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Facts
The assessee sold an immovable property for Rs. 89,75,000 in FY 2009-10. The Assessing Officer (AO) initiated reassessment proceedings u/s 147/144, alleging escapement of income, but the assessee did not comply with the notices. The assessee passed away before these proceedings were completed.
Held
The Tribunal held that the reassessment proceedings were void ab initio due to the non-service of a valid notice u/s 148. The assessment order was passed in the name of a deceased assessee without proper legal representation, and the correct address was not used for issuing notices.
Key Issues
Whether reassessment proceedings are valid when the notice u/s 148 was not properly served on the assessee or their legal heir, especially after the assessee's death.
Sections Cited
147, 148, 144, 142(1), 234A, 234B, 234C, 2(14), 159, 282, 153
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH, ‘F’: NEW DELHI
Before: MS. MADHUMITA ROY & SHRI KHETTRA MOHAN ROY
ORDER PER KHETTRA MOHAN ROY, AM
This appeal by the assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), Ghaziabad, dated 20.03.2019 pertaining to Assessment Year 2010-11.
The assessee has raised following grounds of appeal:-
“1. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the action of Ld. AO in framing the impugned reassessment order u/s 147/144 and that too without assuming jurisdiction as per law and without complying with the mandatory conditions u/s 147 to 151 as envisaged under the Income Tax Act, 1961.
2. That in any case and in any view of the matter, action of Ld. CIT (A) in confirming the action of Ld. AO in framing the impugned reassessment order u/s 147/144, is bad in law and against the facts and circumstances of the case.
3. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the addition of Rs. 89,75,000/- when the alleged notices under section 148, 142(1) and 144 were not served to the appellant.
4. That having regard to the facts and circumstances of the case, Ld. CIT (A) has erred in law and on facts in confirming the addition of Rs. 89,75,000/- allegedly on the ground that the agriculture land sold by the appellant was a capital asset within the meaning of section 2(14) of the Income Tax Act, 1961 and that too by recording incorrect facts and findings.
5. That in any case and in any view of the matter, action of Ld. CIT (A) in confirming the addition of Rs. 89,75,000/- being the entire sale proceeds of agricultural land allegedly on the ground that the agricultural land was a capital asset is bad in law and against the facts and circumstances of the case.
6. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts of the case in not reversing the action of Ld. AO in charging interest u/s 234A, 234B and 234C of the Act.”
Brief facts of the case are that as per AIR information, during the financial year 2009-10, the assessee has sold immovable property for Rs.89,75,000/-. As there was no compliance of verification letter, proceedings under section 148 of I.T. Act, 1961 were initiated and the notices were issued as per details given under:
Sr. Section Notice dated Date fixed for remarks No. under which compliance notices issued 1 148 30.03.2017 - The notice was duly served on the address of the assessee by the postal authorities on 31.03.2017 2 142(1) 22.06.2017 30.06.2017 No Compliance made 3 144 30.11.2017 06.12.2017 The notice was duly served on the address of the assessee by the postal authorities. But no compliance made.
3.1. Further, the Assessing Officer noted that no return of income has been filed by the assessee in response to notice under section
Since, the assessee did not make any compliance of the above mentioned notices issued from this office, final notice under section 144 of the I.T. Act, 1961 was issued as per details given above but no compliance has been made by the assessee till date. Under the circumstances the assessment is being completed under section 144 of the Income Tax Act, 1961 on the basis of information available on the record. As per the details provided by the Sub-Registrar, during the financial year 2009-10, the assessee has sold immovable property for Rs. 89,75,000/-. But no capital gain has been offered for taxation.
Under the circumstances mentioned above, Therefore, the AO consideredthe income of the assessee under the head long term capital gain at Rs. 89,75,000/- and the assessment was completed accordingly.
Against the above order, the assessee preferred appeal before the ld. CIT(A). The ld. CIT(A) confirmed the addition made by the Assessing Officer.
Aggrieved by the order of ld. CIT(A), the assessee is in appeal before us.
