COMMISSIONER OF IT, FARIDABAD vs. KISHORI , VILLAGE - ANKHIR, FARIDABAD

I.T.A. No.514 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

I.T.A. No.514 of 2010.

Date of Decision:-07.08.2013. Commissioner of Income Tax, Faridabad. .........Appellant.

Versus Kishori

.........Respondent. CORAM: Hon'ble Mr. Justice Rajive Bhalla Hon'ble Mr. Justice Dr. Bharat Bhushan Parsoon.

***** Present:- Mr. Tejinder K. Joshi, Advocate for the appellant. Mr. Sanjay Bansal, Senior Advocate with Mr. Rajiv Sharma, Advocate for the respondent. Rajive Bhalla, J (Oral)

The revenue challenges order dated 25.8.2009 passed by the Income Tax Appellate Tribunal, Delhi Bench 'D', New Delhi.

The Assessing Officer passed an order on 22.3.2007 under Section 148 of the Income Tax Act, 1961 (for short, referred to as 'the 1961 Act') against the respondent, Kishori though Kishori had passed away on 29.7.1999. Shri Dhan Singh, a legal representative of Kishori filed an appeal before the Commissioner of Income Tax which was allowed by holding that an assessment order passed against a dead person is a nullity. Aggrieved by this order, the revenue filed an appeal before the Income Tax Appellate Yag Dutt 2013.08.31 10:10 I attest to the accuracy and integrity of this document

I.T.A. No.514 of 2010 -2- Tribunal against Kishori without impleading Dhan Singh. When this error was brought to the notice of the revenue, instead of rectifying the error, the revenue pleaded that as Kishori alone was arrayed as respondent in the order supplied to the revenue by the Commissioner of Income Tax (Appeal), the revenue had no option but to implead Kishori as a respondent. The Income Tax Appellate Tribunal dismissed the appeal, and recorded adverse comments against the revenue for failure to implead the legal heirs of Kishori. Despite this fatal flaw in the assessment order, the revenue seeks reversal of the impugned orders on four substantial questions of law which read as follows: “I. Whether, on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal was right in law without deciding the question raised by the revenue with regards to admitting and accepting an additional ground of appeal by the learned Commissioner of Income Tax (Appeal) without giving an opportunity to be heard to the Assessing Officer and without recording any reason and is contrary to the decision of the Hon'ble Supreme Court in the case of Esthuri Aswathiah Appellant vs CIT, Mysore AIR (1968) SC 36? II. Whether, on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal was right in law in confirming the Commissioner of Income Tax (Appeal)'s order passed in the name of a dead person even though the appeal before the Commissioner of Income Tax (Appeal) was filed by Yag Dutt 2013.08.31 10:10 I attest to the accuracy and integrity of this document

I.T.A. No.514 of 2010 -3- his legal heir namely Sh. Dhan Singh son of late Sh. Kishori, thus the entire matter is liable to restored back for a fresh decision for passing the necessary order as per law in the name of legal heir of the assessee?” III. Whether, on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal was right in law in upholding the order of the Commissioner of Income Tax (Appeal) ignoring the fact that the assessment against a dead person was completed only in view of the fact that the authority concerned was not made aware of the death of the assessee and in contrary to the decision of the Hon'ble Jharkhand High Court in the case of Smt. Sudha Prasad vs. CCIT (2004) 186 CTR (Jharkhand) 475 (2005) 275 ITR 135 (Jharkhand)? IV. Whether, on the facts and in the circumstances of the case, the Ld. Income Tax Appellate Tribunal was right in law in confirming the order of the Ld. Commissioner of Income Tax (Appeal) in deleting the addition of Rs.1,58,49,810/- made by the Assessing Officer on account of long term capital gains from enhanced compensation and interest thereon in view of judgment of Apex Court as the entire controversy on the year of taxability of enhanced compensation and interest thereon has now come to rest with the judgment of the Hon'ble Supreme Court in the case of Commissioner of Income Tax, Faridabad vs. Ghanshyam (HUF) reported in (2009) 315 ITR 1 Yag Dutt 2013.08.31 10:10 I attest to the accuracy and integrity of this document

I.T.A. No.514 of 2010 -4- wherein it has been held that the year in which enhanced compensation is received is the year of taxability?”

Counsel for the revenue contends that even if the order passed by the Assessing Officer was a nullity, the Commissioner of Income Tax (Appeal) or the Income Tax Appellate Tribunal should have restored assessment proceedings to the Assessing Officer.

Counsel for the respondent vehemently contends that as no notice was ever served upon the legal heirs, fresh proceedings would be barred by limitation and should, therefore, not be restored to the Assessing Officer. It is further submitted that as cognizance can no longer been taken by the Assessing Officer, liberty as prayed by the revenue should not be granted.

We have heard counsel for the parties and perused the impugned order. It is, rather, surprising that despite admitting that the assessment order was passed against a dead person, the revenue still has the audacity to file yet another appeal. The impugned orders are affirmed in so far as order passed by the Income Tax Officer has been set aside. However, there is a substantial question of law that arises from the arguments advanced by counsel for the revenue, namely, whether while setting aside the assessment order, the Commissioner of Income Tax (Appeal) or the Income Tax Appellate Tribunal should have restored the matter to the Income Tax Officer? The question has to be answered by holding that though the order passed by the Income Tax Officer was a nullity as it was Yag Dutt 2013.08.31 10:10 I attest to the accuracy and integrity of this document

I.T.A. No.514 of 2010 -5- passed against a dead person but this did not render show cause notice a nullity. The legal representatives of Kishori having filed an appeal and the matter should have been remitted for making an assessment in the hands of the legal heirs of Kishori.

Thus, while affirming the impugned order, the order passed by the Income Tax Appellate Tribunal is restored to the Assessing Officer to proceed afresh after giving an opportunity to the legal heirs of Kishori and considering their objections with respect to limitation etc. and to decide the matter afresh.

Parties are directed to appear before the Income Tax Officer, Ward-II (4), Faridabad on 16.9.2013.

(Rajive Bhalla)

Judge

(Dr. Bharat Bhushan Parsoon)

Judge August 07, 2013

'Yag Dutt' Yag Dutt 2013.08.31 10:10 I attest to the accuracy and integrity of this document