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Facts
The appeal was filed by the legal representative of a deceased assessee, who was the proprietor of M/s New Jewel Palace. The deceased died on 27.07.2016, and her death was conveyed to the revenue during a survey on 17.11.2016. Subsequently, a notice under section 148 was issued on 18.02.2020 to the deceased assessee, despite the revenue having knowledge of her demise.
Held
The Tribunal held that the issuance of a notice under section 148 on a deceased person, when the revenue was aware of the death, is illegal and a nullity. Following the judgments of the Gujarat and Delhi High Courts, the notice and all consequential proceedings were set aside.
Key Issues
Whether the notice issued under Section 148 of the Income Tax Act on a deceased assessee, when the revenue was aware of the death, is valid.
Sections Cited
148, 147, 144, 69, 133A, 159
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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: HON’BLE SHRI MANU KUMAR GIRI & HON’BLE SHRI JAGADISH
(िनधा�रणवष� / Assessment Year: 2017-2018) Punamchand Parek Vs. The Deputy Commissioner of Legal heir Santhilabarek Lathabai Income Tax, G. Vijaychand Jhabakh, Central Circle 2, No.157, P.M. Swamy Colony, Coimbatore 5th Street, Coimbatore 641 002. [PAN: AJDPL 1383R] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri G.V. Jhabak, FCA ��यथ� क� ओर से /Respondent by : Shri N.S. Phanidharan, IRS, JCIT. सुनवाई क� तार�ख/Date of Hearing : 01.10.2024 घोषणा क� तार�ख /Date of Pronouncement : 09.10.2024 आदेश / O R D E R MANU KUMAR GIRI (Judicial Member)
The appeal filed by the legal representative of deceasedassessee is directed against the order of the Ld. Commissioner of Income Tax(Appeal) Chennai-20 [CIT(A)] dated 30.04.2024 for Assessment Years 2017-18.
The assessee has assailed the impugned order on 1-9 grounds. However, we find that the solitary issue raised by the assessee is that whether notice dated 18.02.2020 issued u/s 148 on the deceased person is nullity and all consequential proceedings pursuant thereto is liable to be set aside.
Brief facts of the case are as under: The assessee is an individual, is deceased and was having a proprietorship in the name of M/s New Jewel Palace, was engaged in the business of trading of silver item, hosiery / garments. No Return of Income was originally filed by the appellant for the AY 2017-18. Consequent to the survey u/s 133A of the Act conducted on 17.11.2016 in the case of M/s New Jewel Palace, her son, Shri Sanjay Parek @ Shri Shanthilal Suresh who was looking after the entire business activity of M/s New Jewel Palace, after demise of the appellant on 27.07.2016, has admitted the unaccounted stock to the tune of Rs.46,31,251/- found during the survey as income for the year under consideration. However, in response to notice u/s 148 issued for the year, no return of income was filed. The assessment order u/s 147 r.w.s. 144 was passed computing the assessed income at Rs.46,31,251/- being the unexplained investment u/s 69 of the Act. Aggrieved with order u/s 147 r.w.s 144 dated 29.09.2021, the appeal was filed in the name of deceased person. The CIT(A) vide order dated 01.08.2023 has dismissed the appeal as it is not maintainable. The appellant has filed appeal before Income Tax Appellate Tribunal. The ITAT vide order in dated 28.11.2023 has set aside the order of CIT(A) and directed the appellant to file Form 35 removing the defect and also directed CIT(A) to adjudicate the appeal afresh. The appellant has filed Form 35 on 07.12.2023 and hence, the appeal is taken for disposal. On appeal to CIT(A), the ld.CIT(A) dismissed the only ground raised by the appellant whether AO erred in issuing notice u/s 148 on the dead person. Now assessee is in further appeal before us.
We find from the record that Smt. Santhilabarek Lathabai who was sole proprietor of M/s New Jewel Palace expired on 27.07.2016. The factum of demise of assessee was already conveyed to the income tax department/revenue when survey u/s 133 was conducted on 17.11.2016 in the case of M/s New Jewel Palace. We also find that digital notice dated 18.02.2020 u/s 148 of the Act was issued on a dead assessee despite knowledge of fact to the revenue regarding death of assessee. We also note that the revenue did not take any step u/s 159 of the Act to bring on record the legal representatives of the deceased assessee.
The Hon’ble High Court judgment in the case of Smt. MadhubenKantilal Patel Vs UOI 452 ITR 17 (Guj) held that where the legal heirs of the assessee deceased had supplied information of death to the revenue and despite reopening notice issued subsequently u/s 148 in the name of deceased was illegal and thus liable to be set aside. Similarly, Hon’ble Delhi High Court in the case of Savita Kapila Vs ACIT (2020) 426 ITR 502:273 Taxman148: 118 Taxmann.com 46 (Del) has quashed the notice u/s 148 of the Act on a dead person.
We, respectfully following the judgment of the Hon’ble High Courts referred supra, set aside the notice dated 18.02.2020 issued under section 148 of the Act on deceased assessee and declare the same as nullity. Hence all consequential order and proceedings are also set aside.
In the result, the appeal filed by legal representative of the assessee is allowed. Order pronounced in the open court on 9th day of October, 2024.