Mrs.Kontham Sugunalatha vs. The Assessment Unit, National Faceless Assessment Centre (NFAC)

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WP/22086/2024HC TelanganaHBHC01041019202421 November 2024Author: SUJOY PAUL,NAMAVARAPU RAJESHWAR RAO6 pages
AI SummaryPartly Allowed

What did the High Court hold?

The High Court, in respectful agreement with the Delhi High Court's decision in Savita Kapila v. Assistant Commissioner of Income Tax, Circle 43(11) Delhi, held that the impugned Assessment Order dated February 13, 2024, and the Penalty Order dated June 29, 2024, could not sustain judicial scrutiny. The reasoning was that both orders were passed against a deceased person without affording the legal heir an opportunity of being heard. Consequently, the High Court set aside both orders. Liberty was reserved to the Revenue Department to proceed against the legal representatives of the deceased assessee, if the law permits. No issue was expressly left undecided.

What were the facts?

The petitioner, Mrs. Kontham Sugunalatha, is the legal heir of the deceased assessee, Dr. Kontham Eashwar Jai Suryanarayana, who passed away on February 26, 2016. The National Faceless Assessment Centre (NFAC) issued an Assessment Order dated February 13, 2024, for Assessment Year 2016-17, and a Penalty Order dated June 29, 2024, under Section 271(1)(c) of the Income Tax Act, 1961. These orders were passed against the deceased assessee without prior notice to the legal heir and without affording an opportunity of being heard. The petitioner challenged these orders before the High Court of Telangana at Hyderabad, seeking to declare them illegal, arbitrary, without jurisdiction, and barred by limitation, consequently praying for them to be set aside.

What were the issues?

1. Whether the Assessment Order dated February 13, 2024, passed for Assessment Year 2016-17 under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961, against a deceased person, Dr. Kontham Eashwar Jai Suryanarayana, without notice to the legal heir, is illegal, arbitrary, barred by limitation, and without jurisdiction. 2. Whether the Penalty Order dated June 29, 2024, passed under Section 271(1)(c) of the Income Tax Act, 1961, for Assessment Year 2016-17 against the deceased assessee, without notice to the legal heir, is illegal, arbitrary, barred by limitation, and without jurisdiction. Assessee's Contention: The learned counsel for the petitioner argued that the assessment and penalty proceedings, as well as the impugned orders, were passed against a dead person, which is impermissible. Reliance was placed on the Delhi High Court judgment in Savita Kapila v. Assistant Commissioner of Income Tax, Circle 43(11) Delhi. Revenue's Contention: The learned Junior Standing Counsel for the Income Tax Department opposed the prayer and supported the impugned orders but could not distinguish the judgment cited by the petitioner.

Which sections of the Income-tax Act were involved?

