TaxTMI 
TaxTMI 
2023 (8) TMI 385
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....eclaring 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, Respondent No. 2 disposed of the same vide order dated 30.06.2021. 3.4 Being aggrieved with the same, the ....
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....e 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 decisions; (1) 'Sumit Balkrishna Gupta Vs. Assistant Commissioner of Income-tax, Circle 16(2), Mumbai', reported in [2019] 414 ITR 292 (Bombay); (2) 'Savita Kapila'....
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....rused 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 and thereafter, passed the impugned order of assessment, which is in the name of the dead person, i.e. late Ms. Shah, on 30.06.2021. 6.2 In view of the above, it would be relevant to refer to the provisions of Sec....
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....cated 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 "reasons to believe" was not based on application of mind and was also premised on no reason. The third ground is that the AO completed the reassessment without issuing notice under Section 143 (2) of the Act." 6.4 The observations made by the Jharkhand High Court at Paragraphs-8 to 1....
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....otice 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 Hon'ble Apex Court has dealt a similar issue where the original company [Suzuki Powertrain India Ltd. (SPIL)] had been amalgamated with Maruti Suzuki India Ltd. The Hon'ble Apex Court has held that the notice issued to the original company as null and void. Paragraph 36 of the said judgment is quoted h....
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....he 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 by invoking the provisions of Section 292B of the Act." Following the decision in Spice Entertainment, the Delhi High Court quashed assessment orders which were framed in the name of the amalgamating company in: (i) Dimension Apparels; (ii) Micron Steels; and (iii) Micra India. 21. In Dimension Apparels, a Division Bench of ....
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..... 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." Accordingly, the appeals and special leave petitions are dismissed." 25. The doctrine of merger results in the settled legal position that the judgment of the Delhi High Court stands affirmed by the above decision in the Civil Appeals. 26. The order of assessment in the case of the respondent for AY 2011-12 was set aside on the same ground. This resulted in a Special Leave Petition by the Principal Commissioner of I....
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..... 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. The "reasons to believe" made a reference to a tax evasion report received from the investigation unit of the income tax department. The facts were ascertained by the investigation unit. The reasons to believe referred to the assessment order for AY 20132014 and the findings recorded in it. Though the notice under Sections 147/148 was issued in the name of Skylight Hospitality Pvt. Ltd. (which had ceased to exist Special Leave Petition (C) No. 7409 of 2018 "Sky Ligh....
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....rein 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 of Section 292B. The decision in Skylight Hospitality LLP has been distinguished by the Delhi, Gujarat and Madras High Courts in: (i) Rajender Kumar Sehgal; (ii) Chandreshbhai Jayantibhai Patel; and (iii) Alamelu Veerappan. 30. There is no conflict between the decisions of this Court in Spice Enfotainment (dated 2 November 2017) and in Skylight Hospitality LLP (Supra). 31. Mr Zoheb Hossain, learned Counsel appearing on behalf of the Revenue urged during the course of his submissions that....
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....al 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 the succession took place up to the date of succession; (b) the successor shall be assesseed in respect of the income of the previous year after the date of succession. (2) Notwithstanding anything contained in subsection (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provision....
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....o 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 jurisdiction to assess and the liability to pay tax are not conditional on the validity of the notice : the liability to pay tax is founded in the charging sections and not in the machinery provisions to determine the amount of tax. Reliance was also placed on the decision in Maharaja of Patiala v CIT (1943) 11 ITR 202 (Bombay) ("Maharaja of Patiala"). That was a case where two notices were issued after the death of the assessee in his name, requiring him to make a return of income. The notices were served upon the successor Maharaja and the assessment order was passed describing the assessee as "His Highness...lat....
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....ecision 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 of any of the Fundamental Rights or where there has been a violation of the principles of natural justice or where the order or notice or proceedings are wholly without jurisdiction or the vires of an Act is challenged. [See Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others, (1998) 8 SCC 1]. 24. Further, the fact that an assessment order has been passed and it is open to challenge by way of an appeal, does not denude the petitioner of its right to challenge the notice for assessment if it is without jurisdiction. If the assumption of jurisdiction is wrong, the assessment order passed subsequently wo....
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....TLY, 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 Hospitality LLP. In that factual context, this Court had observed, "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 relied and dealt with by them." The Supreme Court while dismissing the SLP had also observed "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 Ta....