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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR & SHRI BHAGIRATH MAL BIYANI
ORDER PER MAHAVIR PRASAD, JM:
The captioned appeal and Cross Objection have been filed at the instance of the Revenue and assessee against the order of the Commissioner of Income Tax (Appeals)-I, Indore (‘CIT(A)’ in short) vide Appeal No. IT-157/15-16, dated 11.01.2016 arising out of assessment order dated 27.03.2015 passed by the Assessing Officer (AO) under s. 147 A/w. CO No. 13/Ind/2017 [Retd. Capt. Vikram Singh] A.Y. 2009-10 - 2 - r.w.s. 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2009- 10.
The grievances, in Revenue’s appeal and assessee’s Cross Objection, raised being common, both the cases were heard together and disposed of by the common order.
The grounds of appeal raised by Revenue read as under:
“a. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law by allowing the appeal of the assessee without appreciating and taking into account the entire facts of the case. b. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law by allowing the appeal of the assessee relying upon the decision of jurisdictional high court, whereas facts thereof was not applicable to the instant case. c. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law by allowing the appeal of the assessee by not taking into account the judicial pronouncement of jurisdictional high court in the case Smt. Kaushalyabai Vs Commissioner of Income Tax 238 ITR 1008 MP.”
The facts of the case are that the learned AO issued notice under s.148 of the Act in the name of Smt. Lakshmi Kumari who dies on 24.10.2013. Before the AO, it was contended on behalf of the assessee that she has already been passed away and proceedings initiated and carried out pursuance to said notice are null and avoid, bad in law without jurisdiction because such notices were issued and proceedings were carried out after the death of the deceased on 24.10.2013 and requested him to drop the proceedings in the name of the deceased person. The learned AO did not care for the same. So far merits of the case are concerned that assessee filed the return of income for the year under consideration on 26.03.2010 declaring total income of Rs.45,84,097/- and subsequently a notice under S.148 of the Act was issued on 26.03.2014. On behalf of the A/w. CO No. 13/Ind/2017 [Retd. Capt. Vikram Singh] A.Y. 2009-10 - 3 - assessee, a letter was filed by the AR on 19.08.2014 and requested the AO to drop the proceedings and following case laws were also quoted:
ITO vs. Ramprasad & Ors. (1972) 86 ITR 145 (SC); 2. Shaikh Abdul Kadar vs. ITO (1958) 34 ITR 451 (MP); 3. CIT vs. Kumari Prabhavati Gupta & Ors. (1998) 231 ITR 188 (MP); 4. CIT Vs. Fatehlal (1996) 118 ITR 218 (MP); 5. CIT Vs. Amarchand & Shroff (1963) 48 ITR 59 (SC); 6. CIT Vs. Dalumal Shyamumal (2005) 276 ITR 62 (MP); 7. RC Jain (Deed.) Vs. CIT (2005) 273 ITR 384 (Del.); 8. CIT Vs. Motiram (Deed.) Through LH Dharampal 316 ITR 321 (P&H); 9. Rakesh Kumar Mukesh Kumar LH of Late Mohar Singh (2008) 219 CTR (P&H); 10. Late Smt. Laxmi Bai Karanpuria Through LH Rajendra Karanpuria Vs. ACIT (2011) 130 ITD 40 (ITAT, Indore Bench);
5. Learned AR requested that from the above plethora of judgments wherein it has been held that an individual assessee has ordinarily to be a living person and there can be no assessment on a dead person. He also cited the judgment of Hon’ble Madhya Pradesh High Court in case of Shaikh Abdul Kadar vs. ITO (1958) 34 ITR 451, wherein it has been held that;
“That the original assessee was dead, there was no point in sending a notice as well as all the communications in the name of the dead person. The notice u/s. 34 is the foundation of jurisdiction, and that notice has to be correct. When a notice is issued to a dead person, the taxing authority cannot catch any living person into whose hands the notice goes and attribute notice to him. The Court also observed: “Under section 24B(2) of the I.T. Act, the notice u/sec. 34 in respect of the income of a deceased assessee has to be issued to his executor, administrator or legal representatives. In the present case the notice and all communications were addressed to “S”, who, admittedly, was dead at that time, and had been so dead for a long time. The ITO knew from the records of his own office that “S” was not living, and he also knew who his legal representatives were, because the legal representatives had been assessed in subsequent years, taking into account the assets of the deceased “S”. In these circumstances, it was incumbent on the ITO to cause the notice to be issued to the legal representatives of “S”. With the knowledge that A/w. CO No. 13/Ind/2017 [Retd. Capt. Vikram Singh] A.Y. 2009-10 - 4 - the original assessee was dead, and that he was succeeded by his sons and daughter, there was no point in sending a notice as well as all the communications in the name of the dead person. The notice u/s. 34 is the foundation of jurisdiction, and that notice has to be correct. When a notice is issued to a dead person, the taxing authority cannot catch any living person into whose hands the notice goes and attribute notice to him. In the present case all notices and communications are addressed to “S”, which show that they are all sent to a dead person……. The wording of the notice as well as the letters which have been written by the Department on subsequent occasions, clearly show that insofar as the Department was concerned, it was dealing with “S” who, they knew, was dead. The notice was defective. As such a notice is a condition precedent for action u/s. 34, the assessment cannot be made. The ITO is prohibited from making an assessment, on the strength of the notice which he has issued.-E. Alfred v/s. Addl. ITO [1957] 32 ITR 401 (Mad.) relied on.”