We have heard both the parties and perused the materials available on record. The ld. AR vehemently assailed the legality of assessment order passed against an expired assessee. As per the death certificate, contained in assessee’s paper book page no.15, the assessee has died on 23.04.2017. The copy of reasons recorded dated 21.02.2017 is also reproduced below:-
A notice u/s 148 dated 30.03.2017 as per assessee’s paper book 20, which is reproduced below:-
It is a fact on record that the order has been passed in the name of expired assessee. The assessment has been completed u/s 144 of the Act and there was no compliance by the assessee at all. The ld. CIT(A) has considered the issue in para 8.1.3 of his order as follows:-
“8.1.3 During the course of appellate proceedings it has been submitted that appellant expired on 23.04.2017. It is noted that AO issued notice us 148 on 30.03.2017 and as per AO's report, the notice was duly served on his last known address as per tracking report of Postal Department. Thus, it cannot be said that no notice was served upon appellant. Further, it is noted that legal heir of the appellant did not appear before AO as per the provisions of section 159. Especially considering the fact that appeal has been preferred by legal heir namely Shri Ishwar Dayal. it is not understood how the order has been received by the legal heir whereas no notice could reach him during assessment proceedings. Keeping in view above facts the objections taken by the appellant are found to be non maintainable accordingly these grounds of appeal are dismissed.” 8.1. The contentions of CIT(A) are accepted. Ld. AR also pointed out that there has been no service of notice u/s 148 of the Act which is an essential condition to be fulfilled.
The correct postal address as contained in the death certificate page no.15 of the paper book which is as under:-
9.1. However, the address as noted by the Assessing Officer in the notice u/s 148 of the Act as reproduced above is entirely different. In the absence of recording of correct postal address, there cannot be presumption a service of notice. In fact, the address of the assessee in the assessment order is again different, which is reproduced as under:-
Shri Prasadi, S/o- Sh. Bahadur, Village- Shakalpura, Post-Chirori, Ghaziabad
Thus, we are at loss to understand as to how the Assessing Officer can claim that the notice was duly served upon the assessee when it is clear fact evident on record that the notice was marked with a wrong postal address. Thus, by no circumstances, it can be conclusively established the notice u/s 148 of the Act was served upon the assessee particularly when ld. Sr. DR hardly controvert the same. In this connection, we note that the Hon’ble Delhi High Court in the case of CIT vs Chetan Gupta (2016) 382 ITR 0613 (Del.) has held as under:-
To summarize the conclusions: (i) Under Section 148 of the Act, the issue of notice to the Assessee and service of such notice upon the Assessee are jurisdictional requirements that must be mandatorily complied with. They are not mere procedural requirements. ii) For the AO to exercise jurisdiction to reopen an assessment, notice under Section 148 (1) has to be mandatorily issued to the Assessee. Further the AO cannot complete the reassessment without service of the notice so issued upon the Assessee in accordance with Section 282 (1) of the Act read with Order V Rule 12 CPC and Order III Rule 6 CPC. (iii) Although there is change in the scheme of Sections 147, 148 and 149 of the Act from the corresponding Section 34 of the 1922 Act, the legal requirement of service of notice upon the Assessee in terms of Section 148 read with Section 282 (1) and Section 153 (2) of the Act is a jurisdictional pre-condition to finalizing the reassessment. (iv) The onus is on the Revenue to show that proper service of notice has been effected under Section 148 of the Act on the Assessee or an agent duly empowered by him to accept notices on his behalf. In the present case, the Revenue has failed to discharge that onus. (v) The mere fact that an Assessee or some other person on his behalf not duly authorised participated in the reassessment proceedings after coming to know of it will not constitute a waiver of the requirement of effecting proper service of notice on the Assessee under section 148 of the Act. (vi) Reassessment proceedings finalised by an AO without effecting proper service of notice on the Assessee under Section 148 (1) of the Act are invalid and liable to be quashed.”
We humbly place reliance on the above judgment, which is binding upon us. Thus, we hold that in absence of valid service of notice, the entire proceedings u/s 148 is a nullity and accordingly the assessment be quashed. Hence, the addition of Rs.89,75,000/- is directed to be deleted. Since, the appellant is successful in assailing the validity of notice u/s 148, we refrain from dealing into the factual aspects.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on June, 2025.