Section 147,Section 144,Section 144B,Section 148,Section 148A,Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
[ 3411 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) THURSDAY, THE TWENry FRST DAYOFNOVEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION Nos:22070 & 22086 0F 2024 WRIT PETITION NO: 22o70 0F 2024: Between: ...PETITIONER firlrs. Kontham Sugunalatha, wife and Legal Heir of Late Dr.Kontham Eashwar {a1 Qgry.qnq1a.yana, Aged about 60 yearsl Occ. Househoid, neslaent oiX.iro. 2-1-40013, St.No. 3, New Nallakunta, Hyderabad. AND 1 2 The Assessment Un_it, National Faceless Assessment Centre (NFAC), Rep. by its Principle Chief Commissioner of lncome Tax, Room No +Ot Zni ftoor e Ramp Jawaharlal Nehru Stadium, Delhi 1100O3. The lncome Tax Officer, \N ard - 2, Nizamabad, Nizamabad District, Telangana. The Union.of lndia,-Rep. by its Secretary, Ministry of Finance, Government of lndia, North Block, New Delhi - 110 001. ...RESPONDENTS Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to issue an appropriate writ, order or Direction, more particularly one in the nature of writ of Mandamus, to declare the action of the 1st Respondent in issuing the lmpugned Assessment order dated 1312tm24 for the Assessment Year 2016-17 as per Section 147 Read with section 144 and 1448 of the lncome Tax Act '1961 against a dead person Dr.Kontham Eashwar Jai Suryanarayana on the ground of non-filing of the returns of income and demanding ior payment of tax Rs.46,73,976/-, without prior notice and affording reasonable opportunity of being heard against legal heirs of the dead person as being illegal, arbitriry,l patently barred by limitation, without Jurisdiction, contrary to the provisions of section 148 and section 148A of the lncome Tax Act,1961 and consequenfly set aside the Assessment order dated 1310212024, passed for the Assessment year 2016-17 under the lncome Tax Act,1961 as null and void. lA NO: 1 OF 2024 Petition under Section 151 CPC praying that in the circumstances stated in the affidavit filed in support of the petition, the High Court may be pleased to suspend the operation of the lmpugned Assessment Order dated 131212O24 issued by the 1't Respondent for the Assessment Year 2016-17 under the lncome Tax Act.196t, pending disposal of the above Writ Petition, as otherwise lwill be put to irreparable loss and hardship. Counsel for the Petitioner: SRI SHAIK VAHEEDA SUSHMA Counsel for the Respondent No.1 & 2: M/s. J. SUNITHA (JR. Sc FoR lNcoME TAx) rep. for SRI P. MURALI KRISHNA, SR, SC FOR INCOME TAX DEPARTMENT Counsel for the Respondent No.3: SRI GADI PRAVEEN KUMAR, DY. SOLICITOR GENERAL OF INDIA WRIT PETITION NO: 22086 OF 2024: Between: Mrs.Kontham Sugunalatha, Wife and Legal Heir of Late Dr.Kontham Eashwar Jai Suryanarayana, aged about 60 years, Occ. Household, Resident of H.No. 2-1-40013, St.No. 3, New Nallakunta, Hyderabad. ...PETITIONER AND 1 The Assessment Unit, National Faceless Assessment Centre (NFAC), Rep. by its Principle Chief Commissioner of lncome Tax, Room No 401 2nd Floor E Ramp Jawaharlal Nehru Stadium Delhi 1 10003 The lncome Tax Officer, Ward 2, Nizamabad. Nizamabad District, Telangana. The Union of lndia, Rep. by its Secretary, Ministry of Finance, Government of India, North Block, New Delhi 110 001. ...RESPONDENTS Petition under Article 226 oI the Constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High Court may be pleased to issue an appropriate writ order or Direction, more particularly one in the nature of Writ of Mandamus, to declare the action of the l st Respondent in issuing the lmpugned Penalty Order dated 29-6-2024 under Section 271 (1) @) of the lncome Tax Act 1961 for the Assessment Year 2016-17 against a dead person Dr.Kontham Eshwar Jai Suryanarayana on the ground of non-filing of the returns of income and demanding for payment of Penalty of Rs. 14,26,6531, without prior notice and affording reasonable opportunity of being heard against legal heirs of the dead person as being illegal, arbitrary, patently barred by limitation, without Jurisdiction, contrary to the Provisions of the lncome Tax Act,'1961 and consequently set aside the Penalty Order dated 29.06.2024, passed 2 3 7 for the Assessment Year 2016-17 under the Income Tax Act,1961 as null and void. IANO:1OF 2024 Petition under section 151 cpc praying that in the circumstances stated in the affidavit fired in support of the peiition, in" Hign court may u" pr"r"Lo t" suspend the operation of the rmpugned penarty. order dated ze-6-zoz[ iis"ia ov the 1st Respondent, for the Asseisment year 201 .6-17 under the tn"or" r* Act' 1 961 , pending disposar of the above writ petition, as otherwise r wirt G put to irreparable loss and hardship. Counsel for the Petitioners: SRI SHAIK VAHEEDA SUSHMA counser for the Respondent No.1 & 2: M/s. J. suNrrHA (JR. SC FOR TNCOME TAX) !"{ J3',8H,'";tsHEiX-1T 3X$*.,, Counsel for the Respondent No.3: SRI cADl PRAVEEN KUMAR, DY. SOLICITOR GENERAL OF INDIA

The Court made the following: COMMON ORDER

v / THE HONOURABLE SRI JUSTICE SUJOY PAUL AND THE HONOURABLE SRI JUSTICE NAMAVARAPU RAJESHWAR RAO WRIT PETITION Nos.22070 &220A6 of 2o24 COMMON ORDER (per Hon'ble SP,J) . Ms. Shaik Vaheeda Sushma, learned counsel for the petitioner, Ms. J.Sunitha, Iearned Junior Standing Counsel representing Sri P. Murali Krishna, learned Senior Standing Counsel for Income Tax Department, for respondent Nos. 1 and 2 and Sri B' Mukherjee, learned counsel representing Sri Gadi Praveen Kumar, learned Deputy Solicitor General of India, for respondent No 3' With the consent finallY heard 3. karned counsel for the petitioner raised singular submission. She submits that in W.P.No.22O7O of 2024, the Assessment Order dated 13.O2.2024 is subject matter of challenge, whereas the consequential Penalty Order. dated 29.06'2024 is being questioned in W.P.No.22O86 of 2024. The singular ground is that the assessee expired on 26.O2.2016- The impugned Assessment Proceedings and Assessment Order could not have been passed against a dead person. Similarly, the impugned Penalty Order could not have been issued against a dead person. Reliance is placed on a judgment of Delhi High Court in Savita Kapila v. Assistant Commissioner of Income Tax, Circle 43(11 Delhil. 2 , 0 r 2o2o scc online Del 2540

2

4.

Learned Junior Standing Counsel for Income Tax Department opposed the prayer and supported the impugned Assessment and Penalty Orders. However, she could not point out or distinguish the aforesaid judgment of Delhi High Court. We are in respectful agreement with the view taken by the Delhi High Court in Savita Kapila (supra). In the tight of said judgment, the impugned Assessment Order and penalty Order cannot sustain judicial scrutiny.

6.

Resultantly, both the orders dated 73.02.!024 and 29 .06.2024 are set aside. Liberty is reserved to the Revenue Department to proceed against the legal representatives of the deceased assessee, if law so permits. 7 closed. The Writ Petitions are disposed of. No costs Interlocutory applications, if any pending, shall also stand SD/.A.V.S.PRASAD //TRUE C)pytt ASSISTANT REGISInAR V To, SECTION OFFICER

1.

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7.

Two CD Copies BN I GJP

r' HIGH COURT DATED:2111112024 COMMON ORDER WP.Nos.22070 & 22086 ot 2024 DISPOSING OF THE WRIT PETITION WITHOUT COSTS -..aa-- 3'" c ,\. (! oo 2 7 ilE\, zul L @4"q X'fr-

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