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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: DR. M. L. MEENA & SH. ANIKESH BANERJEE
ORDER Per: Anikesh Banerjee, JM: The instant appeal of the assessee was filed against the order of the ld. Principal Commissioner of Income-tax, Jalandhar-1, (in brevity ‘the PCIT’) order passed u/s 263 of the Income-tax Act, 1961 (in brevity the Act) for assessment year 2018-19. The impugned order was emanated from the order of NEAC, Delhi, (in brevity ‘the AO’) order passed u/s 143 (3) r.w.s. 143(3A) and 143(3B) of the Act.
The assessee has taken the following grounds:
“1. That the order u/s 263 dated 30/03/2023 is bad in law.
2 The Learned Pr. Commissioner of Income Not yet quantified. Tax, Jalandhar-1, has erred in holding that the Assessment order u/s 143 (3) read with section 143(3A) and 143(3B) of the Income Tax Act 1961, dated: 23/2/2021 is erroneous in so far as it is prejudicial to the interest of revenue and thereby set aside the said order by invoking the revisionary power u/s 263.The facts as well as the legal position have not been properly appreciated. There was no justification for the exercise of revisionary power u/s 263 in this case.”
Brief facts as culled out from the records are that the assessment was completed u/s 143(3). The assessment proceeding was initiated for limited scrutiny assessment scheme (NEAC) 2019 on the issue of agricultural income.
The ld. AO had issued notice u/s 142(1) and in response to notice the assessee has furnished explanatory letter, land deed, lease deed, Form J as proof for sale of agricultural product. The ld. AO had taken cognizance the said documents in theassessment order. The assessment was completed on the basis of return filed by the assessee. The ld. PCIT had issued notice u/s 263 for incomplete verification of the agricultural income and had treated the assessment order as erroneous and prejudicial to the interest of the revenue. In relation to show cause u/s 263 the assessee filed details submission before the ld. PCIT. But finally, the order u/s 263 was passed by setting aside the assessment order.
Being aggrieved assessee filed an appeal before us.
4. The ld. AR filed the written submission which are kept in the record. The ld. AR argued both the legal and factual ground before the bench. The ld. AR mentioned that the assessee Mr. Avtar Singh died, and which was duly informed by his father Mr. Jit Singh to the ld. PCIT enclosing the death certificate. After receiving this letter, the show cause was issued to the legal heir and finally the revision order was passed by mentioning the PAN of the deceased.
4.1 The ld. AR raised objection about the mentioning deceased PAN in revisional order, passed u/s 263 which is prima facie made the order nullity. The ld. AR relied on the catena of judgment which is reproduced as below: a)Late Mr. Jitendra N. Mehta vs. ACIT, ITA No- 2950 & 2951/ Mum/2017, ITAT Mumbai Bench, Date of Pronouncement 08/02/2019:
While dealing with the penalty matter, it was observed that the notice issued in the name of "Late Jatinder N. Mehta" with his PAN showed that penalty proceedings were initiated against dead person and the penalty imposed in pursuance of such a notice was not sustainable. b) Savita Kapila legal heir of Late Shri Mohinder Paul Kapila vs. ACIT reported at 426 ITR 502 (Delhi):
It was held that the legal heir of the assessee was not under an obligation to inform the death of the assessee in the absence of any statutory obligation.
Most importantly the case mentions about the transfer of proceedings to the pan of the legal heir.. This case law has been cited to show that this is a defined process of transferring the proceedings to the PAN of the legal heir so that the notice was well as the order is issued under the PAN of the person who is alive and who represents the deceased assessee. This further strengthens the contention raised above that the notice and order issued under the PAN of the dead person are bad in law. c) Lalita Agarwal vs. ACIT, 60 CCH 470 (ITAT Delhi):
It was held that where the notice u/ s 148 had been issued in the name of the deceased assessee under his PAN, the order passed was to be quashed. The transfer of proceedings to the PAN of the legal heir of the deceased was duly considered while deciding the issue. d)eMudra vs. ACIT - 117 taxmann.com 550 (Karnataka):
It was held that notice issued to a non-existing company was a substantive illegality and was not curable. e) CIT v. Maruti Suzuki India Ltd (2019) 416 ITR 613 (Supreme Court):
It was held that the notice issued in the name of amalgamating entity after amalgamation is a substantive illegality as the amalgamating entity ceases to exist. It was not a procedural violation adverted to in section 292B. Participation in the proceedings by the assessee cannot operate as an estoppel against law. Copy of the decision is enclosed at page no. 95 to 114.”
