2022 (3) TMI 437 - HC - Income Tax

Reopening of assessment u/s 147 - notice in the name of the original assessee who is no more - HELD THAT - The contention raised by the learned Standing Counsel for the Revenue has to be accepted because, in none of these communications that have been mentioned herein above dated 09.09.2021 or prior to which ie., in the return submitted pursuant to Section 148 notice, it has been clearly mentioned that the original assessee is no more and therefore the petitioner has stepped into the shoes of the original assessee. Communication of the Revenue dated 14.09.2021 as the reason for reopening under Section 147 had already been stated in the earlier occasion also when the similar Section 147 reopening was made and therefore, the very same reason cannot be stated now is concerned, this Court feels that, whether the same reason had been given by the Revenue in the earlier occasion or not cannot be decided now because no document to that effect has been filed by the petitioner, for which the petitioner's counsel expressed the inability of the petitioner because, this all happened during the lifetime of the original assessee ie., the father of the petitioner. Be that as it may. Now the said plea is raised. It is a valid plea to be considered by the Revenue and in this regard, the assessing authority can very well compare the reasons given by the Revenue for reopening the assessment under Section 147 of the Act on the earlier occasion, which ended in the assessment order dated 27.06.2017, where the return of income filed disclosing an income of ₹ 5,16,710/- was accepted and if it is so, accordingly, whether the further reopening can be made or not, has to be decided by the assessing authority. If there was a different reason given in the earlier occasion, what was the reason given in the earlier occasion, that is no way connected with the present reason, that can also be informed by an interim communication in writing by the assessing authority to the petitioner and thereafter, the assessing authority can proceed. Assessing authority shall give an opportunity to the petitioner to put forth his case, pursuant to the Section 148 notice

Summary

Issues:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Legality of reopening the assessment under Section 147 of the Act for the Assessment Year 2013-14.
3. Disclosure of income and reasons for reopening the assessment.
4. Representation of a deceased assessee in legal proceedings.
5. Compliance with procedural requirements in tax assessment.

Analysis:

1. Validity of Section 148 Notice:
The petitioner sought a Writ of Certiorari to quash the notice issued under Section 148 of the Income Tax Act, 1961, dated 31.03.2021. The notice was challenged as illegal and without jurisdiction as it was issued in the name of the deceased original assessee, despite the petitioner being the legal heir. The petitioner raised concerns about the procedural irregularity in issuing the notice to a deceased person and emphasized the need for proper representation in legal proceedings.

2. Legality of Reopening Assessment under Section 147:
The Revenue initiated proceedings to reopen the assessment under Section 147 for the Assessment Year 2013-14 based on reasons related to alleged undisclosed income. The petitioner contested the reopening, arguing that the same reason had been previously considered during a similar assessment that concluded with an accepted income disclosure. The petitioner's counsel highlighted the legal principle that the Revenue cannot reopen an assessment based on the same grounds without proper justification.

3. Disclosure of Income and Reasons for Reopening:
The Revenue cited reasons for reopening the assessment, including alleged undisclosed income related to share transactions. The petitioner challenged the sufficiency of these reasons, questioning the conclusiveness of the claim of long-term capital loss and the computation of taxable income. The petitioner emphasized the importance of full and true disclosure of all relevant materials in the return of income to avoid allegations of tax evasion.

4. Representation of a Deceased Assessee:
The issue of representing a deceased assessee in legal proceedings arose, with the petitioner highlighting the procedural error of continuing proceedings in the name of a deceased person. The petitioner's counsel argued that legal actions against a deceased individual are legally untenable and emphasized the need for accurate representation to ensure fair and lawful proceedings.

5. Compliance with Procedural Requirements:
The Court directed the assessing authority to provide the petitioner with an opportunity to present their case and respond to the Section 148 notice. It instructed the assessing authority to compare the reasons for reopening the assessment with previous proceedings to ensure consistency and legality. The Court emphasized the importance of procedural compliance and fair treatment in tax assessment proceedings, underscoring the need for transparency and adherence to legal requirements.

In conclusion, the Court disposed of the writ petition by remitting the matter to the assessing authority for further action in accordance with the provided directions, emphasizing the importance of procedural fairness and legal compliance in tax assessment processes.