INCOME TAX OFFICER WARD -2 (1), AMRITSAR vs. MS. SAVITA BANSAL, THROUGH LEGAL HEIR SH. PARVEEN KUMAR BANSAL, AMRITSAR

The Ld. AR advanced legal grounds and referred to various judicial decisions to support the same. The arguments were made on merits also. The Ld. CIT-DR controverted the argument of Ld. AR and supported the assessment order of Ld. AO. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. Proceedings before lower authorities 3.1 The assessee’s left for heavenly abode on 17-02-2016. The legal heir of the assessee filed return of income on 18-10-2016 declaring income of Rs.5.29 Lacs which was subjected to scrutiny vide notice u/s 143(2) on 26-09-2017. During the course of assessment proceedings, the assessee filed various documents in support of return of income. The main issue arose on Long-Term Capital Gains (LCTG) as earned by the assessee on sale of shares of two entities namely M/s Marksans Pharma Ltd. & M/s Deccan Gold Wimper Ltd. The assessee computed aggregate Long-Term Capital Gains (LTCG) of Rs.482.86 Lacs on sale of various scrips including these two scrips and claimed the resultant gains to be exempt from tax u/s 10(38). However, Ld. AO alleged that assessee’s own money was routed through the broker and received back in the form of capital gains. Accordingly, a show-cause notice was issued. The Ld. AO observed that there was abnormal increase in the price of the scrips which could be possible only if the prices were rigged. In the absence of any rebuttal as forthcoming from the assessee, the LTCG so earned for Rs.482.86 Lacs & claimed exempt u/s 10(38) was considered to be bogus and accordingly, added to the returned income of the deceased assessee. 3.2 The Ld. CIT(A), after considering assessee’s submissions as well as remand report and assessee’s rejoinder thereto, observed that no documentary evidence was brought in by Ld. AO to support the allegations. The prices of the impugned scrips were stated to be rigged by the concerned broker to abnormally high level. As against this, the assessee produced various documentary evidences to establish the genuineness of the transactions which were not rebutted by Ld. AO to be false. The documents include demat statements. The transactions were though brokers who were registered with SEBI and the transactions happened on stock exchanges. The exponential high could not be stated to be rigged without any clinching documentary evidence. The addition was on mere assumptions and presumptions. The Ld. AO could not establish with clinching evidences that the transactions were bogus, sham, non-genuine and manipulated. No evidence was brought on record to show compensatory payment by the assessee to the buyer. No enquiry was conducted by SEBI in any of the scrip. The doubts and suspicion, however strong, could not partake the place of evidence. Accordingly, Ld. AO was directed to accept the claim of the assessee against which the revenue is in further appeal before us. The assessee, in its cross-objections, has challenged the jurisdiction of Ld. AO by contending that initial notice issued u/s 143(2) conferring jurisdiction on Ld. AO was issued in the name of dead person which oust the very assumption of jurisdiction by Ld. AO. Our findings and Adjudication 4. From the case records, it emerges that the assessee Smt. Savita Bansal left for heavenly abode on 17-02-2016. The legal heir of the assessee Shri Parveen Kumar registered himself as legal heir on the portal and accordingly, filed return of income of the deceased assessee on 18-10-2016 declaring income of Rs.5.29 Lacs. The case was subjected to scrutiny vide notice u/s 143(2) on 26-09-2017 which is placed on Page No.5 of the paper-book. The said notice has been issued by Ld. DCIT/ ACIT, Circle-1, Amritsar in the name of deceased assessee Smt. Savita Bansal with deceased assessee’s PAN. In the said notice, various issued have been identified and the assessee is directed to substantiate her return of income. Subsequently, the legal heir Shri Parveen Kumar, made refund claim on behalf of deceased assessee from appropriate authority through various correspondences which are placed on record. Subsequently, another notice u/s 143(2) has been issued by Income Tax Officer, Ward 5(5), Amritsar on 26-09- 2018 which is also in the name of deceased assessee (Page No.19-20 of the paper-book). Further notice u/s 142(1) has been issued by same officer on 05-12-2018 which is also in the name of deceased assessee Smt. Savita Bansal (Page 23-24 of the paper-book). Subsequent notices / communications have also been issued in the name of deceased assessee only which is evident from copies thereof as placed on record. The Legal heir of the assessee has furnished various replies on behalf of the deceased assessee.

Upon cumulative consideration of the stated facts, it could be seen that the entire proceedings have happened in the name of a dead person only. The scrutiny jurisdiction u/s 143(2) has been acquired by issuing notices in the name of a deceased person which make the assessment nullity as per the decision of Hon’ble Delhi High Court in the case of Vikram Bhatnagar vs. ACIT (147 Taxmann.com 254) rendered on similar facts. In this case law, it was held by Hon’ble Court that wherein it was duly disclosed in return that it was filed by legal representative of deceased assessee, jurisdictional notice issued against deceased assessee and assessment order passed against dead person on his PAN without bringing on record all legal representatives would be null and void and was to be set aside. Considering various earlier decisions, Hon’ble Court held as under: - 9. We have considered the submissions made by the learned counsel for the parties. The issue of the validity of a notice issued against a dead person and the validity of the proceedings held subsequent thereto is no longer res integra. This Court in Savita Kapila (supra) has held as under. "…… 26. In the opinion of this court the issuance of a notice under section 148 of the Act is the foundation for reopening of an assessment. Consequently, 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 merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. (See Sumit Balkrishna Gupta v. Asstt. CIT [2019] 414 ITR 292 (Bom); [2019] 2 TMI 1209- Bombay High Court).

