2018 (12) TMI 126 - HC - Income Tax

Reopening of assessment - assessment in the name of Legal representatives - assessment against dead person - validation of proceedings u/s 292B r.w.s. 292BB - Held that - Notice for re-opening u/s 148 was issued on 25.03.2013, i.e. within time to the deceased-assessee through his legal heirs. The notice was sent through speed post. The same was returned by stating that the assessee had died about 6-7 years ago. It is not disputed that the address was correct. The act of returning the notice was deliberate inspite of the fact that notice was not in the name of Yoginder Singh but Yoginder Singh through his legal heirs. The legal heirs of the assessee filed a reply dated 16.01.2014 stating that notice under Section 143(2) of the Act was time barred. The assessment proceedings were attended by Neeraj Jain, Chartered Accountant and he submitted that no notice had been served u/s 148 for the assessment year 2006-07. The finding recorded has not been disputed that after issuance of notice under Section 148 of the Act, notice under Section 143(2) alongwith questionnaire was issued and the same was served. The final show cause notice was issued which was served through affixation on 04.02.2014. The legal heirs participated in the assessment proceedings but never filed any reply on the merits of the issue. The objection raised regarding non-receipt of notice under Section 148 was rightly rejected by the A.O. The order passed by the Tribunal allowing the appeal on the ground that re-assessment order had no validity being passed in the name of dead person and that notice under Section 148 of the Act was not served upon the deceased-assessee or legal heirs, is not-sustainable.

Summary

Issues involved:
1. Validity of notice under Section 148 of the Income Tax Act, 1961.
2. Jurisdiction of Assessing Officer under Section 147 of the Income Tax Act, 1961.
3. Impleading legal heirs as necessary parties in assessment proceedings.
4. Service of notice under Section 148 of the Income Tax Act, 1961.
5. Interpretation of the terms "issue" and "serve" in the context of jurisdictional and procedural aspects.

Analysis:

1. Validity of notice under Section 148: The appellant challenged the validity of the notice issued under Section 148 of the Act, arguing that it was served within the limitation period to the deceased through legal heirs. However, the legal representative of the deceased contended that the statutory requirements for serving the notice were not met, rendering the initiation of proceedings without jurisdiction. The court referred to Section 159 of the Act, highlighting that legal representatives are liable to pay any sum the deceased would have been liable for. The legal heirs' participation in the assessment proceedings further emphasized their liability.

2. Jurisdiction under Section 147: The Assessing Officer re-opened the assessment for the year 2006-07 under Section 147 due to enhanced compensation received by the deceased. The legal representative objected to the lack of notice under Section 148, which the AO rejected, stating it was sent within time. The Tribunal's decision to allow the appeal based on the invalidity of the notice was deemed unsustainable, and the matter was remanded to decide on the merits of the case.

3. Impleading legal heirs: The Tribunal quashed the assessment order on the grounds that legal heirs were not impleaded as necessary parties. However, the court emphasized that legal representatives are deemed to be an assessee under the Act, and their liability cannot be absolved, especially when they actively participate in the assessment proceedings.

4. Service of notice under Section 148: The legal heirs raised objections regarding the non-receipt of the notice under Section 148, but the AO rejected these objections. Despite the legal heirs participating in the assessment proceedings, they did not file any reply on the merits of the issue. The court upheld the AO's decision to reject the objection regarding the non-receipt of the notice.

5. Interpretation of terms "issue" and "serve": The Tribunal's decision to set aside the reassessment order based on technicalities related to the notice served on the deceased or legal heirs was overturned. The court emphasized that procedural irregularities are curable under specific sections of the Income Tax Act, and the appeal was allowed, remanding the matter back to the Tribunal for a decision on the merits of the case.