SANKARLINGAM SANKAR THROUGH HIS LEGAL HEIR GANESH SHANKAR ,MUMBAI vs. ACIT CIRCLE 17(1), MUMBAI

In response to the notice u/s. 148 of the Act there was no return filed by the assessee within 30 days. Thereafter notices u/s. 142(1) of the Act was issued to the assessee vide dated 17.8.2019, 29.8.2019, 07.10.2019 and 14.10.2019 on the addresses available on record and email id also. Ultimately, assessment was completed ex-parte u/s. 144 r.w.s. 147 of the Act and income of the assessee was assessed at Rs. 77, 18,988/-. The assessee being aggrieved with this order & 705/Mum/2024 Sankaralingam Sankar Through his legal heir Ganesh Shankar preferred an appeal before the Ld. CIT (A), who in turn confirmed the order of AO, as the appeal filed by the assessee before the Ld. CIT (A) was time barred. It is observed that assessment order was passed on 03.12.2019 which as per the assessee’s claim received on 30.6.2023 i.e. there is a gap of almost 3 years and 6 months. This as per the Ld. CIT (A) is abnormal gap in terms of date of passing the order and receiving of the same by the assessee.

We have gone through the order of the AO, order of the Ld. CIT (A) and submissions of the assessee alongwith grounds taken before us. It is observed that the assessee vide ground No. 4 before the Ld. CIT (A) submitted as under “it should be noted that the assessee Mr. Sankaralingam Sankar has expired before the start of the relevant A.Y. 2012-13 and as such issuing notice on a dead person is bad in law and the same needs to be quashed. And as such no assessment can be made on deceased person.” It is observed that this fact was never placed on record by the assessee before the AO and the relevant evidence like death certificate etc. were also not produced before the Ld. CIT (A) but the same is produced before us also for our perusal so that after verification of the same relevant adjudication of the matter can be done by us.

It is further observed that assessee has taken ground before us through which he claimed that all the investments as added back by the AO pertains to earlier assessment years/duly explained/duly offered to tax. As claims made by the assessee before us are not substantiated by the relevant supporting which can help us to adjudicate the matter as per law. Still considering the fact that the original assessee is no more and the matter is being pursued by his legal heir, we “3) The NFAC failed to appreciate that reopening is bad in law as the Notice u/s. 148 of the Act for reopening is issued on a dead person and hence the reassessment order may be quashed. 4) The NFAC failed to appreciate that Assessment Order u/s. 143(3) r.w.s. 147 of the Act is bad in law as same is passed against a dead person and hence the assessment order may be quashed.”

This issue exactly on identical facts has already been examined extensively by the Hon’ble High Court of Delhi in the case of [2020] 118 taxmann.com 46 (Del.) Savita Kapila v. ACIT, Circle 4(1), and Wherein the Hon’ble High Court observed as under:

It is well settled law that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principles of natural justice or where the order or notice or proceedings are wholly without jurisdiction or the vires of an Act is challenged. [See Whirlpool Corporation v. Registrar of Trade Marks, Mumbai and Others [1998] 8 SCC 1].

Further, the fact that an assessment order has been passed and it is open to challenge by way of an appeal, does not denude the petitioner of its right to challenge the notice for assessment if it is without jurisdiction. If the assumption of jurisdiction is wrong, the assessment order passed subsequently would have no legs to stand. If the notice goes, so does the order of assessment. It is trite law that if the Assessing Officer had no jurisdiction to initiate assessment proceeding, the mere fact that subsequent orders have been passed would not render the challenge to jurisdiction infructuous. In Calcutta Discount Co.

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. Commissioner of Income Tax, Circle 16(2), Mumbai & Ors. [2019] 2 TMI 1209 - Bombay High Court.

Also, no notice under section 148 of the Act, 1961 was ever issued to the petitioner during the period of limitation and simply proceedings were transferred to the PAN of the petitioner, who happens to be one of the four legal heirs of the deceased assessee vide letter dated 27th December, 2019. Therefore, the assumption of jurisdiction qua the Petitioner for the relevant assessment year is beyond the period prescribed and consequently, the proceedings against the petitioner are barred by limitation in accordance with Section 149(1)(b) of the Act, 1961.

In Smt. Sudha Prasad (supra) the petitioner had challenged the assessment order and demand notice only. Neither non-issuance of notice was challenged nor was the issue of proceedings being barred by limitation raised or decided. Consequently, the said judgment is inapplicable to the present case and is therefore, of no help to the revenue. 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.

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. 31. in Alamelu Veerappan v. The Income-tax Officer, Non Corporate Ward 2(2), Chennai 2018 (6) TMI 760 - Madras High Court, it has been held by the Madras High & 705/Mum/2024 Sankaralingam Sankar Through his legal heir Ganesh Shankar 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 has no application." In Rajender Kumar Sehgal (supra), a Coordinate bench of this Court has held, "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 proceeding 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.

This Court is of the view that in the absence of a statutory provision it is difficult to cast a duty upon the legal representatives to intimate the factum of death of an assessee to the income tax department. After all, there may be cases 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 not or whether the Department was made aware by the legal representatives or not is irrelevant. In Alamelu Veerappan (supra) it has been held "nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration."

