JADAGADDER PAKKERAPPA, LEGAL HEIR SAROJAMMA,SHIKARIPURA vs. INCOME TAX OFFICER, WARD-1 & TPS,, SHIMOGA

The ld. CIT(A)/NFAC dismissed the appeal of the assessee by observing that during the course of appellate proceedings, various notices were issued from time to time viz. on 7.11.2024, 12.12.2024 and finally on 7.5.2025. However, no submissions were made during the entire appellate proceedings. As the assessee during the entire appellate proceedings did not comply with the statutory notices, the ld. CIT(A)/NFAC held that assessee is not interested to pursue this appeal and in the absence of any reply from the assessee, the ld. CIT(A)/NFAC was left with no option but to decide the matter ex-parte based on material on record. Finally, the ld. CIT(A)/NFAC held that assessment order passed by the AO u/s 144 of the Act resulting in the assessed income amounting to Rs.60 lakhs based on his findings and proper adjudication is quite in order and the same was confirmed.

Again, aggrieved by the order of ld. CIT(A)/NFAC, the legal heir of the assessee Smt. Sarojamma filed the present appeal before this Tribunal. The legal heir has also filed two numbers of paper Jadagadder Pakkerappa, Shikaripura Page 6 of 20 books containing therein the written submission, death certificate of the assessee as well as case laws relied upon by her. The legal heir Smt. Sarojamma has also filed an affidavit stating the reasons for not appearing before the lower authorities.

Before us, the ld. A.R. of the assessee at the outset vehemently contended that the re-assessment proceedings-initiated u/s 148 of the Act on 08/03/2023 and the subsequent order u/s 144 r.w.s. 147 of the Act dated 12/01/2024 were issued after the death of the assessee on 10.10.2021 and accordingly, the entire assessment proceedings are null and void in law. Further, the ld. A.R. of the assessee vehemently submitted that the notice u/s 148 of the Act was also not issued to any of the legal representatives as per the provision contained in Section 159(2)(b) of the Act. Further, by relying on the decision of Hon’ble Delhi High Court in the case of Savita Kapila Vs. ACIT reported in (2020) 118 taxmann.com 46 as well as judgement of Hon’ble Karnataka High Court in the case of ITO Vs. Smt. Preethi V. reported in (2025) 170 taxmann.com 673, the AR submitted that the notice u/s 148 of the Act as well as subsequent assessment order passed u/s 147 r.w.s. 144 of the Act cannot be cured either u/s 292B or 292BB of the Act.

We have heard the rival submissions and perused the materials available on record. Before proceeding further, it is apposite here to reproduce the affidavit filed by the legal heir of the assessee Smt. Sarojamma for better appreciation of facts, which are reproduced below:-

(1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. (2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1),— (a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased; (b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and (c) all the provisions of this Act shall apply accordingly.

In the present facts, admittedly, the proceedings are initiated under section 148 for reassessment relating to escapement of income of late Kurkal Gopal Shetty and such proceedings as has been initiated in the year 2018 by when Kurkal Gopal Shetty had already died (on 11-11-2014). The proceedings in terms of section 159(2)(b) ought to have been taken against the legal representatives of late Kurkal Gopal Shetty at the first instance. It ought to be noted that the period allowable for initiating the proceedings under section 148 is the period prescribed under section 149(1)(b) which position is not in dispute and accordingly, proceedings ought to have been initiated as on 31-3-2018.

The question as to whether proceedings initiated against the deceased Kurkal Gopal Shetty was sufficient to continue proceedings of reassessment as regards the legal representatives is a matter that requires to be answered. The learned counsel for the revenue would contend that the concept of abatement cannot be extended to assessment proceedings and where the original assessee has died, the proceedings against his legal representatives would be good in law as made out under section 159(2) of the Act as well as in light of the definition of assessee under section 2(7)(b) read with section 159 is a matter that also requires consideration.

