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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH
Per Shri D.S.Sunder Singh, Accountant Member :
Delay: This appeal is filed by the Legal Representative of the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-1, Visakhapatnam in I.T.A.No.0111/2015-16/ITO,W-2(2),Vsp/2019-20 dated 14.06.2019 for the Assessment Year (A.Y.)2007-08 with a delay of 3 days.
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The L/R of the assessee has filed a condonation petition and submitted that the delay was due to medical reasons and requested to condone the delay. After hearing both the parties, we condone the delay and admit the appeal.
In the instant case, the assessee has filed as many as nine grounds, however pressed ground No.2 which is related to the validity of issue of notice u/s 148 of the Income Tax Act, 1961 (in short ‘Act’) on a dead person. Therefore, first we take up the legal ground which reads as under :
“2. The Learned CIT(A) is not justified in rejecting the plea of the appellant that the notice u/s 148 was issued in the name of M.Radha Mohan Raju (Dead Person) which is not valid in law.”
Brief facts of the case are that the assessee was an individual government employee, deriving income from pension after retirement and expired on 13.08.2010. The Assessing Officer (AO) had the information with regard to sale of plot of land located at Sy.No.275/30, Adarshnagar, Adavivaram Village & Taluk, Visakhapatnam for a consideration of Rs.3,47,200/- to Smt. Reddy Karuna on 21.03.2007 vide registered sale deed document No.2419/07. The SRO value of the said plot of land was Rs.9,96,000/-. Since the provisions of section 50C of the Act are applicable, the AO reopened the assessment by issue of notice u/s 148 on 26.03.2014. By the time the notice was issued the assessee had already expired. There
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was no compliance from the assessee to the notice within the time allowed u/s 148, therefore, the AO issued notice u/s 142(1). In response to the notice, the assessee’s son, Shri M.Raghurama Raju has filed a letter informing the AO regarding the death of his father on 13.08.2010. Subsequently, the AO issued letter along with notice u/s 142(1) to the son Shri M.Raghurama Raju, who is also one of the legal heirs. But there was no compliance from the legal heir also, hence, the AO completed the assessment ex-parte u/s 144 r.w.s. 147 by an order dated 26.03.2015 on total income of Rs.11,09,100/-. In the assessment made u/s 144, the AO taxed the long term capital gains of Rs,9,29,102/- relating to sale of property.
Against which the assessee went on appeal before the CIT(A) and challenged the order on legal ground as well as on merits. In the legal ground, the assessee objected the notice, stating that the notice issued u/s 148 on a dead person is invalid and hence, requested to quash the notice and consequent assessment proceedings. However, the Ld. CIT(A) upheld the validity of issue of notice, holding that the legal heir chose not to divulge any facts and has not objected the proceedings and participated in the proceedings to the extent of receiving the notice u/s 142(1) and filing the 4 I.T.A. No.529/Viz/2019 A.Y.2007-08 Shri M.Raghurama Raju, L/R of Late Shri M.Radha Mohan Raju, Visakhapatnam
information regarding the death of his father. Therefore, viewed that the legal ground raised by the assessee was an intention to thwart the proceedings, therefore, upheld the notice u/s 148 and dismissed the assessee’s appeal on legal issue of invalidity of the notice. On merits, the Ld.CIT(A) allowed the appeal partly.
Against which the assessee filed appeal before this Tribunal. During the appeal hearing, the Ld.AR submitted that the notice was issued on late Shri Radha Mohan Raju, a dead person, on 26.03.2014. Though the assessee’s son, legal heir, has intimated the death of his father, the AO chose to complete the assessment proceedings by issue of notice u/s 142(1) on his son instead of issuing the notice u/s 148 on all the legal heirs. Therefore, submitted that the notice issued u/s 148 is invalid, hence, requested to quash the notice issued u/s 148 and cancel the assessment proceedings.
