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Income Tax Appellate Tribunal, JAIPUR BENCH ’SMC’, JAIPUR
Before: SHRI SHRI VIJAY PAL RAO
PER VIJAY PAL RAO, JM : This appeal by the assessee is directed against the order dated 29th March, 2019 of ld. CIT (A), Alwar for the assessment year 2010-11. The assessee has raised the following grounds :-
“ 1. Under the facts & circumstances of the case, notice issued u/s 148 and consequent order passed u/s 147 is illegal and bad in law.
2. The ld. CIT (A) has erred on facts and in law confirming the addition of Rs. 8 lacs on account of unexplained cash deposit in bank account.
3. The appellant craves to alter, amend and modify any ground of appeal.
4. Necessary cost be awarded to the assessee.”
Ground No. 1 is regarding validity of notice issued under section 148 and consequently reassessment order passed by the AO due to the reason that the notice under section 148 was issued in the name of dead person.
2. The assessee was an Individual and did not file any return of income for the year under consideration. On the basis of the information of cash deposit of Rs. 17,00,000/- in the bank account of the assessee, the AO issued a notice under section 148 of the IT Act dated 30th March, 2017 to assess the income on account of cash deposit in the bank account. In response to the said notice, the representative of the legal heir of the assessee appeared before the AO and intimated that the assessee already died on 23rd February, 2016. Consequently, the AO issued notice under section 142(1) to the legal heir of the assessee and completed the reassessment at a total income of Rs. 18,72,420/-. The assessee challenged the action of the AO before the ld. CIT (A) and also questioned the validity of notice under section 148. However, the ld. CIT (A) has granted part relief to the assessee on the quantum of addition by accepting the source of deposit to the extent of Rs. 9,00,000/- being sale consideration of agricultural land and the balance addition of Rs. 8,00,000/- was sustained.
3. Before me, the ld. A/R of the assessee has submitted that the notice issued under section 148 dated 30th March, 2017 is not valid as the same was issued in the name of dead person. This fact was apprised to the AO by the representative of the legal heir appeared during the course of proceedings. However, the AO has not issued any notice under section 148 in the name of the legal heir, therefore, the reopening and the assessment is invalid and liable to be quashed as notice issued under section 148 was in the name of deceased assessee and not in the name of Legal Heir of the deceased. In support of his contention he has relied upon the decision of Hon’ble Madras High Court in case of Alamelu Veerappan vs. ITO, 169 DTR 434 (Mad.) as well as the decision dated 5th April, 2019 of Hon’ble Bombay High Court in case of Rupa Shyamsundar Dhumatkar vs. ACIT in Writ Petition No. 404 of 2019.
On the other hand, the ld. D/R has submitted that the notice under section 148 was duly served on the legal heir of the assessee and the said notice was also acted upon by the legal heir, therefore, even if the said notice was issued in the name of deceased assessee due to the reason that the AO was not aware of the death till that date, once the legal heir has accepted the notice and acted upon the same, notice issued under section 148 cannot be held as invalid. The ld. D/R has further contended that the legal heir of the deceased assessee has participated in the assessment proceedings and not raised any objection before the AO regarding the validity of notice, therefore, the said notice cannot be questioned at a subsequent stage.
I have considered the rival submissions as well as the relevant material on record. I have perused the notice issued by the AO under section 148 dated 30th March, 2017 and there is no dispute that the said notice was issued in the name of Bhairu Prasad, the deceased assessee. It is also established from the Death Certificate of the assessee that the assessee died on 23rd February, 2016 at the age of 80 years. Therefore, the notice issued under section 148 in the name of dead person is not a valid notice. Even if the AO has issued the notice in the name of dead person, once this fact is known to the AO, a fresh notice ought to have been issued to the legal representative of the deceased assessee. However, in the case in hand the impugned notice dated 30th March, 2017 under section 148 was issued at the fag end of the limitation of 6 (six) years from the end of the assessment year in question and, therefore, there was no occasion with the AO even to issue a fresh notice under section 148 due to the expiry of limitation provided under section 149 of the IT Act. Though the legal representative of the deceased assessee appeared before the AO and participated in the assessment proceedings, however, no return of income was filed and, therefore, the participation of the legal heir in the assessment proceedings would not validate the notice under section 148 issued in the name of dead person. The Hon’ble Madras High Court in case of Alamelu Veerappan vs. ITO (supra) while considering the issue of validity of notice under section 148 in the name of dead person held in para 16 to 26 as under :-
“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.
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 jurisdiction. 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 159 of 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.
