SMT. RAMPYARI,,SARADDHANA vs. ITO, WARD-2(3), AJMER

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH VC ’A’, JAIPUR Jh fot; iky jkWo] U;kf;d lnL; ,oa Jh foØe flag ;kno] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM vk;dj vihy la-@ITA No. 1249/JP/2019 fu/kZkj.k o"kZ@Assessment Year : 2011-12. cuke Smt. Rampyari Income Tax Officer, Vs. W/o Late Shri Sanwarlal Choudhary, Ward 2(3), Khojo Ki Gali, Purani Pani Ki Tanki Ke Ajmer. Pass, Saradhana, Ajmer. LFkk;h ys[kk la-@thvkbZvkj la-@PAN No. AAZPC 3613 Q vihykFkhZ@Appellant izR;FkhZ@Respondent

fu/kZkfjrh dh vksj ls@ Assessee by : Shri Sanjeev Jain (CA) jktLo dh vksj ls@ Revenue by : Ms Chanchal Meena (Addl. CIT)

lquokbZ dh rkjh[k@ Date of Hearing : 21.09.2020. ?kks"k.kk dh rkjh[k@ Date of Pronouncement : 05/10/2020. vkns'k@ ORDER PER VIJAY PAL RAO, JM : This appeal by the assessee through Legal Representative is directed against the order of ld. CIT (A), Ajmer dated 19th August, 2019 for the assessment year 2011-12. The assessee has raised the following grounds :-

“ 1. Ld. CIT (Appeals) erred in law as well as on facts of the case by confirming action of the AO in issuing notice u/s 148 in the name of the deceased assessee. 2. Ld. CIT (Appeals) erred in law as well as on facts of the case by confirming action of the AO in estimating Agriculture Income of the assessee at Rs. 100000/-, instead of Rs. 2,50,000/- as declared by the assessee in Return of Income.

2 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

The appellant craves leave to add, amend, alter, delete or modify any of the above grounds of appeal before or at the time of hearing.”

The hearing of the appeal is concluded through Video Conference due to prevailing

condition of COVID 19 pandemic.

Ground No. 1 is regarding validity of notice issued under section 148

in the name of the deceased assessee.

retired Government employee and was having income from Pension besides

Agricultural Income. The AO received the information about the deposit of cash in

the bank account of the assessee during the previous year relevant to assessment

year 2011-12 of Rs. 10,99,500/- in Savings Bank account and Time Deposit of Rs. 5,00,000/-. Accordingly, the AO issued notice under section 148 on 28th March,

2018 in the name of deceased assessee. The legal representative of the assessee

raised the objection against the validity of notice under section 148 vide letter dated 05.07.2018 which was disposed off by the AO vide order dated 21st November,

2018. Consequently, the AO completed the assessment under section 143(3) read

with section 147 whereby an addition of Rs. 5,92,000/- has been made on account

of unexplained cash deposit in the bank account by restricting the agricultural

income from Rs. 2,50,000/- to Rs. 1,00,000/-. The assessee challenged the action

of the AO before the ld. CIT (A) and also challenged the validity of reopening,

however, could not succeed.

3 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

assessee who had passed away on 12.06.2012, therefore, the notice issued in the

name of the deceased person is invalid and liable to be quashed. He has further

contended that in the absence of any notice issued under section 148 to the Legal

Representative of the deceased assessee within the period of limitation which expired on 31st March, 2018, the proceedings initiated by the AO under section

147/148 are not valid and a nullity in the eyes of law. In support of his contention

he has relied upon the following decisions :-

Vipin Walia vs. ITO 382 ITR 19 (Delhi)

Rajender Kumar Sehgal vs. ITO 414 ITR 286 (Delhi) Tribunal’s Order dated 26th November, 2019 in ITA No. 989/JP/2015 (Jaipur)

enquiry to verify the source of cash deposit in the bank account of the assessee

prior to issuing the notice under section 148. However, there was no response from

the assessee or of the Legal Representative of the assessee to the said enquiry

conducted by the AO. The ld. D/R has further submitted that the assessee has not

filed any return of income under section 139(1) of the IT Act despite the fact that

the cash deposit in the bank account of the assessee is more than the threshold

amount liable to tax. Therefore, the AO had the belief that Income assessable to tax

