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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & SHRI S RIFAUR RAHMAN, AM
O R D E R
Per Amit Shukla, Judicial Member:
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.
1 "Whether on the facts and in the circumstances of the case and in Law, the Ld. CIT(A) erred in annulling the notices issued u/s. 143(2) and 142(1) thereon and quashing the assessment order passed u/s 143(3) of the Act passed by the Assessing Officer without verifying the facts that the notice u/s 143(2) to initiate the proceedings was issued on 14.08.2018 whereas the intimation of death of the assessee was received on 24.01.2019,"
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."
3. The briefs and facts are that, Assessee Late, Dattatray Pandurang Mhaiskar in his life time had filed return of Income-Tax on 23.11.2017 declaring income of Rs. 15,51,97,750/-. The Assessee expired on 3 Jan 2018, the copy of the death certificate was submitted before the Assessing Officer through online application and legal heir Smt. Sudha Mhaiskar, was filed on 24 Jan, 2019. In spite that, Ld. AO continue to issue notices u/s. Dattatray Pandurang Mhaiskar 143(2), in the name of the diseased person and even finally passed by the assessment order on 30.12.2019 in the name of the dead person that is ‘Dattatray Pandurang Mhaiskar’.
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.
Dattatray Pandurang Mhaiskar Further, the appellant has also contended that since the notice u/s 143(2) is issued in the name of deceased and no such notice was issued in the name of legal heir till date, the assessing officer has proceeded to make assessment and thereby passing the assessment order without assumption of jurisdiction and hence, the additions made by the AO in the impugned order passed by AO are also liable to be deleted. In support of above contentions, the appellant has placed reliance on the Hon'ble Madras High Court in the case of Alamelu Veerappan v. Income Tax Officer [2018] 95 taxmann.com 155 wherein, it was held that a notice issued in the name of deceased in invalid and this not a curable defect u/s section 292B of the Act. 4.4 in the present case, Dattatray Mhasikar expired on 03.01.2018. Intimation of death of Dattatray Mhasikar 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. A first notice u/s 143(2) was issued on 14.08.2018. Thus Initiation of assessment proceedings by the AO in the name of the deceased person was without knowledge of death of the deceased appellant. However, notices u/s 143(2) and 142(1) dated 22.02.2019 and 22.03.2019 were issued in the name of Dattatray Mhasikar these notices were issued on non-existence person and the assessment proceedings carried out in the name of deceased person.
Dattatray Pandurang Mhaiskar It is the settled legal position that the notice issued u/s 143(2) for initiation of the proceedings is issued after the event of death/ amalgamation/merger, therefore, such notice is not valid in the eyes of law. When the information regarding the event of death was received by the AO, the time limit to issue fresh notice u/s 143(2) to initiate the proceedings against legal heirs had already expired. Under this circumstance, the only recourse left to the AO was to issue subsequent notices in the name of legal heirs after identifying all legal heirs of the appellant. Finally, the assessment order must be passed only in the name of legal heir(s).
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:
Dattatray Pandurang Mhaiskar 2. 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 respect can be made to a decision of Gujarat High Court in the case of Chandreshbhai Jayantibhai Patel v. ITO [2019]101, taxmann.com 362/261 Taxman 137/413 ITR 276. As also the decision of Madras High Court in the case of, Alamelu Veerappan v. ITO [2018] 95 taxmann.com 155/257 Taxman 72. 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.”
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.