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Facts
The assessee filed a revised return of income. Information was received about accommodation entries in share transactions of penny stock companies. The assessee had transacted in shares of 'CCL International'. Reassessment proceedings were initiated under Section 147 after issuing notices under Sections 148 and 142(1) without response.
Held
The Tribunal held that the reassessment proceedings were bad in law as the notice under Section 148 was issued in the name of a deceased person, who had died before the notice was issued. The Tribunal relied on the decision of the Delhi High Court in Savita Kapila vs. ACIT.
Key Issues
Whether reassessment proceedings initiated by issuing notice under Section 148 in the name of a deceased person are valid, especially when the legal heir had informed about the death of the assessee.
Sections Cited
133(6), 147, 148, 142(1), 68, 159
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘SMC’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ)
Assessment Year: 2013-2014 Ajay Goel (Legal Heir of Late Manju Goel),…Appellant Flat 4H, 4th Floor, Lake Plaza, 277, Jessore Road, Lake Town, Kolkata-700048 [PAN:ADCPG2207N] -Vs.- Assessing Officer,…………..……….…………...Respondent National Faceless Appeal Centre (NFAC), Delhi Appearances by: Shri Soumitra Choudhury, A.R., appeared on behalf of the assessee Shri Susanta Saha, Sr. D.R., appeared on behalf of the Revenue Date of concluding the hearing: March 10, 2025 Date of pronouncing the order: May 28, 2025 O R D E R
The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 23rd October, 2024 passed for Assessment Year 2013-14.
Brief facts of the case are that the assessee is an individual, who filed her return of income for the assessment year 2013-14 declaring total income of Rs.2,05,030/-. Thereafter the assessee (A.Y. 2013-2014) Ajay Goel (Legal Heir of Late Manju Goel) filed revised return of income declaring total income of Rs.1,05,030/- after claiming deduction under Chapter VIA for an amount of Rs.1,00,000/-. Information was received from the Directorate of Income Tax (Investigation), Kolkata that a large number of persons had taken accommodation entries in the form of bogus long-term capital gain through share transactions of penny stock companies listed with Bombay Stock Exchange. As per the information received, the assessee had transacted in shares of ‘CCL International’ during Financial Year 2012-13 and she is one of such beneficiaries. In view of this, notice under section 133(6) of the Act was issued to the assessee for furnishing the complete details of her transactions in equity shares pertaining to assessment year 2013-14 with supporting documents. In response to the said notice, the assessee submitted certain information. After analyzing the information received from Investigation Wing, written submission of the assessee in response to notice under section 133(6) and other materials available on record, it has been found that the assessee has made transactions in the shares of ‘CCL International’ during F.Y. 2012-13 at a trade value of Rs.40,58,000/-. Therefore, the case of the assessee was reopened under section 147 and notice under section 148 of the Act was issued upon the assessee on 31.03.2021, but no response was received from the assessee. Thereafter notice under section 142(1) of the Act was issued to the assessee on 23.11.2021 requesting to submit Profit & Loss Account, Balance-sheet, Computation of Income and Audit Report, if any, but the assessee failed to reply to the same. As no information was received from the assessee for the notices issued from time to time, the ld. (A.Y. 2013-2014) Ajay Goel (Legal Heir of Late Manju Goel) Assessing Officer concluded the assessment and an amount of Rs.40,58,000/- was added to the income of the assessee under section 68 of the Income Tax Act.
Aggrieved by the order of the ld. Assessing Officer, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. CIT(Appeals) dismissed the appeal of the assessee.
On being aggrieved, the assessee preferred an appeal before the ITAT and raised the following issues:- (1) For that the ld. CIT(A) failed to consider that the entire reassessment proceeding is bad in law since the notice u/s 148 was issued and subsequently reassessment proceeding u/s 147 r.w.s. 144 was completed in the name of a deceased person. (2) For that the ld. CIT(A) failed to consider that the entire reassessment proceeding is barred by limitation. (3) For that the ld. CIT(A) ought to have held the entire reassessment proceeding is bad in law inasmuch as proper approval was not taken from the competent authority before initiation of the reassessment proceedings. (4) For that the ld. CIT(A) ought to have considered that the reasons recorded before the initiation of the assessment proceedings are improper. (5) For that on the facts and circumstances of the case, the ld. CIT(A) was not justified in confirming the addition of Rs.40,39,241/- made by the A.O. treating the long-term capital gain as unexplained income by wrongly invoking the provision of sec. 68 of the Act.
