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आदेश/Order
Per Sanjay Garg, Judicial Member:
The present appeals by different but related assessees have been
preferred against the separate orders dated 15.2.2016 of the
Commissioner of Income Tax (Appeals)-2, Ludhiana [hereinafter
referred to as ‘CIT(A)'].
First, we shall take up the assessee’s appeal in the case of Shri
Balbir Singh, ITA No.567/Chd/2016. This Appeal has been preferred
by Shri Navpreet Singh legal heir of the deceased Shri Balbir Singh,
wherein, following grounds have been taken :- 1. That the Ld. CIT{A) has erred in confirming the action of the Assessing Officer with regard to reopening of the case u/s 148 and also on merits.
That the Ld. CIT(A) has erred in holding that the notice u/s 148 was legally valid and has failed to consider the fact that the notice u/s 148 having been issued to the dead person and, as such, the proceedings are void.
Notwithstanding the above ground of appeal, there was no proper and valid service of notice u/s 148.
Notwithstanding the above said ground of appeal, the Ld. CIT (A) has erred in confirming the action of the Assessing Officer in
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 3
assessing the 50% share of capital gain at Rs. 76,12,500/-.
That the CIT(A) has erred in confirming the action of the Assessing Officer in adopting the sale consideration on the basis of so called alleged sale agreement, which is not reliable at all.
That the Ld. CIT (A) has erred in not admitting the additional ground of appeal, which was legal ground of appeal and which ought to have admitted in view of the judgment of Hon'ble Supreme Court in the case of CIT Vs. National Thermal Plant as reported in 229 ITR 383.
That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
At the outset, the Ld. Counsel for the assessee has submitted that
as per the instructions of his client, he does not press ground No. 6. This
ground is therefore, dismissed as ‘not pressed’.
The facts of the case in brief are that in this case the assessment
was reopened u/s 147 of the Income-tax Act, 1961 (in short 'the Act') by
way of issuance of notice dated 26.3.2013 u/s 148 of the Act in the
name of deceased assessee Shri Balbir Singh. However, admittedly the
assessee had already died on 25.11.2012 i.e. much before the issuance
of notice u/s 148 of the Act. Even, the notice u/s 148 of the Act was
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 4
served through affixation and not in a regular mode of service. The
notice was issued in the name of the deceased assessee.
The issue, in our view, is squarely covered by the various decisions of
the Hon'ble High Courts including the latest decision of the Hon'ble
Bombay High Court in the case of ‘Sumit Balkrishna Gupta Vs. ACIT’
in Writ petition No. 3569 of 2018 vide order dated 15.2.2019, wherein,
the Hon'ble Bombay High Court has held that the issue of a notice under
Section 148 of the Act is a foundation for reopening of assessment. The
sine qua non for acquiring jurisdiction to reopen an assessment is that
such notice should be issued in the name of the correct person. This
requirement of issuing notice to a correct person and not to a dead
person is not a merely a procedural requirement but is a condition
precedent to the impugned notice being valid in law. Thus, a notice
which has been issued in the name of the dead person is also not
protected either by provisions of Section 292B or 292BB of the Act.
This is so as the requirement of issuing a notice in the name of correct
person is the foundational requirement to acquire jurisdiction to reopen
the assessment. The Hon'ble High Court has further observed that
Section 148 of the Act requires that before a proceeding can be taken up
for reassessment, a notice be served upon the assessee. The assessee on
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 5
whom the notice must be sent must be a living person i.e legal heir of
the deceased assessee, for the same to be responded. That this in fact is
the intent and purpose of the Act. Therefore, Section 292B of the Act
cannot be invoked to correct a foundational / substantial error as it is
meant so as to meet the jurisdictional requirement. Therefore, both the
impugned notices and the impugned assessment order required to be
quashed and set aside.
