2024 (11) TMI 853 - AT - Income Tax

Validity of reopening proceedings against dead assessee - HELD THAT - This issue exactly on identical facts has already been examined in the case of Savita Kapila 2020 (7) TMI 441 - DELHI HIGH COURT held that the issuance of a notice u/s 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. Curable defect u/s 292BB or not? - In Commissioner of Income Tax-VIII, Chennai v. Shri M. Hemanathan 2016 (4) TMI 258 - MADRAS HIGH COURT as 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. Decided in favour of assessee.

Issues Involved:

1. Delay in filing the appeal and request for condonation of delay.
2. Validity of reopening assessment under Section 148 of the Income Tax Act, 1961.
3. Legality of assessment and penalty orders issued against a deceased person.
4. Alleged concealment of income and imposition of penalty under Section 271(1)(c) of the Income Tax Act, 1961.
5. Unexplained transactions related to investments, shares, and interest income.

Detailed Analysis:

1. Delay in Filing the Appeal:

The assessee contended that the NFAC erred in dismissing the appeal due to a delay in filing, without considering the reasonable cause for such delay. The assessee requested that the delay be condoned. However, the tribunal did not explicitly address this issue in its final decision, as the appeals were allowed on other grounds.

2. Validity of Reopening Assessment:

The assessee challenged the reopening of the assessment under Section 148, arguing that the notice was issued to a deceased person, making it invalid. The tribunal referred to the precedent set by the Delhi High Court in Savita Kapila v. ACIT, which held that issuing a notice under Section 148 to a deceased person is void, as the jurisdictional requirement of serving notice was not fulfilled. The tribunal concluded that the reopening was invalid, and the assessment order was quashed.

3. Legality of Assessment and Penalty Orders Against a Deceased Person:

The tribunal found that the assessment order under Section 143(3) read with Section 147 was passed against a deceased person, which is legally untenable. Citing similar legal precedents, the tribunal emphasized that legal heirs are not obligated to inform the tax department of the assessee's death, and the issuance of notice to a deceased person is a fundamental jurisdictional error. Consequently, the assessment order and the penalty order were quashed.

4. Alleged Concealment of Income and Imposition of Penalty:

The assessee argued against the penalty imposed under Section 271(1)(c) for alleged concealment of income, asserting there was no deliberate intention to conceal. Since the tribunal quashed the assessment order due to jurisdictional defects, the penalty order, which was based on the invalid assessment, was also quashed.

5. Unexplained Transactions Related to Investments, Shares, and Interest Income:

The assessee contested the additions made by the Assessing Officer regarding unexplained transactions in mutual funds, shares, and bank interest. The tribunal noted that the claims regarding these transactions were not substantiated with evidence before them. However, given the quashing of the assessment order on jurisdictional grounds, these contentions were not adjudicated on their merits.

Conclusion:

The tribunal allowed the appeals on technical grounds, specifically due to the invalidity of notices issued to a deceased person, without delving into the substantive merits of the case. The assessment and penalty orders were quashed, providing consequential relief to the assessee.

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