In Chandreshbhai Jayantibhai Patel v. ITO [2019] 413 ITR 276 (Guj.), [2019] (1) TMI 353-the Gujarat High Court has also held (page 290 of 413 ITR): "the question that therefore arises for consideration is whether the notice under section 148 of the Act issued against the deceased-assessee can be said to be in conformity with or according to the intent and purposes of the Act. In this regard, it may be noted that a notice under section 148 of the Act is a jurisdictional notice, and existence of a valid notice under section 148 is a condition precedent for exercise of jurisdiction by the Assessing Officer to assess or reassess under section 147 of the Act. The want of valid notice affects the jurisdiction of the Assessing Officer to proceed with the assessment and thus, affects the validity of the proceedings for assessment or reassessment. A notice issued under section 148 of the Act against a dead person is invalid, unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection." Consequently, in view of the above, a reopening notice under section 148 of the Act, 1961 issued in the name of a deceased-assessee is null and void. Also, no notice under section 148 of the Act, 1961 was ever issued upon the petitioner during the period of limitation. Consequently the proceedings against the petitioner are barred by limitation as per section 149(1)(b) of the Act, 1961. As in the present case proceedings were not initiated/pending against the assessee when he was alive and after his death the legal representative did not step into the shoes of the deceased assessee, section 159 of the act, 1961 does not apply to the present case. ** ** ** 30. Section 159 of the Act, 1961 applies to a situation where proceedings are initiated/pending against the assessee when he is alive and after his death the legal representative steps into the shoes of the deceased assessee. Since that is not the present factual scenario, section 159 of the Act, 1961 does not apply to the present case.

In Alamelu Veerapan v. ITO [2018] 12 ITR-OL 95 (Mad); [2018] (6) TMI 760- the Madras High Court, it has been held by the Madras High Court, "In such circumstances, the question would be as to whether section 159 of the Act would get attracted. The answer to this question would be in the negative, as the proceedings under section 159 of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being otherwise, the provisions of section 159 of the Act have no application". In Rajender Kumar Sehgal (supra), a Coordinate Bench of this court has held, (page 291 of 414 ITR) "This court is of the opinion that the absence of any provision in the Act, to fasten revenue liability upon a deceased individual, in the absence of pending or previously instituted proceedings which is really what the present case is all about, renders fatal the effort of the Revenue to impose the tax burden upon a legal representative". There is no statutory requirement imposing an obligation upon legal heirs to intimate the death of the assessee. ……."

The above judgment was followed by this Court in Mrs. Sripathi Subbaraya Manohara v. Pr. CIT [2021] 436 ITR 469.

In the present case as admitted by the Respondent the facts are admitted. The death of the Assessee was duly communicated by his legal heirs (the Petitioner herein). The ITR also duly disclosed that the same has been filed by the legal representative. However, in ignorance of the said facts available on the record the scrutiny proceedings have been wrongly conducted in the name of the deceased Assessee without bringing on record all his legal heirs as per the requirement of law.

In the present case, the jurisdictional notice under section 143(2) of the Act was issued against the dead person and the assessment order has also been passed against the dead person on his PAN without bringing on record all his legal representatives, therefore, the said assessment order and the subsequent notices are null and void and are liable to be set aside.

Consequently, the impugned notice dated 22nd September, 2019 issued under section 143(2) of the Act and the impugned assessment order dated 30th September, 2021 is set aside along with all consequential proceedings and notices. The petition is allowed; however, Revenue will have the liberty to take steps in the matter, albeit as per law. In case any such-steps are taken, the Petitioner will have liberty to assail the same, in accordance with law.

The above captioned writ petition is disposed of in the aforesaid terms along with pending applications.

In essence, the ratio of all the cited decisions is that jurisdiction acquired by Ld. AO by issuing notices in the name of dead person would be null and void which would render subsequent assessment proceedings void-ab-initio. Respectfully following the same, facts being pari-materia the same in the present appeal, we would hold that Ld. AO lacked assessment jurisdiction in the present case. The notice issued u/s 143(2) was invalid one which makes subsequent proceedings void- ab-initio. In other words, the impugned order stands quashed. The assessee succeeds in its cross-objections which renders revenue’s appeal as infructuous and mere academic in nature.

In the result, the revenue’s appeal stands dismissed. The assessee’s cross-objections stand allowed. Order pronounced u/r 34(4) of Income Tax (Appellate Tribunal) Rules, 1963.