Similarly, the Hon'ble Delhi High Court in the case of ‘Rajender Kumar
Sehgal Vs. ITO’ [2019] 101 taxmann.com 233 (Delhi) held that where
the notice seeking to reopen assessment was issued in the name of
deceased assessee, since she could not have been participated in
reassessment proceedings, provisions of section 292BB were not
applicable to the assessee’s case and as a consequence, reassessment
proceedings deserved to be quashed.
At this stage, the Ld. DR has pointed out that the LR of the
assessee should have promptly come forward to apprise the Assessing
officer that the assessee had died so that notice could have been issued
in the name of legal representative of the assessee. We do not find any
force in the above contention of the Ld. DR. as noticed above, the notice
was not served through registered post / or by regular mode of service.
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 6
The notice in this case was allegedly served through substituted mode of
the service i.e. by affixation of the same at the door of the house of the
assessee. Further, the report of service through affixation have not been
witnessed by any person. Had the Income-tax officials actually gone to
the house of the deceased assessee and enquired from the villagers about
the whereabouts of the assessee for the purpose of service of the notice,
they could have easily come to know about the death of the original
assessee and would have accordingly apprised the Assessing officer.
It is not believable that the Revenue officials had visited the house
of the assessee and they could not get the information about the death of
the assessee despite affixation of the notice which is also required to be
witnessed by some independent / respectable of the village.
The Ld. counsel has further invited our attention to the receipt
which has been printed on the back of the stamp papers upon which the
alleged agreement to sell has been executed, wherein, the name and
address of the seller i.e. Shri Balbir Singh has been mentioned as Shri
Balbir Singh S/o Shri Dharam Singh 1535/34-D, Chandigarh. However,
the alleged notice was never served by the Assessing officer on the said
address despite the address of the assessee duly mentioned on the
receipt which was the part and parcel of the alleged agreement to sell on
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 7
the basis of which reopening of the assessment has been made. This
otherwise show that even otherwise the notice is never served on the
address at which the assessee actually was residing before his death.
In view of this, the issue is squarely covered by the decision of the
Hon'ble Bombay High Court in the case of ‘Sumit Balkrishna Gupta Vs.
ACIT’ (supra) and of the Hon’ble Delhi High Court in ‘Rajender
Kumar Sehgal Vs. ITO’ (supra). The impugned notice issue u/s 148 of
the Act, therefore, is held as ‘invalid’ and the consequent assessment
proceedings, are, therefore, liable to be quashed. We order accordingly.
In the result, the appeal of the appellant is hereby allowed.
ITA No. 568/Chd/2016
The present appeal has been preferred by the assessee Navpreet
Singh against the order dated15.2.2016 of the Commissioner of Income
Tax (Appeals)-2, Ludhiana.
The assessee in this appeal has taken following grounds of
appeal:- 1. That the Ld. CIT(A) has erred in confirming the action of the Assessing Officer with regard to reopening of the case u/s 148 and also on merits.
That the Ld. CIT(A) has erred in holding that the notice u/s 148 was legally valid.
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 8
Notwithstanding the above said ground of appeal, the Ld. CIT (A) has erred in confirming the action of the Assessing Officer in assessing the 50% share of capital gain at Rs. 76,12,500/-.
That the CIT(A) has erred in confirming the action of the Assessing Officer in adopting the sale consideration on the basis of so called alleged sale agreement, which is not reliable at all.
That the Ld. CIT (A) has erred in not admitting the additional ground of appeal, which was legal ground of appeal and which ought to have admitted view of the judgment of Hon'ble Supreme Court in the case of CIT Vs National Thermal Plant as reported in 229 ITR 383. 6. That the Appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.
The Ld. Counsel for the assessee stated at Bar that as per the
instructions of his client, he does not press ground No. 5, this ground is,
therefore, dismissed as not pressed.
The assessee, in this appeal, apart from contesting the additions
made by the lower authorities on merits has also taken the legal ground
regarding the validity of the assessment framed u/s 147 of the Act on the
ground that there was no valid service of mandatory notice required to
be issued u/s 148 of the Act.
