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2022 (1) TMI 1210
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....r along with other Co-owners and his share in the transaction was Rs. 35,79,625/- ,but no return of income had been filed by the asseseee. Subsequently assessment was framed , subjecting the Long Term Capital Gain earned thereon, amounting to Rs. 32,63,644/-, to tax by taking the assessee's share as the sale consideration received and reducing therefrom the cost of acquisition on the basis of DVO report in the case of one of the Co-owners Shri Ramjanibhai Bikhubhai Shekh. 2.1. The assessee challenged the assessment so framed before the Ld. CIT(A) where, despite several opportunities given, none appeared on behalf of the assessee and the Ld. CIT(A) accordingly noted that since the assessee had nothing to state in his appeal, she dismissed the appeal filed by the assesee. 3. Aggrieved by the same, the assessee has now come up in appeal before us raising the following grounds: 1. The reassessment is bad in law since there is no escapement of income. 2. The learned CIT(A) has erred in passing the exparty order and thereby has erred in confirming the addition of Long Term Capital Gain [LTCG] of Rs. 32,63,644 in as much as the fair market value as on 01-04-1981 sh....
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....hat date the AO has received the reply from Court Receiver is not mentioned as per Para No. 3 of the assessment order. (f). The Show Cause Notice [SCN] dated 03-10-2016 was served by the speed post to all the legal heirs [as per Para No .4 of the assessment order] but it is not mentioned in the assessment order whether speed post is served to all the legal heirs and if yes, on what date and on what place or whether speed post is returned unserved to any legal heirs or all legal heirs. 02. The learned AO has erred in not accepting the Registered Valuer's Report furnished by letter dated 29-12-2016 - Para No.5 on Page No.3 of top of the assessment order without giving any reasons and has erred in following the DVO Report in case of another co-owners Ramjanibhai Bhikhubhai Shekh without giving any notice to all the legal heirs and therefore the assessment order is void ab initio. 5. During the course of hearing before us, Ld. Counsel for the assessee first made arguments vis-à-vis additional ground no1.3 to the effect that the notice u/s. 148 was not served on the legal representatives at all and therefore the reassessment proceedings was without valid ....
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.... Section 159 of the Act came to the assistance of the revenue. The Hon'ble High Court ,in this backdrop ,held that where the assessee had expired and was no longer surviving on the date of issue of notice u/s. 148 ,then even as per Section 159 of the Act the notice was required to be issued in the name of the heirs of the deceased assessee. The Hon'ble High Court held that Section 159 of the Act would not be of any assistance to the revenue. Accordingly, the writ petition filed by the asessee was allowed by the Hon'ble High Court, the relevant findings of the Hon'ble High Court at para 5 to 7 of the order is as under: "5. Heard learned advocates for the respective parties at length. 6. It is an admitted position that the assessee 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 assesee has expired long back, and ther....
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....der passed against the deceased, the petitioner herein had preferred an appeal as a legal heir of late Shri Dhirajlal Dayaljibhai Thakkar and, therefore, the respondent was well aware of this fact. Against the order passed by the Commissioner (Appeals) the department has preferred an appeal before the Tribunal, wherein the name of the petitioner is reflected as the legal heir of Shri Dhirajlal Dayaljibhai Thakkar. While seeking to reopen the assessment, the Assessing Officer has issued notice dated 30.03.2017 in relation to the assessment year 2010-11 to Shri Dhirajlal Dayaljibhai Thakkar. Admittedly, the notice has been issued against a dead person. This court in the case of Rasid Lala (supra) wherein the re-assessment proceedings had been initiated after the death of the assessee and the notice was issued against a dead person, held that the reassessment proceedings having been initiated against the dead person and that too after a long delay, even if section 159 of the Act is attracted, in that case also, the notice was required to be issued against and in the name of the heir of the deceased assessee. The court held that in the facts and circumstances of the case, sect....
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....in accordance with the provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was - (a) not served upon him; or (b) not served upon him in time; or (c) served upon him in an improper manner. The proviso thereto says that nothing contained in the section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. In the present case, apart from the petitioner is not the assessee, the petitioner has raised objection before completion of the reassessment and, therefore, the provisions of section 292BB would not be applicable in the facts of the present case. 12. In the light of the above discussion, the impugned notice under section 148 of the Act having been issued against a dead person, is a nullity and cannot be sustained. The petition, therefore, succeeds and is accordingly allowed. The impugned notice dated 30.03.2017 issued against late Shri Dhirajlal Dayaljibhai Thakkar, father of the petitioner, for assessment year 2010-11 is hereby quashed and set aside. RULE is made absolute accordingly. 12. The matter again came up for c....