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. (supra). 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 (supra) fully supports the case of the petitioner herein.
The decision in the case of Vipin Walia (supra) was followed in the decision of the High Court of Gujarat in the case of Rasid Lala, (supra) in which, the reassessment 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.
6 Late Shri Bhairu Prasad L/H Smt. Shanti Devi, Alwar.
In the decision of the Delhi High Court in the case of Spice Entertainment Ltd. (supra) 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 v. CIT [2006] 280 ITR 396/145 Taxman 186 it has been held that the provisions of Section 292B of the Act are not 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 jurisdictional defect, as there cannot be any assessment against a dead person.
The learned Senior Standing Counsel for the Revenue has sought to distinguish the decision in the case of Spice Entertainment Ltd. (supra) by referring to Sky Light Hospitality LLP. Case (supra) 25. On a perusal of the factual position therein, the Court came to the conclusion that the defect was curable because it was held that the notice was not addressed to the correct name and that the PAN mentioned was also incorrect. The factual background was taken into consideration and the Court held that errors and mistakes cannot and should not nullify the proceedings, which are otherwise valid and that no prejudice had been caused, as this being the mandate of Section 292B of the Act. The decision in the case of Sky Light Hospitality LLP case (supra) is clearly distinguishable on facts and it does not support the case of the Revenue.
For all the above reasons, this court holds that the impugned notice is wholly without jurisdiction and cannot be enforced against the petitioner.”
The facts in the case in hand are identical to the said case wherein the notice for reopening of the assessment was issued on 30th March, 2017 whereas the limitation for issuance of notice expired on 31st March, 2017. Since the said notice was issued in the name of dead person, therefore the Hon’ble High Court has held that the subsequent notice issued by the AO are beyond the period of limitation and the notice issued beyond the period of limitation is a nullity. A similar view has been taken by the Hon’ble Bombay High Court in the case of Rupa Shyamsundar Dhumatkar vs. ACIT (supra) as under :-
“1. Heard learned Counsel for the parties for final disposal of the Petition. This Petition is filed by the widow of Late Shri Shyamsundar Pundalik Dhumatkar. Late Shri Shyamsundar Dhumatkar was engaged in his individual business. He filed return of his income till the year 2007-2008. According to Petitioner, however, since thereafter he had no taxable income, he had stopped filing returns of income. The Assessing Officer issued a notice dated 27/03/2018 in the name of Late Shri Nesarikar 2/3 08-WP-404-19.odt Shyamsundar Dhumatkar under section 148 of the Income Tax Act, 1961 (for short 'the Act') reopening the assessment for the assessment year 2011-2012. Shri Shyamsundar Pundalik Dhumatkar expired on 14/10/2016. Thus, the notice dated 27/03/2018 was issued on a dead person. The Petitioner as a widow and legal heir of the deceased Shri Shyamsundar Dhumatkar brought these facts to the notice of the income tax department. Despite this, the Assessing Officer issued a notice under section 142(1) of the Act on 29/08/2018 and therefore the Petitioner has filed this Petition challenging the said notice dated 27/03/2018.
The facts are not seriously in dispute. The Petitioner had produced the death certificate of Shri Shyamsundar Dhumatkar before the Income Tax authorities, indicating that he died on 14/10/2016. Thus, the impugned notice of reopening of assessment was issued on a dead person. There are several judgments of different High Courts holding that the notice or reopening of assessment is invalid in law. A reference in this 3/3 08-WP-404-19.odt respect can be made to a decision of Gujarat High Court in the case of Chandreshbhai Jayantibhai Patel Vs The Income Tax Officer (Special Civil Application No.15172 of 2018, decided on 10/12/2018). As also the decision of Madras High Court in the case of Alamelu Veerappan Vs. Income Tax Officer, Non- corporate Ward-2(2), Chennai, reported in (2018) 257 Taxman 72 (Madras). It is not necessary to refer to all the judgments on the point. Suffice it to say, as per the settled law, notice for reopening of assessment against a dead person is invalid.
In the result, the impugned notice is set aside. Petition is disposed of accordingly. Consequentially, the order of assessment dated 31/12/2018 also stands annulled.”
Accordingly, when there is no dispute regarding the fact that at the time of issuing the notice under section 148 the assessee was already dead, the said notice is invalid and consequent reassessment framed under section 147 is also not sustainable in law and liable to be quashed. I order accordingly.
Since I have quashed the reopening of the assessment, therefore, I do not propose to go into the merits of the issue regarding the addition sustained by the ld. CIT (A).
In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 23/07/2019.