I have heard both the sides. The main contention of the ld. Counsel for the appellant is that the entire reassessment proceedings are bad in law since the notice under section 148 of (A.Y. 2013-2014) Ajay Goel (Legal Heir of Late Manju Goel) the Act was issued in the name of deceased person. It was the submission of the appellant that the assessee (by name Manju Goel) died on 31.01.2021. The notice under section 148 of the Act was issued on 31.03.2021 and the same was served on the appellant/legal heir (by name Ajay Goel) on 01.04.2021 and the case was reopened. He further submitted that the appellant had been applying to appoint himself as legal heir of the deceased assessee (Manju Goel) on the Income Tax Portal, but it was rejected. He further submitted that the appellant also informed about the death of the assessee to the Income Tax officials through Postal Notices. He further submitted that the appellant/legal heir placed evidence before the ITAT, which clearly shows that the Income Tax Portal rejected the appointment of legal heir. The appellant/legal heir also placed before the ld. CIT(Appeals) about the death of the assessee (Manju Goel) but the ld. CIT(Appeals) passed the order in the name of a death person. On this aspect, ld. Counsel for the appellant/legal heir placed reliance on the decision of the Hon’ble Delhi High Court in the case of Savita Kapila -vs.- ACIT reported in (2020) 118 taxmann.com 46 (Delhi), wherein the Court was of the view that - “in absence of a statutory provision, a duty cannot be cast upon legal representatives to intimate factum of death of assessee in the Income Tax Department. After all, there may be a case where the legal representatives are estranged from the deceased assessee or the deceased assessee may have bequeathed his entire wealth to a charity. Consequently, whether PAN record was updated or (A.Y. 2013-2014) Ajay Goel (Legal Heir of Late Manju Goel) not or whether the Department was made aware by the legal representatives or not is irrelevant. Nothing has been placed before the Court by the Revenue to show that there is a statutory obligation on the part of legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration. Consequently, the legal heirs are under no statutory obligation to intimate the death of the assessee to the revenue. Therefore, Hon’ble Court was of the opinion that issuance of notice upon a dead person and non- service of notice does not come under the ambit of mistake, defect or omission. Consequently, section 292B of the Act does not apply to the present case”.
By relying on the judgment of the Hon’ble Delhi High Court, he pleaded to set aside the orders passed by the ld. Assessing Officer as well as ld. CIT(Appeals).
On the other hand, ld. Departmental Representative submitted that the appellant failed to inform about the death of the deceased assessee to the Revenue authorities. Therefore, the ld. Assessing Officer issued notice under section 148 of the Act in the name of the deceased person and pleaded to uphold the orders passed by the lower authorities.
I have perused the material available on record. It is an undisputed fact that the deceased assessee Manju Goel died on (A.Y. 2013-2014) Ajay Goel (Legal Heir of Late Manju Goel) 31.01.2021 and admittedly the notice under section 148 was issued on 31.03.2021. Therefore, admittedly the proceedings were initiated under section 148 of the Act for reassessment relating to escapement of income of late Manju Goel and such proceedings as has been initiated in the year 2020-21. Now the question before me is whether proceedings initiated against the deceased assessee Manju Goel was sufficient to continue proceedings of reassessment as regards the legal representative is a matter that requires to be answered. There is also no dispute as regards to the general proposition that proceedings against an assessee would continue even after his death as against his legal representative and there would be no abatement of such proceedings. However, in the present case on hand, the question is as regards to the initiation of proceedings against the legal representative of the deceased Manju Goel under section 148 of the Act are valid or not. Admittedly the notice was issued u/s 148 to the deceased assessee Manju Goel on 31.03.2021, who died on 31.01.2021, therefore, notice u/s 148 of the Act, which was issued on 31.03.2021, is bad in law and reassessment proceedings initiated by the ld. Assessing Officer is null and void in view of the ratio laid down by the Hon’ble Delhi High Court in the case of Savita Kapila -vs.- ACIT reported in (2020) 118 taxmann.com 46 (Delhi), wherein the Hon’ble Delhi Court was of the view that “in absence of a statutory provision, a duty cannot be cast upon legal representatives to intimate factum of death of assessee in the Income Tax Department. After all, there may be a case where the legal representatives are estranged from the deceased assessee or the deceased assessee may have bequeathed his entire wealth to a charity. Consequently, whether (A.Y. 2013-2014) Ajay Goel (Legal Heir of Late Manju Goel) PAN record was updated or not or whether the Department was made aware by the legal representatives or not is irrelevant. Nothing has been placed before the Court by the Revenue to show that there is a statutory obligation on the part of legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration. Consequently, the legal heirs are under no statutory obligation to intimate the death of the assessee to the revenue. Therefore, Hon’ble High Court Delhi was of the opinion that issuance of notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission. Apart from this, in this case, legal representative also intimated about the death of Manju Goel to the ld. Assessing Officer through Income Tax Portal, but it was not accepted and there is no service of notice. Apart from this, even before the 1st appellate proceedings, the appellant/legal heir brought to the notice of the ld. CIT(Appeals) about the death of the assessee, but ld. CIT(Appeals) has not even passed the appellate order in the name of legal heir. Therefore, Considering the facts and circumstances of the case and the ratio laid down by the Hon’ble Delhi High Court, I have no hesitation to come to a conclusion that the reassessment proceedings initiated by the ld. Assessing Officer against the death person is not valid under the eyes of law. The ld. CIT(Appeals) also has not taken any step to initiate the proceedings against the legal representative as prescribed under section 159 of the Act. Therefore, considering the totality of the facts and circumstances of the case, I am of the view that the notice issued under section 148 of the Act is bad in law and reassessment proceedings initiated
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 28/05/2025.