SMT. JUBEDABAI M. RESHAMWALA,,SURAT vs. THE INCOME TAX OFFICER, WARD-3(4),, SURAT

This appeal by the assessee, is directed against the order of the ld. Commissioner of Income Tax (Appeals)-II, Surat [in short “the CIT(A)”] dated 29.03.2016 for the Assessment Year (AY) 2011-12.

The grounds raised by the assessee read as under:-

Appellant craves leave to add, alter or delete any ground(s) either before or in the course of hearing of the appeal.

Brief facts of the case are that no return of income was filed by the assessee for the assessment year 2010-11. The assessing officer received information that assessee along with other 6 co-owner sold o property for ₹ 2.35 Crore, as per registration record with Rub- Registrar-II, Udhana, Surat. The fair market value adopted by Stamp Duty Authority was reported at Rs. 5.31 Crore. On the basis of such information, the assessing officer took his view that the income of assessee for AY 2010-11, has escaped assessment. Therefore, the assessing officer on the basis of aforesaid information had a reason to believe that income of the assessee escaped assessment within the meaning of section 147 of the Income tax Act. The assessing officer obtained necessary approval for reopening of the case from Additional Commissioner income tax. Notice under section 148 dated 26 March 2013 was served upon the assessee. In response to the notice under section 148 neither the assessee made compliance of the for filing return of income nor attended the proceeding before the assessing officer. The assessing officer after serving notice under section 142(1) dated 13.06.2013 for fixed hearing on 27.06.2013 and directed the assessee to furnish books of accounts. No compliance was made by the assessee to this notice as well. The assessing officer noted that on one occasion Mr. Nazir Godit a Tax Consultant appeared and copy of sale deed of land, return of income for AY 2010 – 11 & 2011-12, 2 ITA 1478/AHD/2016/AY.2011-12 Jubedabai M. Reshamwala computation sheet, income and expenditure account, capital accounts and balance each in case of Son of assessee was filed. The assessing officer after serving final show cause notice proceeded to complete the assessment. Before completing the assessment the assessing officer also issued show cause notice as to why penalty under section 271(1)(b) for not complying the notices of the assessing officer, may not be imposed upon the assessee. The assessing officer recorded that the show causes notice was issued received by the husband of assessee but no compliance was made. The assessing officer on the basis of information received from Sub-Registrar Office made addition of long- term capital gain (LTGC) of ₹ 75,88,286/- (being 1/ 7th part of sale proceeds) in the assessment order dated 21.03.2014 passed under section 147 read with section 143(3).

On receipt of assessment order under section 147 read with section 143 (3), the legal heirs of the assessee filed appeal before learned Commissioner (Appeals). The legal heirs of the assessee in the statement of fact, filed with appeal form before learned Commissioner (Appeals) pleaded that assessee expired on 13th December 2011, and that the assessing officer was not justified in passing the assessment order in the name of deceased person. It was also contended that during the course of assessment proceeding legal heirs of the assessee submitted all relevant details to their counsel but he appeared before the assessing officer only one occasion and thereafter did not comply with the notice issued by the assessing officer. It was also stated by the legal heirs of the assessee that son of the assessee was in financial 3 ITA 1478/AHD/2016/AY.2011-12 Jubedabai M. Reshamwala crisis and due to the final crisis they have sold the property in a distress sale. In alternative submission the legal heirs of the assessee also claimed deduction on account of cost of acquisition of the property.

The learned Commissioner (Appeals) after considering the submission of legal heirs of the assessee as recorded in para 5 of the impugned order, affirmed the action of assessing officer in the reopening of the case under section 147 as well as the addition of LTCG. The learned Commissioner (Appeals) while affirming the action of assessing officer concluded that in compliance of notice under section 148, no one attended the hearing nor any return of income was filed. The legal heirs of the assessee not file any return of income in compliance of notice under section 148 and that objection on the reopening being bad in law and the issue of jurisdiction can be raised only after filing the return of income. No objection was filed regarding the issuance of notice in the name of deceased person, this fact clearly shows that the assessing officer was not aware of the death of the assessee and has passed the assessment order in the name of deceased person. The passing of assessment order and issuance of notice to a deceased person cannot be considered as an illegality but definitely an irregularity which is covered by the provision of section 292 BB of the Act. And finally concluded that as the legal heirs failed to undertake the legal obligation in filing return of income in response of notice under section 148, within a stipulated time, thus the objection raised by appellant is devoid of merit.