On the other hand, the Ld.DR argued that the assessee is a non-filer. As per the information available on record, there is no intimation regarding the death of the assessee, therefore, submitted that the AO has rightly issued notice u/s 148 on the assessee. Subsequently, after receiving the information regarding the death of the assessee the AO issued the notice u/s 142(1) to Shri Raghurama Raju, the legal heir of the assessee, hence,
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argued that notice issued u/s 148 cannot be held to be invalid. The Ld.DR relied on the decision of CIT Vs. Amarchand N.Shroff 1963 AIR 1448 and submitted that the Hon’ble Supreme Court held that the assessment cannot be made on a dead person, therefore, argued that since the case is squarely covered by the decision of Hon’ble Supreme Court, requested to uphold the notice as well as the assessment.
We have heard both the parties and perused the material placed on record. In the instant case, the AO had issued the notice u/s 148 on 26.03.2014. By the time, the notice was issued, the assessee had already expired. As per the information available on record, the assessee was expired on 13.08.2010. Though the assessee’s son has brought on record, the information regarding the death of the assessee, the AO chose to continue the assessment proceedings by issue of notice u/s 142(1) in the name of the legal heir. The Ld.DR relied on the decision of CIT Vs. Amarchand N.Shroff, cited supra. The facts of the case are distinguishable. In the cited case, relied up on by the DR, issue was with regard to the year in which the assessment required to be made. In the case law relied upon by the Ld.DR, Shri Amarchand was a partner in a partnership firm and he
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was deceased on 07.07.1949 and the assessment was made for the A.Y.1950-51 to 1954-55 and the Hon’ble Apex court held as under:
“In the present case the amounts which are sought to be taxed and which have been held not to be liable to tax are those which were not received in the previous year and are therefore not liable to tax in the several years of assessment. It cannot be said that they were income which may be deemed by fiction to have been received by the dead person and therefore they are not liable to be taxed as income of the deceased Amarchand and are not liable to be taxed in the hands of the heirs and legal representatives who cannot be deemed to be assessees for the purpose of assessment in regard to those years.” In the instant case issue is not with regard to the year of assessment but issue is with regard to the issue of notice u/s 148 on dead person. Therefore, the case law relied upon by the Ld.DR is not helpful to the department’s case. This Tribunal on identical facts in the case of Late Tanguturi Venkata Subbayya in I.T.A. No.226/Viz/2018 dated 28.06.2019 held that the notice issued on a dead person is invalid following the decision of Sri Aemala Venkateswara Rao in I.T.A. No.227/Viz/2017 dated 03.04.2019. For the sake of clarity and convenience, we extract relevant part of the order of this Tribunal in the case of Aemala Venkateswara Rao which reads as under :
“6. We have heard both the parties and perused the material placed on record. In the instant case, the assessee was expired on 03.11.2009, in support, death certificate is also enclosed in the paper book. Subsequent to the death of the assessee, reassessment proceedings were initiated and the notice u/s 148 was issued in the name of the dead person. In response to the notice issued by the AO, the wife of the deceased had intimated the death of the assessee.
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However, no effort was made by the AO to bring the legal heir on record, instead, the AO proceeded to complete the assessment in the name of the legal heir without issuing notice u/ 148. The Ld.AR relied on the provisions of section 159 of the Act. For the sake of clarity and convenience, we extract relevant part of the provisions of section 159 which reads as under :
(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 recomputation 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.