There is no dispute as regards to the general proposition that proceedings against an assessee would continue even after his death as against his legal representatives and there would be no abatement of such proceedings. However, in the present case, the question is as regards to the initiation of proceedings under section 148 vis-à-vis the legal representatives of the deceased Kurkal Gopal Jadagadder Pakkerappa, Shikaripura Page 15 of 20 Shetty. As noticed earlier, notice issued at the first instance on 28-3-2018 is as regards Kurkal Gopal Shetty and at that relevant point of time, the said assessee was dead. It comes out from the subsequent proceedings that the revenue, upon being informed by the 2nd petitioner through an e-mail on 30-5-2018 that Kurkal Gopal Shetty had died, has issued notice to the legal representatives on 19-11- 2018 and on 21-12-2018 under section 142 and hence, in effect, there was no notice to the petitioners with respect to the initiation of proceedings for reassessment under section 148. The proceedings under section 142 being a part of the re-assessment proceedings, the starting point for initiation of proceedings under section 148 is the issuance of notice, which notice to be valid is required to be initiated within the time prescribed under section 149(1)(b). Notice issued against Kurkal Gopal Shetty on 28-3-2018 being against a dead person, at the very inception would not be a tenable notice for initiation of proceedings under section 148 as regards the legal representatives insofar as any proceedings against the legal representatives are to be governed by Section 159. While section 159(2)(a) provides for continuation of proceedings against the legal representatives when initiated against the assessee when he was alive. Clearly section 159(2)(b) would require a separate notice to be issued under section 148 within the time prescribed under section 149(1)(b) as against the legal representatives directly. If such proceedings are initiated beyond the time prescribed under section 149(1)(b) such proceedings would not be valid.

In the present case while the notice at its inception to Kurkal Gopal Shetty who is dead is invalid insofar as any claim by the department as against the dead assessee should be only by issuance of notice to the legal representatives in terms of section 159(2)(b) and except this procedure, there can be no other procedure envisaged. This would flow from the premise that any act which is required to be done in a particular manner must be done in that manner or not at all which is a settled legal proposition. In the present case, it also ought to be noted that though notice was issued to the dead assessee, the contention that as there is no abatement, and proceedings must be permitted to be continued against the legal representatives, is an argument that is liable to be rejected as the question of continuation of proceedings of an assessment against the legal representatives is only in the scenario as contemplated under section 159(2)(a) i.e., where the assessee is alive at the initiation of proceedings and has subsequently died. In the case on hand, the assessee having died on 11-11-2014, claims or proceedings, if any against the deceased assessee ought to be under section 159(2)(b). As section 159 does not permit of any ambiguity, any elasticity to the time period fixed under section 149 and the manner of initiation of proceedings against the deceased assessee as provided under section 159(2)(b) is impermissible.

It also ought to be noted that the assessment proceedings initiated against Kurkal Gopal Shetty under section 148 is sought to be continued and concluded as against the legal representatives not by way of any fresh notice to the legal representatives under section 148 but by way of notice to furnish return under section 142 which again relates to a subsequent stage of reassessment proceedings. The judgment in the case of Alamelu Veerappan (supra) provides that notice issued to the legal representatives beyond the period of limitation prescribed is without jurisdiction and unenforceable in law. The judgment in the case of Rajender Kumar Sehgal v. ITO [2019] 101 taxmann.com 233/260 Taxman Jadagadder Pakkerappa, Shikaripura Page 16 of 20 412/414 ITR 286 (Delhi) is also on the same lines. In addition, the contention of Sri. E.I.Sanmati, learned counsel for the revenue that the notice issued to the dead assessee ought to be saved by virtue of Section 292B, has also been considered in the case of Rajender Kumar (supra), where the Court has rejected such contention.

Section 292B reads as follows: "292B. Return of income, etc., not to be invalid on certain grounds: No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act."

Section 292B provides for saving of the proceedings if such proceedings are in substance and effect in conformity with or according to the intent and purpose of this Act. As noticed earlier, the procedure prescribed as regards to proceedings to be initiated against the deceased assessee is as contained under section 159(2)(b). Accordingly, notice issued against a dead person as regards his affairs which ought to have been issued under section 159(2)(b) to the legal representatives cannot be saved by recourse to section 292B.

As regards the contention of learned counsel Sri. E.I.Sanmathi, seeking for remanding of the matter back for fresh consideration by the Assessing Authority by permitting de novo proceedings with respect to the same assessment year by rectifying the formal defect in notices issued, by placing reliance on the judgments referred in paragraph No. 5 above, it ought to be noticed that no doubt in all the 3 orders relied upon by Sri. Sanmathi, learned counsel (Judgment Rudra Gouda v. Asstt. CIT [2018] 93 taxmann.com 333 (Kar.) Judgment passed in Appanna Seetharamu v. ITO [IT Appeal No. 877 of 2018, dated 3-9-2019] and the judgment in the case of Smt. Sudha Prasad v. Chief CIT [2003] 133 Taxman 864/[2005] 275 ITR 135 (Jharkhand), the Court had permitted de novo proceedings to be initiated for the same assessment year against the legal representatives. However, what does not come out from the facts in the aforesaid cases is the consideration of the point of limitation vis-à-vis the proposed proceedings against the legal representatives. If the case was that proceedings were initiated against the deceased assessee and subsequently on coming to know the details regarding the legal representatives, fresh notice is issued and such notice is challenged by the legal representatives as being invalid as against them, consideration would have been different. If the notice to the said legal representatives at the second instance were issued within the time prescribed under section 149, such fact would be of relevance wherein a contention is raised regarding the absence of jurisdiction to initiate proceedings vis-à-vis legal representatives as has been considered above. The Court in none of the above judgments has recorded a finding as to whether issuance of notice to the deceased in contravention of section 159(2)(b) could be saved which point was not raised nor considered in the said judgments and accordingly, the Court not having expressed a view as regards to the power to Jadagadder Pakkerappa, Shikaripura Page 17 of 20 initiate proceeding against the legal representatives, such judgments are of no avail.