We have heard the submission of learned authorised representative (AR) of the assessee and the learned senior department representative (DR) for the revenue. We have also gone through the orders of lower authorities. At the outset of hearing the ld. AR of the assessee submits that the legal heir of the assessee in the statement of fact furnished 5 ITA 1478/AHD/2016/AY.2011-12 Jubedabai M. Reshamwala before learned Commissioner (Appeals) clearly stated that the assessee died on 13.12.2011. The notice under section 148 dated 26.03.2013 was issued in the name of deceased /assessee. Notice under section 148 cannot be issued in the name of dead person. The assessment order passed by assessing officer in invalid and is liable to be quashed. In support of his submissions the ld AR for the assessee relied on the following decisions;  Vipin Walia Vs ITO -382 ITR 19 (Delhi),  Alamelu Veerapan Vs ITO - 95 taxmann.com 155 (Mad),  Rasid Lala Vs ITO -77 taxmann.con 39 (Gujarat),  Chandreshbahi Patel Vs ITO -413 ITR 276 ( Gujarat),  Sumit P Gupta Vs ACIT- 414 ITR 292 (Bombay),  Jaydeep Kumar D Thakkar Vs ITO- 401 ITR 302 (Gujarat),  CIT Vs Amarchand N Shroff- 48 ITR 59 (SC),  Brahm Prakash Vs ITO- 275 ITR 242 (Delhi),  PCIT Vs Maruti Suzuki India Ltd -416 ITR 613 (SC),  CIT Vs Suresh Chand Jaiswal -325 ITR 563 (Allahabad) and  Savita Kapila LR’s of Mohinder Paul Kapila Vs ACIT ( WP(C) 3258/2020 (Delhi High Court).

On the other hand the ld. DR for the revenue submits that learned Commissioner (Appeals) in para 6.2.2 to 6.3.2 of his order has clearly held the legal heir of the assessee failed to undertake legal obligation either in filing return of income or to raised such objection before assessing officer. The appellant/ legal heirs of the assessee for the first time raised the objection during the first appellate stage. The issuance of the notice and passing of the assessment in the name of dead person is not illegality rather irregularity which is covered under section ITA 1478/AHD/2016/AY.2011-12 Jubedabai M. Reshamwala 292BB of the Act. The ld. DR for the revenue thus supported the order of the learned Commissioner (Appeals).

In the rejoinder submissions the ld AR for the assessee submits that the learned Commissioner (Appeals) have co-terminus power while adjudicating the appeal. Once it is came in the notice of learned Commissioner (Appeals) that the assessee had already died when the notice under section 148 was issued, the learned Commissioner has not issued fresh notice in the name of LR’s. Thus, the statutory requirement of service of notice under section 148 is not fulfilled. The ld. AR for the assessee submits that case law in Savita Kapila LR’s of Mohinder Paul Kapila Vs ACIT (supra) is directly on the issue.

We have considered the rival submissions of the parties and have carefully gone through the orders of the lower authorities. We have also deliberated on the various case laws relied by ld. AR for the assessee and the decisions referred and relied by learned Commissioner (Appeals) in the impugned order. There is no dispute of the fact that when the assessing officer issued notice under section 148 dated 26.03.2013, the assessee had already expired on 13.12.2011. The copy of the death certificate of the assessee is placed on record. This is also admitted fact that during the assessment the assessing officer was not informed about the death of the assessee. The LR’s of the assessee for the first time informed learned Commissioner (Appeals) about the death of the assessee in writing and filed death certificate.

The Hon’ble Gujarat High Court in Rasid Lala Vs ITO (supra) also held that when the reassessment proceedings have been initiated against the dead person and that too after a long delay. It was further held that even if section 159 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. Section 159 shall not be of any assistance to the revenue.

Further, the Hon’ble Gujarat High Court in Chandreshbhai Jayantibhai Patel Vs ITO (supra), while considering the contention of the revenue that the LR’s has not raised objection and participated in proceedings held that the notice under section 148 of the Act, 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 notice, the provisions 8 ITA 1478/AHD/2016/AY.2011-12 Jubedabai M. Reshamwala of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid. In the absence of a valid notice, the Assessing Officer has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding under section 147 of the Act pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained.

In a recent decision, Hon’ble Delhi High Court in Savita Kapila LR’s of Manohar Paul Kapila Vs ACIT (supra) held that in absence of a statutory provision, a duty cannot be cast upon legal representatives to intimate factum of death of assessee to department and, thus, where Assessing Officer issued a notice to assessee under section 148 after his death and, in such a case, it could not have been validly served upon assessee, said notice being invalid, was to be quashed. Considering the aforesaid factual and legal discussions, we are in agreement with the submissions of the ld. AR for the assessee that notice issued in the name of dead person was not valid and enforceable in law. Further, we find no merit in the reasoning recorded by learned Commissioner (Appeals) that issuance of the notice and passing of the assessment in the name of dead person is not illegality rather irregularity which is covered under section 292BB of the Act. In view of the discussions, we are of the view the notice under section 148, which is not valid notice, all subsequent action are void ab initio, hence, ground No.1 and 2 of the appeal are allowed.