The judgment in Pr. Commissioner of Income-tax v. Maruti Suzuki India Limited (supra) offers no assistance to the respondents. In Pr. Commissioner of Income-tax v. Maruti Suzuki India Limited (supra) the Supreme Court was dealing with Section 170 of the Act, 1961 (succession to business otherwise than on death) wherein notice under section 143(2) of the Act, 1961 was issued to non-existing company. In that case, Department by very nature of transaction was aware about the amalgamation. However, the said judgment nowhere states that there is an obligation upon the legal representative to inform the Income-tax Department about the death of the assessee or to surrender the PAN of the deceased assessee. The relevant portion of the said judgment is reproduced herein below:- "35. In this case, the notice under section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. ** ** ** & 705/Mum/2024 Sankaralingam Sankar Through his legal heir Ganesh Shankar 39. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co- ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment.

Consequently, the legal heirs are under no statutory obligation to intimate the death of the assessee to the revenue. SECTION 292B OF THE ACT, 1961 HAS BEEN HELD TO BE INAPPLICABLE VIZ-A-VIZ NOTICE ISSUED TO A DEAD PERSON IN RAJENDER KUMAR SEHGAL (SUPRA), CHANDRESHBHAI JAYANTIBHAI PATEL (SUPRA) AND ALAMELU VEERAPPAN (SUPRA).

This Court is 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, 1961 does not apply to the present case.

In Skylight Hospitality (supra) notice was issued to Skylight Hospitality Pvt. Ltd. instead of Skylight Hospitality LLP. In that factual context, this Court had observed, "Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated April 11, 2017. They had objected to the notice being issued in the name of the company, which had ceased to exist. However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was relied and dealt with by them." The Supreme Court while dismissing the SLP had also observed "In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under section 292B of the Income-tax Act."

In any event, Section 292B of the Act, 1961 has been held to be inapplicable viz-a-viz notice issued to a dead person in Rajender Kumar Sehgal (supra), Chandreshbhai Jayantibhai Patel (supra) and Alamelu Veerappan (supra). In all the aforesaid cases, the judgment of Skylight Hospitality (supra) had been cited by the revenue. IN RAJENDER KUMAR SEHGAL (SUPRA) A COORDINATE BENCH OF THIS COURT HAS HELD THAT SECTION 292BB OF THE ACT, 1961 IS APPLICABLE TO AN ASSESSEE AND NOT TO A LEGAL REPRESENTATIVE.

This Court is also of the view that Section 292BB of the Act, 1961 is applicable to an assessee and not to a legal representative. Further, in the present case one of the legal & 705/Mum/2024 Sankaralingam Sankar Through his legal heir Ganesh Shankar heirs of the deceased assessee, i.e. the petitioner, had neither cooperated in the assessment proceedings nor filed return or waived the requirement of Section 148 of the Act, 1961 or submitted to jurisdiction of the Assessing Officer. She had merely uploaded the death certificate of the deceased assessee. In Commissioner of Income Tax-VIII, Chennai v. Shri M. Hemanathan 2016 (4) TMI 258 - Madras High Court it has been held "In the case on hand, the assessee was dead. It was the assessee's son, who appeared and perhaps cooperated. Therefore, the primary condition for the invocation of Section 292BB is absent in the case on hand. Section 292BB is in place to take care of contingencies where an assessee is put on notice of the initiation of proceedings, but who takes advantage of defective notices or defective service of notice on him. It is trite to point out that the purpose of issue of notice is to make the noticee aware of the nature of the proceedings. Once the nature of the proceedings is made known and understood by the assessee, he should not be allowed to take advantage of certain procedural defects. That was the purpose behind the enactment of Section 292BB. It cannot be invoked in cases where the very initiation of proceedings is against a dead person. Hence, the second contention cannot also be upheld."

Even a Coordinate Bench of this Court in Rajender Kumar Sehgal (supra) has held "If the original assessee had lived and later participated in the proceedings, then, by reason of Section 292BB, she would have been precluded from saying that no notice was factually served upon her. When the notice was issued in her name- when she was no longer of this world, it is inconceivable that she could have participated in the reassessment proceedings, (nor is that the revenue's case) to be estopped from contending that she did not receive it. The plain language of Section 292BB, in our opinion precludes its application, contrary to the revenue's argument."

Consequently, the applicability of Section 292BB of the Act, 1961 has been held to be attracted to an assessee and not to legal representatives. CONCLUSION 41. To conclude, the arguments advanced by the respondent are no longer res integra and have been consistently rejected by different High Courts including this jurisdictional Court. In view of consistent, uniform and settled position of law, to accept the submissions of the respondent would amount to unsettling the 'settled law'. In fact, in Pr. Commissioner of Income-tax v. Maruti Suzuki India Limited (supra), the Supreme Court speaking through Hon'ble (Dr.) Justice Dhananjaya Y. Chandrachud has succinctly observed as under:- "40. We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of & 705/Mum/2024 Sankaralingam Sankar Through his legal heir Ganesh Shankar consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable."

Keeping in view the aforesaid, the present writ petition is allowed and the impugned notice dated 31st March, 2019 and all consequential orders/proceedings passed/initiated thereto including orders dated 21st November, 2019 and 27th December, 2019 are quashed.”

In view of the above, it is observed that the facts of the case and judicial pronouncements discussed (supra) are similar. Resultantly respectfully following the same, ground no. 3 and 4 raised by the assessee are allowed and assessment order passed by the AO is quashed. In the result, relevant grounds of the assessee are allowed and consequential relief is provided.

In the result, appeal of the assessee is allowed on technical grounds without going into the merits of the case.

In view of the above findings in quantum appeal, the findings in this penalty appeal are also same and above findings will be applied mutatis mutandis here also. Based on the above, the grounds raised by the assessee are allowed and penalty order also [which is based on the assessment order discussed (supra)] quashed.

In the result both the appeals are allowed in above terms.