to the submission of counsel for the Commissioner of Income-tax the words of sub-section (1) "or any tax which would have been payable by him under this Act if he had not died" mean that irrespective of the date of receipt of income receivable by a person, if the income is received by his heirs and legal representatives after his death, they are liable for payment of the tax just as the deceased would have been liable when the income was received had he been living. But this interpretation is not in accord with the language used in S.24B All the sub-sections have to be read together Subsection (1) can be divided into too parts (1) where the income of the deceased was assessed before his death and (2) where the income was not so assessed but it would have been liable to tax had he not died. The second part or the words above quoted when read with sub-sections (2) and (3) show that they are confined to cases ....
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....e-tax under S.24B as his income in the hands of his heirs and legal representatives. In the present case the accounts were kept on cash basis. The assessee under the Act has ordinarily to be a living person and cannot be a dead person because his legal personality ceases on his death. By S.24B the legal personality of a deceased assessed is extended for the duration of the entire previous year in the course of which he died and therefore the income received by him before his death and that received by his heirs and legal representatives after his death but in that previous year becomes assessable to income-tax in the relevant assessment year. The section was enacted by the Legislature to bring to tax after his death, income received during his lifetime and fill up the lacuna which was pointed out by the High Court in Commissioner of Income-tax Bombay v. Ellis C. Reid, 5 ITC 100: (AIR 1931 Bom 333). Any income received in the year subsequent to the previous or the account year cannot be called income received by the person deceased. The provisions of S.24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account wear in which that person d....
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.... liable to tax under S.24B(1) but in that case also the amount was received by the widow in the previous year and it was earned by the deceased during the previous year. 7. The correct position is that apart from S.24B no assessment can be made in respect of the income of a person after his death. See 5 ITC 100 : (AIR 1931 Bom 333). In that case, and that was a case before S. 24B was enacted, a person was served with a notice under Section 22(2) of the Income-tax Act but no return was made within the period specified and he dies. It was held that no assessment could be made under S.23(4) of the act after his death. At page 106 (of ITC) : (at p.335 of AIR) it was observed : "It is to be noticed that there is throughout the Act no reference to the decease of a person on whom the tax has been originally charged, and it is very difficult to suppose the omission to have been unintentional. It must have been present to the mind of the legislature that whatever privilege the payment of income-tax may confer, the privileges of immortality is not amongst them. Every person liable to pay tax must necessarily die and, in practically every case, before the last installment ha....
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....sions on which strong reliance has been placed on behalf of the Revenue. In Travels (supra) a notice under Section 148 was issued to the assessee, who appeared in response to the notice before the Assessing Officer and had in fact participated in the proceedings. The assessment was completed by making some additions to the assessee's income. On appeal, the Commissioner (Appeals) upheld the said order. Before the Tribunal, the assessee challenged the notice issued under Section 148 in status of unregistered firm as illegal and without jurisdiction. The Tribunal held that the notice under Section 148 was bad in law as it did not indicate, whether it was issued to a registered firm or to an individual who was carrying on proprietary business. The Revenue, being dissatisfied, went in appeal before the High Court. The High Court took the view that the Tribunal ought not to have declared the notice under Section 148 to be illegal and without jurisdiction as the assessee did not dispute its status as a firm but the only distinction sought to be made was that it was a registered firm. The High Court took the view that it would not be correct to say that the distinction of status of the....