The other circumstance that is required to be noticed is that the legal representatives in the present case were not issued with any notice regarding proceedings under section 148 and it is only under section 142 notice was issued to the legal representatives which fact is also taken note of while refusing to reserve liberty to the authority by remanding the matter to the Assessing Authority to initiate proceedings. It must also be noted that exercise of power under article 226 is not made out in the present case as granting of any relief would be contrary to the statutory period available to initiate proceedings against the legal representatives in terms of section 159(2)(b) read with section 149(1)(b) as discussed above.

The position of law regarding invalidity of the notice vitiating the proceedings pursuant thereto being settled as noticed from the judgment in the case of Kurban Hussain Ibrahimji Mithiborwala (supra) and in light of the discussions made above and in the absence of any notice under section 148 in terms of section 149(1)(b) of the Act, the assessment order passed in the names of the petitioners enclosed at Annexure-E for the assessment year 2011-12 passed under section 144 read with section 147 of the Act is set aside. Consequent to setting aside of assessment order, demand notice, recovery notice and show cause notice issued pursuant thereto vide Annexures - F1, F2 and G respectively are also set aside.

This Court in the case of CLSA India (P.) Ltd. v. Dy. CIT [2023] 149 taxmann.com 380 (Bom.) in Writ Petition No. 2462 of 2022 whilst allowing the Petition has held that the stand of the revenue that the reassessment was justified Jadagadder Pakkerappa, Shikaripura Page 18 of 20 in view of the fact that the PAN in the name of the non-existent entity had remained active does not create an exception in favour of the revenue to dilute in any manner the principles enunciated by the Apex Court in Saraswati Industrial Syndicate Ltd. v. CIT [1990] 53 Taxman 92/186 ITR 278 (SC) and in the case of Maruti Suzuki India Ltd. (supra).

Keeping in mind, the averments in paragraph 20 of the reply, extracted hereinabove, this Court is of the view that the respondent no. 1 would not have been wrong, keeping the settled law in mind, in abstaining from issuing a notice on the deceased assessee. The respondent no. 2 would also not have been wrong in not granting the sanction to the respondent no. 1 for issuance of a notice on the deceased assessee, since the department was aware of the demise of the assessee and since the ITBA system is undergoing a change and being updated with new functionalities and modalities. In our view, if the concerned officers follow the settled law and abstain from issuing notices which are null and void, would not only help the citizenry but also the courts in the country who are already overburdened. In fact, it would be in tune with the Finance Act 2021 which aims to achieve the ultimate object of simplifying the tax administration, ease compliance and reduce litigation.

For the reasons stated above, this Court holds that the notice and all consequential proceedings in the name of a deceased assessee are null and void and consequently, the impugned notice dated 31st March 2022 u/s 148 of the Act, the Order dated 31st March 2022 u/s 148A(d) of the Act and Notice dated 19th March 2022 u/s 148A(b) of the Act are quashed and set aside and all actions in furtherance thereto are prohibited.

The facts in the present case are identical to the case of Chandreshbhai Jayantibhai Patel (supra), as in the facts of the present case also father of the petitioner expired on 12.6.2016 and impugned notice was issued on 28.3.2018. In facts of the present case, even prior to issuance of notice, department was aware about the death of the petitioner's father since on 13.3.2018 in response to the summons issued under section 131(1A) of the Act, the petitioner had intimated to the department about the death of his father. Therefore, it cannot be said that the respondent was not aware about the death of the father of the petitioner and he could have belatedly issued notice under section 159 of the Act upon the legal representatives of late Shri Kanubhai Nagjibhai Rajpara.

In the result, appeal filed by the assessee is allowed.