4 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

has escaped assessment. The ld. D/R has relied upon the orders of the authorities

below.

record. There is no dispute that the AO has issued notice under section 148 dated 28th March, 2018 in the name of the deceased assessee who had expired on

12.06.2012. This fact is not in dispute as the AO subsequently brought the Legal

Heir of the deceased assessee on record. However, the said exercise of the AO to

bring the Legal Heir of the deceased assessee on record would not turn the invalid

notice issued under section 148 into valid one. Though the AO has stated that a

letter was written to the assessee to explain the source of cash and time deposit in

the bank account of the assessee, however no reference of date of letter is

mentioned by the AO. Therefore, in the absence of any details or copy of the letter

these averments made by the AO are very vague. Further, once the notice under

section 148 was issued in the name of the deceased assessee and subsequently the

AO came to know that the assessee had already expired, then it was incumbent

upon the AO to serve a fresh notice under section 148 on the Legal Heir, if limitation

for issuing the notice is available. In the case in hand it is apparent that the notice under section 148 was issued in the name of the deceased assessee on 28th March,

2018 and the AO has not issued any further notice to the Legal Representative of

the deceased assessee. It is also not in dispute that the Legal Representative of the

assessee raised the objection against the notice issued under section 148 vide letter dated 05.07.2018 which was disposed off by the AO vide order dated 21st

5 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

November, 2018 and the issue regarding validity of the notice issued in the name of

the deceased person is decided by the AO as under :-

“ Objection 2 : Notice issued in the name of the person who has already been demised. Disposal : On examination of the details available with the Income Tax Department and facts available on the record, it is evidently clear that Legal Heirs of the assessee has not informed the department about the assessee’s death. It has been already mentioned in the reasons for record that assessee has only filed return of income for A.Y. 2008-09. Hence, the return with regard to intimation of the legal heir of the demised persons is never available with the Assessing Officer. Hence, the Assessing Officer rightly issued the notice u/s 148 and later on the proceedings are continued with the legal heir of the assessee i.e. his spouse Smt. Rampyari. So the version of the assessee is not acceptable and dismissed accordingly. From the above it is clearly that the information about the income and expiry of the assessee is never furnished before the Assessing Officer before issuance of the notice u/s 148 of the Act. Neither the Legal Heir of the assessee has applied before the Assessing Officer about deleting of the PAN as the assessee has expired. In view of the above discussions, your objections against reopening of the case do not hold any merit and they are hereby rejected. You are requested to comply with the notice u/s 143(2) and notice u/s 142(1) issued to you in continuation of the proceedings.”

6 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

Thus it is clear that the AO has shifted the blame on the Legal Heir of the assessee

regarding the information of death of the assessee instead of conducting the enquiry

to find out the fact. Since it is not a case of pending assessment proceedings but

the AO proposed to assess the income under section 147/148 of the Act, then it is

incumbent upon the AO to issue the notice under section 148 to the right person.

The subsequent participation of the Legal Heir in the assessment proceedings would

not render the proceedings valid when the initiation of the proceedings itself are

invalid for want of a valid notice under section 148. The Hon’ble Delhi High Court in

case of Rajender Kumar Sehgal vs. ITO (supra) has considered this issue in para 6

to 12 as under :-

“6. The provision relevant to decide the first issue is Section 159 of the Act, which reads as follows: "159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. (2) For the purpose of making an assessment (including an assessment, reassessment or re-computation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1),- (a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the 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.

7 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

(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 undischarged, 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 sections 161, 162 and 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-section (4) and sub-section (5), be limited to the extent to which the estate is capable of meeting the liability." 7. After noticing the facts of the case, the Division Bench, in Vipin Walia (supra) (where again the reassessment notice was issued in the name of the deceased and no notice was issued to the legal representative), held that: "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 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." 8. This court sees no reason to disagree with the decision in Vipin Walia (supra); the summation of the principle applicable, given the plain words of the statute are unexceptionable. The revenue's argument that the "defect" was curable, in regard to the issuance of notice, to a deceased individual, is, in the opinion of this court, untenable. The phraseology of Section 292BB precludes the contention. That provision reads as follows: "292BB. Notice deemed to be valid in certain circumstances.-Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from