As per sub section 2(a) of section 159, in case the proceedings are already taken against the deceased person before his death, it is deemed that the proceedings are taken against the legal representative and the same would continue against the legal representative from the stage at which it stood on the date of death of the deceased. In the instant case the proceedings were initiated against the dead person after the death of the assessee, hence the notice issued on the dead person cannot make the legal heirs binding unless a proper notice is issued on the legal heirs. After the death of the assessee, proceedings must be initiated against the legal heirs to treat the legal heirs as deemed assessees. As per section 159 (2)(b), the AO is free to initiate proceedings against the legal representatives which could have been initiated against the deceased and determine the tax liability of the deceased person and the same is binding on the Legal representatives. Any notice issued in the name of a deceased person is invalid and cannot be enforced in the law. The Ld.AR relied on the decision of Hon’ble Madras High Court in the case of Alamelu Veerappan Vs. ITO, Non Corporate, Ward 2(2), Chennai, Writ Petition No.30060 of 2017 and WMP No.32631 of 2017. Hon’ble Madras High Court held that the notice issued on a dead person is invalid and cannot be enforced. For the sake of clarity and convenience , we extract para No.14-23 which reads as under :
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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.
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 cooperate in the proceedings pursuant to the impugned notice.
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.
This Court supports such a conclusion with the following reasons : Admittedly, the limitation period for issuance of notice for reopening expired on 31.3.2017. The impugned notice was issued on 30.3.2017 in the name of the dead person. On being intimated about the death, the Department sent the notice to the petitioner - his spouse to participate in the proceedings. This notice was well beyond the period of limitation, as it has been issued after 31.3.2017. If we approach the problem sans complicated facts, a notice issued beyond the period of limitation i.e. 31.3.2017 is a nullity, unenforceable in law and without juri iction. Thus, merely because the Department was not intimated about the death of the assessee, that cannot, by itself, extend the period of limitation prescribed under the Statute. Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration.
In such circumstances, the question would be as to whether Section 159 of the Act would get attracted. The answer to this question would be in the negative, as the proceedings under Section 159of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being otherwise, the provisions of Section 159 of the Act have no application.
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The Revenue seeks to bring their case under Section 292 of the Act to state that the defect is a curable defect and on that ground, the impugned notice cannot be declared as invalid.
The language employed in Section 292 of the Act is categorical and clear. The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. Undoubtedly, the issue relating to limitation is not a curable defect for the Revenue to invoke Section 292B of the Act.
All the above reasons are fully supported by the decision in the case of Vipin Walia. In that case, the notice dated 27.3.2015 was issued under Section 148 of the Act to the assessee, who died on 14.3.2015. The validity of the said notice was put to challenge. The Income Tax Officer took a stand that since the intimation of death of the assessee on 14.3.2015 was not received by her, the notice was issued on a dead person. However, the fact regarding the death of the assessee could not be disputed by the Department. The Department continued the proceedings under Section 147/ 148 of the Act and at that stage, the son of the deceased approached the High Court of Delhi. The High Court of Delhi pointed out that what was sought to be done by the Income Tax Officer was to initiate proceedings under Section 147 of the Act against the deceased assessee for the assessment year 2008-09, for which, the limitation for issuance of notice under Section 147/148 of the Act was 31.3.2015 and on 02.7.2015 when the notice was issued, the assessee was already dead and if the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31.3.2015 by issuing the notice to the legal heirs of the deceased and beyond that date, it could not have proceeded in the matter even by issuing notice to the legal representatives of the assessee. The decision in Vipin Walia fully supports the case of the petitioner herein.
The decision in the case of Vipin Walia was followed in the decision of the High Court of Gujarat in the case of Rasid Lala, in which, the re-assessment proceedings were initiated against the dead person, that too, after a long delay. The Court pointed out that even if the provisions of Section 159 of the Act are attracted, in that case also, the notice was required to be issued against and in the name of the heirs of the deceased assessee and under the said circumstances, Section 159 of the Act shall not be of any assistance to the Revenue.
In the decision of the Delhi High Court in the case of Spice Entertainment Ltd., one of the questions, which fell for consideration, is as to whether such framing of assessment against a non existing entity or a dead person could be brought within the ambit of Section 292B of the Act and after referring to the decisions on the point including the decision of the Allahabad High Court in the case of Sri Nath Suresh Chand Ram Naresh Vs. CIT [reported in (2006) 280 ITR 396], it has been held that the provisions of Section 292B of the Act are not 10 I.T.A. No.529/Viz/2019 A.Y.2007-08 Shri M.Raghurama Raju, L/R of Late Shri M.Radha Mohan Raju, Visakhapatnam
applicable and that framing of assessment against a non existing entity/person goes to the root of the matter, which is not a procedural irregularity, but a juri ictional defect, as there cannot be any assessment against a dead person.
