2022 (1) TMI 1210 - AT - Income Tax

Validity of Reopening of assessment u/s 147 - jurisdictional notice u/s. 148 as issued to a dead person - addition of Long Term Capital Gain LTCG in as much as the fair market value as on 01-04-1981 should have been adopted as per Registered Valuer Report - HELD THAT - In the present case the defect in not confined to notice not being issued in the name of the legal heirs only but has also not been served or received by them. The legal heirs are in fact not even aware of the proceedings being undertaken on them. The question of waiver of notice u/s 148 therefore cannot arise where the person concerned has no knowledge of the proceeding initiated. Being a jurisdictional notice, these defects cannot be termed as mere irregularities which can be cured by participation of the assesses/legal heirs,. The Hon ble jurisdictional High Court in the case of P.V Doshi vs Commissioner of Income Tax 1977 (8) TMI 29 - GUJARAT HIGH COURT has held that provisions conferring jurisdiction cannot be conferred on the authority by mere consent. The jurisdictional notice u/s 148 of the Act having been issued to a dead assessee and the defect therein being not curable by waiver or consent of the legal heirs, the said notice is an invalid notice and the proceedings conducted in pursuance thereof are not sustainable in the eyes of law. The assessment order passed therefore, we hold, is null and void and thus set aside. - Decided in favour of assessee.

Issues Involved:
1. Validity of the reassessment proceedings under Section 147 of the Income Tax Act, 1961.
2. Confirmation of Long Term Capital Gain (LTCG) addition by CIT(A).
3. Acceptance of the Registered Valuer's Report versus the DVO Report.
4. Jurisdictional validity of the assessment order.
5. Admission of additional ground regarding Section 54F claim.

Detailed Analysis:

1. Validity of the Reassessment Proceedings Under Section 147:
The reassessment proceedings were initiated based on information that the assessee had sold immovable property but had not filed a return of income. The Assessing Officer (A.O.) framed the assessment by subjecting the Long Term Capital Gain (LTCG) to tax. The assessee challenged the reassessment, arguing that the notice under Section 148 was issued to a deceased person and was not served on the legal heirs, making the proceedings invalid. The Tribunal referred to several judgments, including those of the Jurisdictional High Court, which consistently held that notices issued to deceased persons are invalid unless the legal heirs participate in the proceedings and waive their rights to proper notice. In this case, the Tribunal found that the notice was not served on the legal heirs, and therefore, the reassessment proceedings were null and void.

2. Confirmation of LTCG Addition by CIT(A):
The CIT(A) dismissed the appeal filed by the assessee on the grounds that the assessee did not appear despite several opportunities. The assessee argued that the CIT(A) erred in passing an ex parte order and confirming the LTCG addition. The Tribunal did not address this issue in detail as the reassessment proceedings were held to be invalid.

3. Acceptance of the Registered Valuer's Report Versus the DVO Report:
The assessee contended that the fair market value should have been adopted as per the Registered Valuer's Report instead of the DVO Report used by the A.O. The Tribunal did not delve into this issue due to the invalidity of the reassessment proceedings.

4. Jurisdictional Validity of the Assessment Order:
The assessee raised additional grounds challenging the jurisdiction of the A.O., arguing that the assessment order was void as the A.O. did not have jurisdiction and the notice under Section 148 was not properly served. The Tribunal upheld the assessee's contention, stating that the notice was issued to a deceased person and not served on the legal heirs, making the proceedings invalid.

5. Admission of Additional Ground Regarding Section 54F Claim:
The assessee sought to admit an additional ground regarding a Section 54F claim for a residential house purchased. The Tribunal did not address this issue as the reassessment proceedings were invalidated.

Conclusion:
The Tribunal held that the reassessment proceedings were null and void due to the jurisdictional notice under Section 148 being issued to a deceased person and not served on the legal heirs. Consequently, the assessment order was set aside, and other grounds raised by the assessee were not considered. The appeal was allowed in favor of the assessee.

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