8 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

taking any objection in any proceeding or inquiry under this 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: Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment." 9. If the original assessee had lived and later participated in the proceedings, then, by reason of Section 292BB, she would have been precluded from saying that no notice was factually served upon her. When the notice was issued in her name- when she was no longer of this world, it is inconceivable that she could have participated in the reassessment proceedings, (nor is that the revenue's case) to be estopped from contending that she did not receive it. The plain language of Section 292BB, in our opinion precludes its application, contrary to the revenue's argument. 10. As far as Pankajbhai Rameshbhai Zalavadiya (supra) is concerned, this court notices that the judgment is an authority on the proposition that rejection of an application under Order XXII Rule 4 CPC without adjudicating its merits is not per se a bar for impleadment of the legal heirs and successors of a party under Order-I Rule 10(2) CPC. This court is of opinion that the absence of any provision in the Act, to fasten revenue liability upon a deceased individual, in the absence of pending or previously instituted proceeding which is really what the present case is all about, renders fatal the effort of the revenue to impose the tax burden upon a legal representative. 11. As far as the second argument, with regard to the clarification is concerned, this court is unpersuaded by the revenue's argument. The petitioner's objection that the transaction with an entity attributed to the deceased was unsupported by the books furnished to the revenue, was straightaway rejected. However, the "reasons to believe" are premised upon such a transaction with one Varun Capital Services Ltd. (as is evident from the table at Appendix B to that document). After rejection, of the objection, which meant that according to the revenue, such a transaction was indeed recorded in the deceased's books, the revenue attempted to "correct" the "error" by changing the name of the entity (with whom the suspect transaction occurred). This court is of opinion that such "correction" is neither innocuous nor innocent; it was clearly aimed at improving what was a fatally defective "reasons to believe" and mask the reality, to wit, that the revenue authorities utterly failed to apply their minds to the facts and circumstances of the case. On the last issue, i.e. the fatality attached to the completed reassessment in the absence of a notice under Section 143 (2), this court notices that the omission renders the assessment (or reassessment as in this case) void a proposition of law enunciated in Asstt. CIT v. Hotel Blue Moon [2010] 188 Taxman 113/321 ITR 362 (SC).

9 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

The Hon’ble High Court has held that a notice issued under section 148 in the name

of the deceased person suffers from illegality which is not a curable defect.

Similarly, this Tribunal in the case of late Shri Bhura Ram vs. ITO (supra) has

considered this issue in para 8 to 11 as under :-

“8. 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

10 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

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.

“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

11 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

Jaiswal. The Tribunal was right in holding that the defects in the notice under s. 148 were not cured by s. 292B.”

“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. 15. 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. 16. 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.

12 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

13 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

The Tribunal after considering the decision of Hon’ble Delhi High Court in case of

Vipin Walia vs. ITO (supra) as well as the decision of Hon’ble Madras High Court in

case of Alamelu Veerappan vs. ITO, 95 taxmann.com 155 (Madras) has held that

notice issued under section 148 in the name of the deceased assessee is a nullity in

the eyes of law. Consequently, the proceedings initiated under section 147/148 are

vitiated and liable to be quashed. Accordingly in the facts and circumstances of the

case and following the decisions as discussed above, we hold that the notice issued

under section 148 in the name of the deceased assessee is invalid. The same is

liable to be quashed. Since the initiation of reassessment proceedings itself are held

14 ITA No. 1249/JP/2019 Smt. Rampyari, Ajmer.

to be invalid, the reassessment order passed by the AO would not survive and liable

to be set aside. Since the notice under section 148 is quashed being invalid,

therefore, we do not propose to go to the other grounds of the appeal on the merits

of the addition as they become infructuous.

Order is pronounced in the open court on 05/10/2020.

Sd/- Sd/- (foØe flag ;kno) (fot; iky jkWo ½ (VIKRAM SINGH YADAV ) (VIJAY PAL RAO) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Jaipur Dated:- 05/10/2020. Das/ आदेश की प्रतिलिपि अग्रेषित@ब्वचल वf जीम वतकमत वितूंतकमक जवरू

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