In the later decision in the case of CIT vs. Kumari Prabhawati Gupta 231 ITR 188 the Jurisdictional High Court has made the following observations:
It is an admitted fact that the assessee died before the proceedings for assessment were completed. Since the proceedings had not been completed and it was yet to be completed, therefore, it was incumbent under Section 159(2) of the Act on the Income-tax Officer to have brought the legal representative of the deceased on record and proceeded from the stage where it was left at the time of death of the deceased. According to the findings of the Tribunal, the proceedings had not been completed before the death of the assessee ; therefore, the Tribunal has rightly held that the assessment should be completed under Section 159(2) of the Act. In this view of the matter, we are of the opinion that the view taken by the Tribunal is correct and both the questions are answered against the Revenue and in favour of the assessee. Learned counsel for the Revenue has submitted that no order has been passed by the Tribunal for assessing the liability of the legal representative of the deceased assessee though the Tribunal in para 4 of the order has very clearly observed :
In such circumstances, natural justice demands that the assessment should go back to the Income-tax Officer to give sufficient opportunity to the legal representatives of the deceased for stating their case."
Therefore, the Tribunal was mindful of the fact that in such a situation, the case has to be remanded; though the Tribunal has not very specifically mentioned this part presumably the Tribunal may have credited this much to the Income-tax Officer that he will initiate the action under Section 159(2) of the Act. Be that as it may, A/w. CO No. 13/Ind/2017 [Retd. Capt. Vikram Singh] A.Y. 2009-10 - 5 - if it is now possible under the law, then it is open for the Income-tax Officer to proceed according to law under Section 159(2) of the Act.
In the case of CIT vs. Dalumal Shyamumal the Jurisdictional High Court has observed as under:
“In a case where an assessee dies pending any assessment proceedings, the provisions of section 159 of the Act gets attracted. It is the duty of assessing officer to ensure compliance of sub-section (2) of section 159 before any orders are passed.
4. In our opinion, the Tribunal while deciding the appeal ought to have taken note of section 159 ibid and should have accordingly, remanded the case to Assessing Officer for ensuring compliance of section 159 for passing appropriate orders of assessment after due notice to legal representative of deceased assessee. Indeed, once the assessment order is held to be a nullity then in such event consequential direction as contemplated under section 159 of the Act should have been given to Assessing Officer so that proper assessment order could be passed.”
In a recent judgment in the case of CIT v. Suresh Chandra Jaiswal [2010] 325 ITR 563 (All.) the Allahabad High Court has made the following observations:
“Where the notice under section 148 was addressed to an assessee who was already dead even on the date of issue of notice and the notice was not served upon the legal representatives of the deceased but it was served on munim, the defect in such notice was not cured by section 292B and as such the notice was not valid.”
But, despite of the objection, learned AO made the addition of Rs.23,49,70,830/-.
Thereafter, assessee preferred first statutory appeal before the learned CIT(A). Before the learned CIT(A), learned AR reiterated the similar arguments who held that:
“5.7 In view of the above facts and the judicial position the notice issued u/s section 148 of The Act therefore cannot be held to be a valid notice in the eyes of law as it was issued in the name of a person who was deceased. In view of the fact that there was no valid notice u/s 148 and subsequent notices also being issued to a person who was as per record not alive and following the above cited order of the A/w. CO No. 13/Ind/2017 [Retd. Capt. Vikram Singh] A.Y. 2009-10 - 6 - jurisdictional high court the impugned order u/s 147 r.w.s. 143(3) of The Act dated 27,3.2015 cannot be upheld to be a valid order in the eyes of law. AO should have taken note of the provisions of section 159(2) of The Act.”
Thus, on this technical ground, CIT(A) allowed the appeal of the assessee.