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....essed to the Income Tax Officer, the petitioner informed him that his father Shri Jayantilal Harilal Patel has passed away on 24.06.2015, enclosing therewith a death certificate and further being his son and in his capacity as legal heir, requested him to drop the proceedings. Thereafter, another notice dated 10.07.2018 came to be issued under sub-section (1) of section 142 of the Act to Shri Jayantilal Harilal Patel calling upon him to furnish the details mentioned therein. In the annexure to the said notice, the assessee was 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 and stating that this may be treated as a notice under section 142(1) read with section 129 of the Income Tax Act, 1961. 8. The petitioner addressed a letter dated 02.08.2018 to the Income Tax Officer objecting to the notices issued under section 148 as well as under section 142(1) of the Act 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 att....
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....n also, as per the provisions of section 292B of the Act, the same cannot be held to be invalid. 11. Insofar as the contention raised by the petitioner based on section 159 of the Act is concerned, the Assessing Officer observed that in this case, the assessee (the petitioner) had introduced himself as a son of the deceased assessee and as legal heir and has produced death certificate in response to the notice issued under section 148 of the Act. Therefore, as the legal heir, upon being served with the notice under section 148, has participated in the proceedings, the reassessment proceedings initiated are legal and valid. Reliance has been placed upon the decision of the Madras High Court in the case of V. Ramanathan v. Commissioner of Income Tax, (1963) 49 ITR 881 (Madras). It is further stated therein that it is not in dispute that Shri Chandreshbhai J. Patel is the legal heir of the deceased assessee; therefore, the proceedings initiated against the legal representative/legal heir are valid and legal. 12. In the 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 b....
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....e stage at which it stood on the date of the death of the deceased; (b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and (c) all the provisions of this Act shall apply accordingly. (3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. (4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undercharged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of, or parted with. (5) The provisions of sub-section (2) of section 161, section 162 and section 167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative. (6) The liability of a legal representative under this section shall, subject to the provisions of sub....
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....he deceased before his death, and hence, clause (a) would not be applicable in the facts of this case. 15. Clause (b) of sub-section (2) of section 159 of the Act provides that any proceeding which could have been taken against the deceased if he had survived may be taken against the legal representative. The present case would, therefore, fall within the ambit of section 159(2)(b) of the Act and, hence, the proceeding can be taken against the legal representative. Now, it cannot be gainsaid that a proceeding under section 147 of the Act of reopening the assessment is initiated by issuance of notice under section 148 of the Act, and as a necessary corollary, therefore, for taking a proceeding under that section against the legal representative, necessary notice under section 148 of the Act would be required to be issued to him. In the present case, the impugned notice under section 148 of the Act has been issued against the deceased assessee. In the opinion of this court, since this is not a case falling under clause (a) of sub-section (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 cont....
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....t. In this regard, it may be noted that a notice under section 148 of the Act is a jurisdictional notice, and existence of a valid notice under section 148 is a condition precedent for exercise of jurisdiction by the Assessing Officer to assess or reassess under section 147 of the Act. The want of a valid notice affects the jurisdiction of the Assessing Officer to proceed with the assessment and thus, affects the validity of the proceedings for assessment or reassessment. A notice issued under section 148 of the Act against a dead person is invalid, unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection. Therefore, where the legal representative does not waive his right to a notice under section 148 of the Act, it cannot be said that the notice issued against the dead person is in conformity with or according to the intent and purpose of the Act which requires issuance of notice to the assessee, whereupon the Assessing Officer assumes jurisdiction under section 147 of the 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 c....
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....ce u/s. 148 of the Act and the validity of notice u/s. 148 then cannot be challenged. 14. This position was again reiterated in the case of Urmilaben Anirudhhasinhji Jadeja vs. ITO vide judgment dated 27.08.2019 reported in [2020] 420 ITR 226 and again in the case of Durlabhai Kanubhai Rajpara vs. ITO vide judgment dated 26.03.2019 reported in [2020] 424 ITR 428. 15. As is evident from the above, the proposition of law laid down by the Jurisdictional High Court vis-à-vis the issue of validity of proceedings where the jurisdictional notice for reopening cases, u/s. 148 of the Act, is issued on a dead person, is that the proceedings are null and void since the statute requires that where the assessee is deceased the proceedings have to be undertaken on their legal representatives as per Section 159(2)(b) of the Act. The Jurisdictional High Court has consistently held that in such cases where the assessee was deceased on the date of the issue of notice u/s. 148,the same is to be issued on their legal representatives. Going further and taking note of various judicial decisions and the provisions of Section 292B/BB, the Hon'ble High Court has held that the notice shall not ....