4.2 The ld. AR further agitated that the ld. AO had not made the verification which has not correct the observation of the ld. PCIT. There is a lack of investigation, but not, no verification did. The ld. AR first invited our attention in the order of the 263 page 6 to 7, the relevant para are reproduced as below:
“With reference to the above documents it would be incorrect to suggest that documents for ownership have not been produced. The documents filed above at page no. 7 to 17 are part of thereply filed during the assessment proceedings show the ownership of land in my name and that of my father as well as my brothers whose land is cultivated by me. As explained above the factual position is that very rarely the lessor of agricultural land provides a copy of his fard/jamabandi. Since the ownership of the land by the lessor is known to many persons in the village, it is not necessary for the person taking the land on lease to insist on the document of ownership of land.
The state revenue authorities do not issue any document which could be produced by me to show that I was involved in the cultivation of land. /4s stated above, the lessor of agricultural land does not get the name of the lessee registered in the revenue record for fear of losing control/ possession over his land.
Complete detail and supporting evidence of J Forms has been explained above at point no. (viii).
Evidence of agricultural expenses to the extent available is being enclosed at page no. 27 to 43. The total expenses were clearly mentioned In schedule El of the return of Income.
There Is no reason to suggest that agricultural income to the extent of Rs. 50,84,747 should have been brought to tax u/s 69A. The documents filed regarding agricultural income from potatoes have not been doubted. The documents already submitted during the assessment proceedings include storage of potatoes in different cold storages.
Late Sh. Avtar Singh had been involved in agricultural operations since long and agriculture was his main source of income. The documents in connection with the agricultural operations were maintained by him and I could not locate all the documents within the time allowed since he has passed away. The assessment order in question cannot be treated as erroneous in so far as it is prejudicial to the Interest of revenue.”
3. I have considered the reply of the assessee on the issues raised in the show cause notice and documents filed by the assessee which need to be verified since such verifications/enquiries have not been made by the Assessing Officer at assessment stage. The lack of enquiry by the AO in respect of the issues raised in the revisionary proceeding amounts to the assessment order to be erroneous in so far as prejudicial to the interest of the revenue. Therefore, the order passed by the Assessing Officer is held to be erroneous and prejudicial to the interest of revenue. The case is, therefore, set
aside to the file of the Assessing Officer for fresh assessment on the above mentioned issue.
In view of the above facts and discussions, I am satisfied that the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of the revenue. Therefore, the said order passed is set aside to this extent to the file of the assessing officer to pass fresh order after making necessary enquiries/investigations in the light of the discussions made above and after giving due opportunity to the assessee of being heard.”
4.3 The ld. AR further relied on the order of the Hon’ble Jurisdictional High Court in the case of CIT vs. R. K. Metal Works 112 ITR 445 (P&H) which is held as under:
"....... There is no indication in the order of the CIT as to the basis on which he came to the prima facie conclusion that the capital borrowed by the firm was utilised for purposes other than that of the firm's business. When the assessee field a detailed written statement before him, the CIT did not deal with any of the points raised in the statement. He thought that the best course in the circumstances was to remand the matter to the ITO for consideration of the points raised in the assessee’s written statement. That certainly was not the best course to be adopted by him. It was necessary for the CIT to state in what manner he considered that the order of the ITO was erroneous and prejudicial to the interest of the Revenue and what was the basis of such a conclusion."
We heard the rival submission and considered the documents available in the record. From the perusal of the records, it is clear that theld. PCIT was duly informed by the father of the assessee that the assessee died before initiation of the proceedings. Accordingly, the notice was issued to the legal heir i.e. the assessee’s son Sh. Gurtej Singh whose PAN DTPPS6577H but the PAN of the assessee is mentioned in the order bearing AROPS8489C and passed the order relying on the PAN of deceased assessee.
5.1 Further the ld. AO in the assessment order has received all the relevant documents related to the evidence of agricultural income. Here, we cannot say there is any absence of verification. All the documents are duly submitted during the assessment proceeding which are enclosed in APB pages 1 to 47 and the same documents are duly submitted before the ld. PCIT by the assessee in revisional proceeding. The ld. AO is bound by limited scrutiny in the CASS system. Respectfully considering the orders of Hon’ble Jurisdictional high court in the case of R. K. Metal Works(supra) the investigation by the ld. AO cannot be called ‘absence of investigation’. The ld. PCIThas not brought any material on record to show that the view taken is contrary to law or the investigation is erroneous. In the light of these discussions and placing respectful reliance on the decisions of Hon'ble Supreme Court in the case of Maruti Suzuki India Ltd(supra), Hon’ble High Court in the case of eMudra(supra)&Savita Kapila legal heir of Late Shri Mohinder Paul Kapila,(supra) and Coordinate Bench of ITAT in the case of Lalita Agarwal, (supra), the ld. PCIT has erred to mention the deceased PAN in the revisional order. This is not the curable mistake from the end of revenue and caused the order nullity. In our considered view, the ld. PCIT is not justifying setting aside the order of the ld. AO. The assessment order cannot be treated as erroneous. Accordingly, the order U/s 263 of the ld. PCIT is quashed.
In the result, appeal of the assessee is allowed.