2022 (5) TMI 744 - HC - Income Tax

Reopening of assessment u/s 147 - notice against deceased - deceased - Jagannath Rampal Kabra had claimed bogus accommodation entry and there was escapement of income - whether the reopening of assessment is void-ab-initio as the Notice under Section 148 of the Act has been issued to dead person? - HELD THAT - The aforesaid question of law is no more res-integra. The issue came to be considered by this Court in the case of Chandreshbhai Jayantibhai Patel vs. Income Tax Officer 2019 (1) TMI 353 - GUJARAT HIGH COURT as legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid There is no scope/occasion for filing a voluntary return for escapement of income and the only provision under which return can be filed is on issue of a notice under Section 148. Indisputably, the assessment proceedings for escaped income were initiated by issue of notice under Section 148 of the Act and therefore the AO was vested with jurisdiction over the case. However, issuing notice upon the deceased assessee is as good as no valid notice in eye of law resulting in irregularity, which is not curable. It would be a nullity, as it hits upon the inherent jurisdiction of AO. On a bare reading of the provision, it is evident that issuance of valid notice confers power upon the AO to assume jurisdiction for initiation of proceedings for assessment of escapement of income. It is a cardinal proposition in law that not issuing notice at all or issuing that beyond statutory period or issue of an invalid notice under Section 148 does affect the jurisdiction of AO and would make the assessment/reassessment null and void because the notice under this section is not a mere procedural requirement but a condition precedent to assume jurisdiction and to make a valid assessment/reassessment. Absence of such a notice would make the assessment invalid and without jurisdiction in view of the decisions of Y Narayana Chetty 1958 (10) TMI 10 - SUPREME COURT , THAYABALLI MULLA JEEVAJI KAPASI (DECD.) (BY HIS LEGAL REPRESENTATIVES) 1967 (3) TMI 1 - SUPREME COURT ,KURBAN HUSSAIN IBRAHIMJI MITHIBORWALA 1971 (9) TMI 9 - SUPREME COURT , ELECTRO STEEL CASTINGS LTD. 2003 (7) TMI 58 - CALCUTTA HIGH COURT , MADAN LAL AGARWAL 1982 (9) TMI 26 - ALLAHABAD HIGH COURT , NYALCHAND MALUKCHAND DAGLI 1965 (9) TMI 57 - GUJARAT HIGH COURT Thus notice being issued upon deceased assessee is void ab initio and the consequential proceedings and the orders passed thereon are any without jurisdiction and are therefore, hereby quashed and set aside. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act to a deceased person.
2. Applicability of Section 292B and Section 292BB of the Income Tax Act in curing defects in the notice.
3. Jurisdiction of the Assessing Officer (AO) in the absence of a valid notice.

Issue-Wise Detailed Analysis:

1. Validity of Notice Issued Under Section 148 to a Deceased Person:

The primary issue in this case was whether the reopening of assessment under Section 148 of the Income Tax Act was void ab initio because the notice was issued to a deceased person. The court noted that the writ applicant, the son of the deceased assessee, received a notice dated 31.03.2021 addressed to his deceased father for the assessment year 2017-18. The writ applicant argued that the notice was void as it was issued to a deceased person, and hence, the proceedings should be dropped.

The court referred to the case of Chandreshbhai Jayantibhai Patel vs. Income Tax Officer, which established that a notice issued to a deceased person is invalid. The court emphasized that for proceedings to be valid, the notice must be issued to the legal representative of the deceased, not the deceased themselves. The court held that since the proceedings under Section 147 were not initiated against the deceased before his death, the notice issued to the deceased was invalid and could not be continued against the legal representative.

2. Applicability of Section 292B and Section 292BB in Curing Defects in the Notice:

The respondent argued that the defect in the notice could be cured under Section 292B of the Income Tax Act, which states that no notice shall be invalid merely due to any mistake, defect, or omission if it is in substance and effect in conformity with the Act. However, the court clarified that Section 292B does not apply to a situation where the notice itself is issued to a deceased person, as this is not a mere procedural defect but a fundamental flaw affecting jurisdiction.

The court also considered Section 292BB, which precludes an assessee from raising objections about the notice if they have participated in the proceedings. However, the court pointed out that Section 292BB applies only if the notice emanates from the department and there are defects in the manner of service. It does not cure the complete absence of a valid notice. The court cited the Supreme Court's decision in Commissioner of Income Tax vs. Laxman Das Khandelwal, which held that Section 292BB does not save the complete absence of a notice.

3. Jurisdiction of the Assessing Officer in the Absence of a Valid Notice:

The court observed that the issuance of a valid notice under Section 148 is a condition precedent for the Assessing Officer to assume jurisdiction for assessment or reassessment. The court held that issuing a notice to a deceased person is as good as not issuing any notice at all, making it a nullity and affecting the AO's jurisdiction. The court referenced multiple precedents, including Y Narayana Chetty v. ITO and CIT v. Kurban Hussain Ibrahimji Mithiborwala, which established that the absence of a valid notice deprives the AO of jurisdiction.

Conclusion:

The court concluded that the notice dated 31.03.2021 issued to the deceased assessee was void ab initio. Consequently, the proceedings and orders passed based on this invalid notice were without jurisdiction and were quashed and set aside. The writ application succeeded to the extent of invalidating the notice and the subsequent proceedings.