Now, Revenue has come before us by way of second statutory appeal.
We have gone through the relevant record and heard both parties. In this case, notice was issued under S.148 of the Act on 26.03.2014 by the AO whereas assessee Smt. Laxmi Kumari died on 24.10.2013 and it is pertinent to mention here that these facts were brought to the notice of the leaned AO wherein it is settled legal position that assessment cannot be framed in the case of a dead person. When it was came to the notice of the AO that assessee is a dead person in that case, assessment could have been made in the hands of the legal heirs and should be taken a necessary step. The assessee filed a return of income for the year under consideration on 26.03.2010 declaring total income ofRs.45,84,097/-. Thereafter, notice under S.148 of the Act dated 26.03.2014 was issued and in response to said notice, a letter dated 20.04.2014 was filed before the AO wherein it was stated that: i. Smt. Laxmi Kumari, assessee, was passed away. A photo copy of the death certificate issued by the Dy. Registrar (Births & Deaths) Village Bicholi Mardana, Jan Panchayat, Indore. ii. The notice issued by you is, therefore, not in accordance with the law. iii. Under her last will dated 14.08.2013, I have been appointed as executor, inter-alia, to administer the estate. iv. Without prejudice, I have to state that the return filed by the deceased u/s 139(1) of the I.T. Act, 1961 for the A.Y. 2009-10 A/w. CO No. 13/Ind/2017 [Retd. Capt. Vikram Singh] A.Y. 2009-10 - 7 - pleased be taken as due compliance of the notice under reply, read with the return of income filed by her for the A.Y. 2012-13. v. I also request you to let me know the ‘reason recorded’ for the issue of the notice u/s 148 of the Act to enable me to file the objection for re-opening the assessment. vi. An authority letter in favour of the counsel (CA) is enclosed. But despite of above objections, notice under s.142(1) dated 16.01.2015 and 20.02.2015 were also issued in the name of the deceased asseessee compliances to the notice were made by the AR and finally impugned order u/s. 147 r.s.w. 143(3) of the Act dated 27.03.2015 was passed in the name of the deceased. Thereafter, before the learned CIT(A), a detailed submission was made and the same was part of the impugned order. The Hon’ble Apex Court and several High Courts have held that the notice was not served upon a dead person. In our considered opinion, learned AO ought to have taken the other remedial. To our considered opinion, same is amount to miscarriage of justice. Therefore, in view of the above, we do not find any merit in the appeal filed by the Revenue and we are not inclined to interfere in the order passed by the CIT(A). To best of our knowledge, the learned CIT(A) has passed a detailed and reasoned order and same does not require any kind of interference at our end.
In the result, appeal filed by the Revenue is dismissed.
CO NO. 13/Ind/2017
The grounds of appeal raised by assessee in Cross Objection read hereunder:
“1. The ld. Commissioner of Income Tax (Appeals) erred in observing “The Assessing Officer is directed to take action as per law by issuing a valid notice u/s.148 of the Act.” It is without prejudice and be deleted/expunge.
A/w. CO No. 13/Ind/2017 [Retd. Capt. Vikram Singh] A.Y. 2009-10 - 8 - 2. Without prejudice, the respondent herein should not have been named as “respondent”, as he has, by his letter dated 25.04.2016 already communicated to the Ld. A.O. that the respondent here in is not an Executor as and the estate of deceased has been fully distributed to the specified legatees and nothing remained to administer and execute since.”
Since, we have confirmed the action of the learned CIT(A) and granted relief to the assessee, therefore, Cross Objection is dismissed.
In the combined result, the captioned appeal filed by Revenue and Cross Objection filed by assessee both are dismissed.
This Order pronounced in Open Court on 29/06/2022
Sd/- Sd/- (BHAGIRATH MAL BIYANI) (MAHAVIR PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore: Dated 29/06/2022 S.K.SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order UE COPY Assistant Registrar Income Tax Appellate Tribunal Indore Bench, Indore A/w. CO No. 13/Ind/2017 [Retd. Capt. Vikram Singh] A.Y. 2009-10 - 9 - 1.Date of dictation on 20.06.2022 2.Date on which the typed draft is placed before the Dictating Member 22.06.2022 3.Date on which the approved draft comes to the Sr.P.S./P.S. 4.Date on which the fair order is placed before the Dictating Member for pronouncement 5.Date on which the fair order comes back to the Sr.P.S./P.S 6.Date on which the file goes to the Bench Clerk 7.Date on which the file goes to the Head Clerk 8.The date on which the file goes to the Asstt. Registrar for signature on the order 9.Date of Dispatch of the Order