The facts of the case in brief are that in this case the assessment
was reopened u/s 147 of the Income-Tax Act, 1961 (in short 'the Act')
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 9
by way of issuance of notice dated 26.3.2013 u/s 148 of the Act through
registered post as well as by way of substituted service by affixture on
the same date i.e. 26.3.2013
The Ld. Counsel for the assessee has submitted that the Assessing
officer allegedly issued the notice u/s 148 of the income Tax Act at the
wrong address / old address from which the assessee had already left
long back. That the alleged notice u/s 148 of the Act was never served
upon the assessee. Inviting our attention to the impugned assessment
order framed by the Assessing officer, the Ld. counsel has submitted
that as per the assessment order the Assessing officer issued the alleged
notice u/s 148 of the Act through normal mode of service i.e by
registered post as well as allegedly served the notice through substituted
mode of service i.e byway of affixation, on the same date i.e. 26.3.2013.
He, therefore, has submitted that if the Assessing officer was under
bonafide belief that the assessee was residing at the address at which
notice was issued i.e. village Bhatian Tehsil Khanna and the notice was
issued in the normal course at the last address through registered post
then what prompted the Assessing officer to simultaneously effect the
service through substituted mode i.e. by way of affixation on the same
date. He in this respect has submitted that perhaps the Assessing officer
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 10
was already aware that the assessee was not residing at the said address.
The Ld. Counsel, further inviting our attention to the Affixture Report
of the notice, has submitted that the said affixture report has not been
signed by any independent witness in whose presence the alleged
affixture was done at the house of the assessee. The Ld. counsel has
further submitted that the father of the assessee namely Shri Balbir
Singh had already died whereas the assessee had already left the said
address long back. Had the officials of the Department had gone to the
house of the assessee and enquired about the assessee, they could have
easily come to know not only about the death of the father of the
assessee Shri Balbir Singh but also the fact that the assessee was not
residing there.
The Ld. Counsel has further submitted that the old address of
Village Bhattian, Tehsil Khanna at which the notice was allegedly
served / sent to the assessee has not been mentioned in the agreement to
sell in question. Though in the front part of the agreement, the address
of his deceased father Shri Balbir Singh has been mentioned as H. No.
2208C, Phase-7, SAS Nagar, Mohali, however, since the said house
itself was the subject matter of sale, the Assessing officer served the
alleged notice / letter at the old address / village address of the assessee
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 11
at Village Bhattian, Tehsil Khanna. However, the other address of the
assessee and his father was available in the agreement to sell itself i.eon
the receipt printed on the back side of the stamp paper at which the
Assessing officer never served notice u/s 148 of the Act.
The Ld. counsel has invited our attention to the receipt which has been
printed on the back of the stamp papers upon which the alleged
agreement to sell has been executed, wherein, the name and address of
the seller i.e. Shri Balbir Singh, the deceased father of the assessee, has
been mentioned as Shri Balbir Singh S/o Shri Dharam Singh 1535/34-D,
Chandigarh. However, the alleged notice was never served by the
Assessing officer on the said address despite the address of the assessee
duly mentioned on the receipt which was the part and parcel of the
alleged agreement to sell on the basis of which reopening of the
assessment has been made. That the notice was never served on the
address at which the assessee actually was residing at that time.
