TaxTMI 
TaxTMI 
2023 (8) TMI 385
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....inchandra Shah filed her return of income for the Assessment Year 2015-2016 on 30.09.2015, declaring her income at Rs. 60,73,400/-. 3.1 It appears that the case of Ms. Shah was taken-up for scrutiny and the Assessing Officer issued various notices, under Section 142(1) of the Income Tax Act, 1961 (in brief, 'the Act'), so as to examine the transaction of sale of immovable property. 3.1.1 Ms. Shah replied to all the notices. 3.2 Subsequently, an order under Section 143(3) came to be passed on 12.09.2017, whereby, the returned income of Ms. Shah was accepted as the assessed income. 3.3 The original assessee, i.e. Ms. Shah, passed away on 16.02.2021. Pursuant to the same, Respondent No. 2 issued the impugned notice, Dated: 27.03.2021, under Section 148 of the Act, asking late Ms. Shah to file return of income. 3.3.1 It seems that the present petitioner, being the heir and legal representative of late Ms. Shah, filed the return of income and he also sought the reasons for re-opening vide communication dated 15.04.2021. 3.3.2 Pursuant to the above, the reasons for reopening were supplied to the petitioner, against which the petitioner filed the objections. However, Res....
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.... i.e. Ms. Shah, which is nothing, but, absolute nullity. 4.6 It was also pointed out that the Second Notice is issued to the legal heir, i.e. the present petitioner, under Section 148 of the Act, whereas, the order of assessment is passed in the name of the dead person, i.e. Ms. Shah, which is a clear nullity. 4.7 In support of the above submissions, learned Advocate, Mr. Soparkar, placed reliance on the following decisions; (1) 'PCIT Vs. Maruity Suzuki India Ltd.', reported in 416 ITR 613 (SC); (2) 'Krishnaawatar Kabra Vs. Income-Tax Officer', reported in [2022] 140 taxmann.com 423 (Gujarat); (3) 'Rajender Kumar Sehgal Vs. ITO, Ward 56(1), New Delhi', reported in [2019] 414 ITR 286 (Delhi); (4) 'Sandeep Chopra Vs. Principal Commissioner of Income Tax', reported in [2023] 149 taxmann.com 225 (Jharkhand); (5) 'Savita Kapila Vs. Assistant Commissioner of Income-tax, Circle 4(1)', reported in [2020] 426 ITR 502 (Delhi); 4.8 Learned Advocate, Mr. Soparkar, further, submitted that the provisions of Section 292B and 292BB shall not apply in the facts of this case. 4.8.1 In support of the above, reliance is placed on the following d....
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....us, submitted that the Respondent-authorities have committed neither any illegality nor any error and hence, this petition may be dismissed. 6. We have heard the learned Advocates for the parties and also perused the material produced on record, which reveals that late Ms. Shah filed her return of income on 30.09.2015 and pursuant thereto, scrutiny of the same was undertaken and the assessment, as provided under Section 143(3) of the Act, was done on 12.09.2017, whereby, the income shown in the return filed by late Ms. Shah was accepted, as the assessed income. 6.1 The original assessee, i.e. late Ms. Shah, passed away on 16.02.2021 and the notice, under Section 148 of the Act, came to be issued to late Ms. Shah on 27.03.2021. In response to the same, the present petitioner filed the return of income and also requested the Respondent-authorities to provide the reasons for re-assessment or re-opening. Thereafter, the petitioner, who is the legal heir of late Ms. Shah, intimated the Respondent-authorities about the sad demise of Ms. Shah. 6.1.1 Pursuant to the same, the Respondent-authorities issued notice, under Section 148 of the Act, in the name of the present petitioner ....
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....ed this fact; without prejudice. Thereafter, vide letter dated 15.05.2017, the petitioner also sought a copy of the "reasons to believe". The revenue furnished the "reasons to believe" recorded on its file in support of its opinion that reassessment was necessary. This indicated that according to information received, the deceased had shown some transactions which led to a claim for losses brought forward, pertaining to one Varun Capital Services Limited. The petitioner protested that this was not correct; after rejecting the objections received from the petitioners, the AO issued a clarification, ostensibly "clarifying" that the entity from which the deceased had received the amounts and claimed losses was different, and that the original "reason to believe" contained a typographical error. 3. The petitioner approached this court, seeking the reliefs that she has claimed, primarily on three grounds: firstly, the Act does not provide any mechanism for issuing and carrying on reassessment in respect of the dead person, if the reassessment notice is issued against a deceased. It is urged, secondly, that the "clarification" issued camouflages the fact that the so-called "reas....
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....ction 292 BB of the Act and the regular response by the petitioner has cured the defect of issuance of notice to the dead person. We are not in agreement with such contention, inasmuch as, Section 292 BB does not save complete absence of notice. It is only the infirmities in the manner of service of notice that this section seeks to cure, but in no case this section will save the revenue from issuing a notice to the dead person. In the case of RAJENDRA KUMAR SEHGAL vs. I.T.O. (Delhi High Court) reported in [2018 (12) TMI 697 (Delhi)], it is held that Section 292 BB of the Act, 1961 is applicable to an assessee and not to a legal representative. It is not a case where the proceedings under Section 147/148 were initiated against the assessee and during its pendency the assessee died and after his death the legal representative did not step into the shoes of the deceased assessee; it is a case where the first notice for reassessment was issued against the dead person, as such Section 159 of the Act, 1961 does not apply to the present case. Recently, in the case of PRINCIPAL COMMISSIONER OF INCOME TAX, NEW DELHI Versus MARUTI SUZUKI (INDIA) LIMITED, reported in (2020) 18 SCC 331, the H....
