ACIT 6(1)(1), MUMBAI vs. SHRI. DATTATRAY PANDURANG MHAISKAR, MUMBAI

The aforesaid appeal has been filed by the Revenue against the order dated 20.01.2021, passed by the Ld.CIT(A), 53 Mumbai Dattatray Pandurang Mhaiskar for the quantum of assessment passed u/s. 143(3), for the AY 2017-18. 2. The Revenue has challenged the impugned order on the following two grounds.

Whether on the facts and in the circumstances of the case and in law, Ld CITA) was justified in deleting the disallowance of penal charges paid as the assessee was unable to establish with justification that the said was expenditure incurred in the normal course of business to be allowed as a deduction u/s 37(1) of the Income Tax Act, notwithstanding the provisions of Explanation 1, thereto."

The Ld.AO has made competed the assessment and the income of Rs.26,32,40,530/- after making disallowance of penal charges u/s. 37(1) of Rs. 10,70,22,784/- and addition under section 22 of Rs. 10,20,000/-.

The Ld. CIT(A) on this issue has recorded following facts;- 4.3 The appellant has challenged the validity of issue of notice u/s 143(2) and 142(1) and thereby, the validity of order passed in furtherance to these invalid notices. The appellant has contended that the assessing officer has issued notices u/s 143(2) and 142(1) dated 14.08.2018, 22.02.2019 and 22.03.2019 in the name of appellant, Dattatray Mhaiskar, who expired on 03.01.2018. This fact was brought to the notice of AO by Legal heir of appellant by submitting the copy of death certificate of appellant while making the registration of legal heir on e-filing portal and thus, the appellant contended that notice ought to be served to the legal representative of appellant, Ms Sudha Mhaiskar in accordance with the provisions of section 159 of the Act which deals with Legal Representatives.

Thereafter, considering various judgments, the Ld. CIT (A) quashed the assessment after observing as under: 4.5 in the present case, Dattatray Mhaiskar expired on 03.01.2018. Intimation of death of Dattatray Mhaiskar was communicated to the AO on 24.01.2019.by an online application for registration of Smt. Sudha Mhaiskar as legal heir of the deceased appellant. The assessment order u/s 143(3) has been passed in the name of deceased person. It is seen that no notice is issued by AO u/s 143(2) on the legal heir/s of deceased. The failure to issue a notice u/s 143(2) in the name/s of the legal heirs renders the assessment order void even if the legal heir/s has participated in the assessment proceedings. Section 292BB does not save complete absence of notice For Section 292BB to apply, the notice must have emanated from the department. It is only the infirmities Dattatray Pandurang Mhaiskar in the manner of service of notice that the Section seeks to cure The Section is not intended to cure complete absence of notice itself. Thus, in the present case, the assessment order passed in the name of the deceased person by AO is without any jurisdiction and thus, the assessment order passed by AO is quashed. He is also gave relief on merits also.

After hearing both the parties and on perusal of the material placed on record, we find that, it is an undisputed fact that Assessee, Late, Dattatray Pandurang Mhaiskar expired on 03.01.2018 and intimation to that effect along with death certificate was communicated to the Assessing Officer on 24.11.2019 and the details of legal heir was also and the name was also given.

However, the Ld. Assessing Officer despite of this communication has passed the assessment order in the name of deceased person. Nor, he has issued any notice u/s. 143(2) in the name of the deceased person. It is well settled law that any proceeding or assessment against a dead person is null and void which has been held by the Jurisdictional High Court in the case of “Rupa Shyamsundar Dhumatkar v. ACIT [2020] 420 ITR 256 (Bom), Hon'ble High Court of Bombay has also held that since impugned notice u/s 148 of reopening of assessment was issued against a dead person, same was invalid and was to be set aside along with assessment order. The relevant part of the decision is as under:

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.”

Apart from that, Hon’ble Supreme Court in case of Pr.CIT Vs. Maruti Suzuki India Ltd. reported in 416 ITR 613 held that even participation in the proceedings in such circumstances cannot operate as an estoppel against law. Therefore, any notice u/s.1 43(2) order or any assessment order issued to an non existing entity is bad in law.