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.... is came to know that the assessee has died on 29/03/2012 and her legal heirs are : (1) Afsarbhai Abdul Rashid Shaikh (2) Vahed . Abdul Rashid Shaikh (3)Binaz Abdul Rashid Shaikh (4) Shahin W/o Sohilbhai Shaikh (5) Shahnavaj Hanifbhai Dhoni (6) Mohammed Hanif rajubhai Shaikh (7) deceased Rubiben Abdul rashid Shaikh . 4. Therefore, notice u/s 142(1) of the Act was issued on 03/10/2016 along with a specific questionnaire by the under signed, on change in incumbent and duly served by speed post to all the legal heirs of the assessee. In response to the notice u/s.142 (1) dated 3.10.2016 neither anyone has attended the hearing nor submitted any reply. Then, this office has issued a show cause notice for proposed addition on 28/11/2016 and duly served to all the legal heirs by speed post. 5. After receiving the show cause notice only an authority letter of CA Faruk Y Patel, duly authorized by one of the legal heirs Shri Vahed Abdul Rashid Shaikh has been received by speed post in this office on 13/12/2016. On 29.12.2016 the representative of the assessee has attended and filed written submission with three ....
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....irs, as required by law, and also service of the same on the legal heirs in any capacity, i.e in the name of the deceased assessee or even in their own name, the defects in the service of notice cannot be said to be an irregularity which can be cured by waiver. The Hon'ble jurisdictional High Court, we find, has held the waiver of the requirement of issuance of notice u/s 148 to the legal heirs in the fact situation where the legal heirs participated in the proceedings on receipt of and in response to notice issued in the name of the deceased assessee. In the present case the defect in not confined to not being issued in the name of the legal heirs only but has also not been served or received by them. The legal heirs are in fact not even aware of the proceedings being undertaken on them. The question of waiver of notice u/s 148 therefore cannot arise where the person concerned has no knowledge of the proceeding initiated. Being a jurisdictional notice, these defects cannot be termed as mere irregularities which can be cured by participation of the assesses/legal heirs, even as per the aforementioned decisions of the jurisdictional High Court.The Hon'ble jurisdictional High Court i....
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....ovides for time limits for such notice. Sec. 151 provides as under: "(1) No notice shall be issued under s. 148 after the expiry of eight years from the end of the relevant assessment year, unless the Board is satisfied on the reasons recorded by the ITO that it is a fit case for the issue of such notice. (2) No notice shall be issued under s. 148 after the expiry of four years from the end of the relevant assessment year, unless the CIT is satisfied on the reasons recorded by the ITO that it is a fit case for the issue of such notice." 5. The provision being for reopening the finally concluded assessment this special provision has been considered as properly hedged in by these various statutory safeguards, because the income has escaped the original assessment even when the procedure of original assessment contemplated such wide powers of appeal, revision and even rectification under the various provisions of the Act. That is why the conditions laid down for the reasonable belief to be reached by the ITO under sub- cl. (a) or under sub-cl. (b), and his recording of the reasons under s. 148(2), and for the sanction before issuing the said notice under s. ....
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....tion is not a mere formality but it is mandatory. The failure to fulfil that condition would vitiate the entire proceedings. As per the settled legal position, the ITO would be acting without any jurisdiction if the reason for his belief that the conditions are satisfied did not exist or was not material or relevant to the belief required by that section. Courts would not go into the sufficiency of the reasons which persuaded the ITO to initiate proceedings under s. 34(1)(a) of the Act but the Courts would examine the relevancy of the reasons which persuaded the ITO to take proceedings under s. 34(1)(a). It was further pointed out that the formation of the required belief was not the only requirement. The ITO was further required by s. 34 to record his reasons for taking action under s. 34(1)(a) and obtain the sanction of the Central Board of Revenue or the CIT, as the case may be. It was pointed out that the CIT or the Board of Revenue, while granting sanction would have to examine the reasons given by the ITO and come to an independent decision and the authority in question should not act mechanically. The ITO having himself proceeded only under s. 34(1)(b) and not on th....