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....in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law : "11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said 'dead person'. When notice under Section 143 (2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day. In such proceedings an assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law. 12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured ....
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....he take the remedial measure of transposing the transferee as the company which had to be assessed. Instead, the original assessee was described as one in existence and the order mentioned the transferee's name below that of the original assessee. The Division Bench adverted to the judgment in Dimension Apparels wherein the High Court had discussed the ruling in Spice Entertainment. It was held that this was a case where the assessment was contrary to law, having been completed against a non-existent company. 24. A batch of Civil Appeals was filed before this Court against the decisions of the Delhi High Court, the lead appeal being Spice Enfotainment. On 2 November 2017, a Bench of this Court consisting of Hon'ble Mr Justice Rohinton Fali Nariman and Hon'ble Mr Justice Sanjay Kishan Kaul dismissed the Civil Appeals and tagged Special Leave Petitions in terms of the following order : "Delay condoned. Heard the learned Senior Counsel appearing for the parties. We do not find any reason to interfere with the impugned judgment(s) passed by the High Court. In view of this, we find no merit in the appeals and special leave petitions." ....
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....o. 14106 of 2018 Court consisting of Hon'ble Mr Justice A K Sikri and Hon'ble Mr Justice Ashok Bhushan. In assessing the merits of the above submission, it is necessary to extract the order dated 6 April 2018 of this Court: "In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act. The special leave petition is dismissed. Pending applications stand disposed of." Now, it is evident from the above extract that it was in the peculiar facts of the case that this Court indicated its agreement that the wrong name given in the notice was merely a clerical error, capable of being corrected under Section 292B. The "peculiar facts" of Skylight Hospitality emerge from the decision of the Delhi High Court34. Skylight Hospitality, an LLP, had taken over on 13 May 2016 and acquired the rights and liabilities of Skylight Hospitality Pvt. Ltd upon conversion under the Limited Liability Partnership Act 200835. It instituted writ proceedings for challenging a notice under Sections 147/148 of the Act 1961 dated 30 March 2017 for AY 2010-2011....
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....er company. After notice under Section 147/148 of the Act was issued and received in the name of Spice Corp. Ltd., the Assessing Officer was informed about amalgamation but the Assessment Order was passed in the name of the amalgamated company and not in the name of amalgamating company. In the said situation, the amalgamating company had filed an appeal and issue of validity of Assessment Order was raised and examined. It was held that the assessment order was invalid. This was not a case wherein notice under Section 147/148 of the Act was declared to be void and invalid but a case in which assessment order was passed in the name of and against a juristic person which had ceased to exist and stood dissolved as per provisions of the Companies Act. Order was in the name of non-existing person and hence void and illegal." 29. From a reading of the order of this Court dated 6 April 2018 in the Special Leave Petition filed by Skylight Hospitality LLP against the judgment of the Delhi High Court rejecting its challenge, it is evident that the peculiar facts of the case weighed with this Court in coming to this conclusion that there was only a clerical mistake within the meaning....
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....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." In this case, the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B." In this context, it is necessary to advert to the provisions of Section 170 which deal with succession to business otherwise than on death. Section 170 provides as follows: "170. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,- (a) the predecessor shall be assesseed in respect of the income of the previous year in which....
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....he matter having regard to the reasons which have weighed us in the earlier part of this judgment. 32. On behalf of the Revenue, reliance has been placed on the decision of this Court in Commissioner of Income Tax, Shillong v Jai Prakash Singh (1996) 3 SCC 525 ("Jai Prakash Singh"). That was a case where the assessee did not file a return for three assessment years and died in the meantime. His son who was one of the legal representatives filed returns upon which the assessing officer issued notices under Section 142 (1) and Section 143 (2). These were complied with and no objections were raised to the assessment proceedings. The assessment order mentioned the names of all the legal representatives and the assessment was made in the status of an individual. In appeal, it was contended that the assessment proceedings were void as all the legal representatives were not given notice. In this backdrop, a two judge Bench of this Court held that the assessment proceedings were not null and void, and at the worst, that they were defective. In this context, reliance was placed on the decision of the Federal Court in Chatturam v CIT (1947) 15 ITR 302 (FC) holding that the jurisdict....
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.... having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment." 6.6 In the case of 'Savita Kapila' (Supra), the High Court of Delhi observed as under at Paragraphs- 23 and 24 and 35 to 37; "23. It is well settled law that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition in at least three contingencies, namely, where the writ petition has been filed for the enforcement ....
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....s precedent for the assumption of jurisdiction under Section 34 were not satisfied and come to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under Article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons....." THE SINE QUA NON FOR ACQUIRING JURISDICTION TO REOPEN AN ASSESSMENT IS THAT NOTICE UNDER SECTION 148 SHOULD BE ISSUED TO A CORRECT PERSON AND NOT TO A DEAD PERSON. CONSEQUENTLY, THE JURISDICTIONAL REQUIREMENT UNDER SECTION 148 OF THE ACT, 1961 OF SERVICE OF NOTICE WAS NOT FULFILLED IN THE PRESENT INSTANCE. XXX XXX XXX 35. This Court is of the opinion that issuance of notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission. Consequently, Section 292B of the Act, 1961 does not apply to the present case. 36. In Skylight Hospitality (supra) notice was issued to Skylight Hospitality Pvt. Ltd. instead of Skylight Hospi....