Hon’ble Mumbai High Court in the case of Sumit Balkrishna Gupta. v.Assistant Commissioner of Income-tax, Circle 16(2), Mumbai 103 taxmann.com 188 held that the notice issued on a dead person is invalid unenforceable in law. We extract the relevant part of the order of Hon’ble Bombay High court in Sumit Balkrishna Gupta supra which reads as under:
“7. The issue of a notice under Section 148 of the Act is a foundation for reopening of assessment. The sine qua non for acquiring juri iction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not a merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. Thus, a notice which has been issued in the name of the dead person is also not protected either by provisions of Section 292B or 292BB of the Act. This is so as the requirement of issuing a notice in the name of correct person is the foundational requirement to acquire juri iction to reopen the assessment. This is evident from Section 148 of the Act, which requires that before a proceeding can be taken up for reassessment, a notice must be served upon the assessee. The assessee on whom the notice must be sent must be a living person i.e legal heir of the deceased assessee, for the same to be responded. This in fact is the intent and purpose of the Act. Therefore, Section 292B of the Act cannot be invoked to correct a foundational / substantial error as it is meant so as to meet the juri ictional requirement. Therefore, both the impugned notice dated 29.3.2018 and the impugned order dated 13.11.2018 are quashed and set aside. It is made clear that this order will not prohibit the Revenue from issuing a fresh notice for reassessment, if requirement of Sections 147/ 148 of the Act are satisfied, including the limitation period therein.” The Ld.DR did not submit any other case law or the decision supporting the notice issued on a dead person is valid or to controvert the submissions made by the Ld.AR. Therefore, we hold that the notice u/s 148 on a dead person is invalid and accordingly quashed. Consequent assessments made u/s 144 r.w.s. 147 is annulled.”
Further, Hon’ble High Court of Madras in Alamelu Verappan vs I.T.A. No.529/Viz/2019 A.Y.2007-08 Shri M.Raghurama Raju, L/R of Late Shri M.Radha Mohan Raju, Visakhapatnam
(supra), held that notice issued on dead person is illegal and the department cannot plead ignorance. Therefore, respectfully following the decision of this Tribunal in the case cited (supra) , we hold that notice issued u/s 148 is invalid, hence, we quash the notice and hold that the subsequent assessment proceedings are void-ab-initio. Since, we have quashed the notice u/s 148, we consider that the remaining grounds raised by the assessee are not necessary for adjudication. Accordingly, the appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 17th June, 2020. (िी.दुगाा राि) (धड.एस. सुन्दर धसंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER नवशधखधपटणम /Visakhapatnam नदनधंक /Dated : 17.06.2020 L.Rama, SPS
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आदेश की प्रतितिति अग्रेतषि/Copy of the order forwarded to:- 1. तिर्धाररिी/ The Assessee– M Raghurama Raju, L/R of (Late) M.Radha Mohan Raju, Flat No.306, Charan Castle, Sairam Colony, Madhurawada, Visakhapatnam 2. रधजस्व/The Revenue –Income Tax Officer, Ward-2(2), Visakhapatnam
The Commissioner of Income Tax-1, Visakhapatnam
The Commissioner of Income Tax (Appeals)-1, Visakhapatnam 5. तवभधगीय प्रतितितर्, आयकर अिीिीय अतर्करण, तवशधखधिटणम/DR, ITAT, Visakhapatnam 6.गधर्ाफ़धईि / Guard file आदेशधिुसधर / BY ORDER //// Sr. Private Secretary ITAT, Visakhapatnam