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.... any section laying down as a condition for the initiation of proceedings that the reasons which induced the CIT to accord sanction to proceed under s. 34 must also be communicated to the assessee. The ITO need not communicate to the assessee the reasons which led him to initiate the proceedings under s. 34. These reasons have to be considered as pointed out by their Lordships in the other decision, when the matter comes for sanction by the authority. That itself makes it clear that the scheme of these provisions is to lay down these safeguards in the wider public interest by way of fetters on the jurisdiction of the authority itself and they could not be said to be merely for the private benefit of the individual assessee concerned as the assessee concerned is not even intended to be supplied with the reasons for reopening the assessment and the entire matter is looked upon as an administrative matter, at the earlier stages where the ITO is to record his reasons and obtain sanction of the CIT. 7. The legal position about waiver of such a mandatory provision created in the wider public interest to operate as fetter on the jurisdiction of the authority is well settled that ....
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.... there was none. Even if there was inherent jurisdiction, certain provisions could not be waived. What can be waived would be only those provisions which are for the private benefit and protection of an individual in private capacity, which might be dispensed with without infringing any public right or public policy. 8. This settled legal position was again reiterated in Superintendent of Taxes vs. Onkarmal Nathmal Trust, AIR 1975 SC 2065, where the question had arisen in the context of the Assam Taxation (on Goods Carried by Road and on Inland Waterways) Act, 1961. The assessee had obtained an injunction order against the State in a writ petition challenging the validity of the Act. The assessee had not submitted the return under s. 7(1) and under s. 7(2) a notice had to be issued only within two years from the end of the return period. The procedure of best judgment assessment was laid down in s. 9(4) and the question arose whether, in view of the injunction order obtained by the assessee, ignoring the two years' limit laid down as a fetter for issuance of the notice under s. 7(2), the best judment assessment procedure was permissible. At page 2070, the learned Chief....
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....to avoid the effect of violating a mandatory provision on a jurisdictional matter even by agreement. This decision completely settles the legal position. It makes a distinction between the provisions which confer jurisdiction and provisions which merely regulate the procedure by holding that such provisions which confer jurisdiction or such mandatory provisions which are enacted in public interest on ground of public policy even in such revenue statutes could not be waived, because of the underlying principle that jurisdiction could neither be waived nor created by consent. 9. The decision in Director of Inspection of Income-tax vs. Pooran Mall & Sons 1974 CTR (SC) 243 : (1974) 96 ITR 390 (SC), which is so vehemently relied upon by the learned standing counsel, does not detract from the aforesaid ratio, and in fact, reiterates the same. In that case, the question had arisen regarding the waiver of a provision in s. 132(5) of the IT Act which permitted the ITO to pass an order of seizure within 90 days. The provision was held to be not a mandatory provision and at page 400 it was also pointed out that there was no question of the period of limitation under s. 132(5) involvi....
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....terest which could not be waived, because by consent no jurisdiction could be conferred on the authority unless the conditions precedent were first fulfilled. In Dasa Muni Reddy vs. Appa Rao, AIR 1974 SC 2089, 2092, such a question of waiver was examined also in the context of the bar of estoppel or of res judicata. At page 2091, it was pointed out that want of jurisdiction must be distinguished from irregular or erroneous exercise of jurisdiction. If there is want of jurisdiction the whole proceeding is coram non judice. The absence of a condition necessary to found the jurisdiction to make an order or give a decision deprives the order or decision of any conclusive effect. (See Halsbury's Laws of England, 3rd edition, volume 15, paragraph 384). Further proceeding at page 2092, it was pointed out that just as the Courts normally did not permit contracting out of the Acts so there could be no contracting in. A status of control of premises under the Rent Control Acts could not be acquired either by estoppel or by res judicata. Their Lordships in terms held that the principle was that neither estoppel nor res judicata could give the Court jurisdiction under the Acts which those ....
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....ence, the writ petition was dismissed. The order of the High Court was a final judgment which terminated the independent writ proceeding. It was held at page 1186 that that order having not been appealed before the Supreme Court, it had become final and it was no longer open to the parties to raise a plea of jurisdiction in appeal against the subsequent award given by the Industrial Tribunal after exercising jurisdiction which the Tribunal was permitted to exercise by the order of the High Court. These were competent proceedings and the independent writ proceeding was also finally terminated and, therefore, this final order precluded the parties from reagitating the same question before the Industrial Tribunal. Their Lordships distinguished the earlier decision in Satyadhyan Ghosal vs. Smt. Deorajin Debi, AIR 1960 SC 941, where the question had arisen about the applicability of s. 28 of the Calcutta Thika Tenancy Act, 1949, and the plea having been rejected by the munsif trying a suit, revision, the High Court had held that operation of s. 28 of the Act was not affected by the subsequent amendment Act and the case was remanded to the munsif for disposal according to law. After the ....