So far as the validity of service through affixture is concerned, a
copy of the letter / affixture order has been placed at page 4 of the
paper book, the contents of which are reproduced as under:-
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 12
“AFFIXTURE ORDER
I, Swaran Singh, Income Tax officer, Ward-III, Khanna, am satisfied that the Notice u/s 148 of the I.T. Act, 1961 issued in the case of Sh. Navpreet Singh S/o Sh. Balbir Singh, Vill. Bhattian, Khanna cannot beserved in an ordinary way. I, therefore, direct Sh. Param Vir Singh Duggal, Income Tax Inspector of this office to effect service of the said notice by affixture under Order V Rule 20 of CPC, 1908 on the conspicuous part of palace where the assessee is known to have last resided or carried on his business or personally worked for gain. Sd/- Dated 26.3.2013 (Swaran Singh) Income Tax Officer, Ward-III,Khanna
A copy of this order should be palced on the Notice Board of this office. Sd/- (Swaran Singh) Income Tax Officer, Ward-III,Khanna Attested by me Sd/- P V Duggal 26.3.2013
Imp. Sd/- Mangat Ram”
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 13
A perusal of the above affixture order reveals that Shri Swaran
Singh, ITO, Ward-III, Khanna directed Shri PamamVir Singh Duggal,
Income Tax Inspector to effect the service of the notice u/s 148 of the
Act by way of affixture under Order V Rule 20of CPC, 1908 on the
conspicuous part of place where the assessee is known to have last
resided or carried on his business or personally worked for gain.
However, no address of such place has been mentioned in the said
affixture order. It is not clear from where the Income Tax Inspector
would come to know about the last known address of the assessee either
of his residence or of his working place. Even in the report of the
Inspector of the same date i.e. 26.3.2013, he has simply written ‘affixed
by me’. Even he has not mentioned as to where he had gone to affix the
notice, to say whether it was affixed at the last known residential
address of the assessee or at the last known work place of the assessee.
Though the signature of one Shri Mangat Ram have also been appended
but who that Mangat Ram is/was, has not been mentioned; whether he
was an independent witness available at the place where the affixation
was done or was an employee of the income Tax office, is not coming
out. Even as mentioned above, the notice by registered post as well as
by way of substituted service was allegedly served on the same date.
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 14
Under the circumstances, there was no reason for the satisfaction of the
Assessing officer that the alleged notice cannot be served in an ordinary
way. The Assessing officer issued the affixture order on the same day
without waiting for the outcome of the service of notice sent through
ordinary way i.e. by way of registered post.
A perusal of the assessment order further reveals that when the
service could not be effected at the village address of the assessee, the
Assessing officer thereafter served the notice u/s 142(1) of the Act at
his office address which means that the Assessing officer had come to
know the office address of the assessee at which service can be effected
but admittedly no notice u/s 148 of the Act was served on the assessee
at his office address also. Under the circumstances, it is clear that
there was no valid service of notice u/s 148 of the Act on the assessee.
The issue, therefore, is squarely covered by the recent decision of
the Hon'ble Bombay High Court in the case of ‘Sumit Balkrishna Gupta
Vs. ACIT’ (supra) in Writ petition No. 3569 of 2018 vide order dated
15.2.2019, wherein, the Hon'ble Bombay High Court has held that the
issue of a notice under Section 148 of the Act is a foundation for
reopening of assessment and condition precedent for framing of the
ITA Nos. 657 & 658-C-16- S/Sh. Balbir Singh & Navpreet Singh, Mohali 15
assessment u/s 147 of the Income Tax Act. Since there was no valid
service of the notice u/s 148 of the Act, therefore, the consequent
assessment proceedings framed u/s 147 of the Act are not sustainable in
the eyes of law and the same are accordingly quashed. The appeal of the
assessee is hereby allowed.
In the result, both the captioned appeals are hereby allowed.
Order pronounced in the Open Court on 13/05/2019
Sd/- Sd/- (संजय गग� / SANJAY GARG) (एन. के. सैनी / N.K. SAINI) उपा�य� /Vice President �या�यकसद�य/ Judicial Member
Dated : 13. 05.2019 “आर.के.”
आदेशक���त�ल�पअ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकरआयु�त/ CIT 4. आयकरआयु�त (अपील)/ The CIT(A) 5. �वभागीय��त�न�ध, आयकरअपील�यआ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड�फाईल/ Guard File
आदेशानुसार/ By order, सहायकपंजीकार/ Assistant Registrar