9911796707
TMI Blog2018 (5) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... t the learned CIT(A) has erred in law and on facts in considering 2433 Sq.Mt. land left for road as estimated by ITI instead of actual area 2658.32 sq. mt. as per map plan on record for arriving embedded cost of acquisition of plots sold, thereby short calculation of cost of acquisition to Rs. 52,76,866/- (page-14 of CIT (A) order) instead of Rs. 54.34,120/- ( page-7 of CIT(A) order) resulting excess computation of short-term capital Gain by Rs. 1,57,254/-. " 2. Apropos Ground No. 2, the assessee raised the following ground No. 2 before the ld. CIT(A): "2. That there was no proper and valid service of notice u/s 148 to all the legal heirs in the case thereby proceedings are void. " 3. The ld. CIT(A) has rejected this grievance of the assessee, holding as under: "While going through the above submission of the appellant, it is observed that the Sh. Pradeep Kapoor the son of the deceased assessee has duly participated in the assessment proceedings. It is well settled that if a legal representative receives a notice / communication from the AO, and he or she participates in the assessment proceedings before the AO on his or her own voluntarily even without the notice being addre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chinery for the assessment of tax on the income of a deceased person on whom the tax had been originally charged. Thereunder, it is expressly recognised that upon the death of the assessee, the liability to pay any sum which the deceased would have been liable to pay if he had not died, is that of his legal representative and for the purposes of the Act, the legal representative is treated as an assessee. If at the date of death of the deceased assessee, a return in respect of the income earned by him in the previous year had already been filed and the assessment proceeding had commenced, it would not be necessary to start the proceeding afresh against the legal representative since any proceeding taken against the deceased prior to the date of his death is by, a fiction, deemed as having been taken against the legal representative. From that stage onwards, however, the proceeding will have to continue against the legal representative who, in the eye of law, represents the legal personality of the deceased assessee. For this purpose, it would be necessary to determine who the legal representative is and that would be an issue to be decided in accordance with law in the course of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est. Therefore, if the legal representative (which term includes plurality of persons) is present before the taxing authority in some capacity or voluntarily appears in the proceeding without service of notice or upon service of notice not addressed to him but to the deceased assessee, and does not object to the continuance of the proceeding against the deceased person and is heard by the ITO, in regard to the tax liability of the deceased and invites an assessment on merits, such a legal representative must be taken to have exercised the option of abandoning the technical plea that the proceeding has not been continued against him, although, in substance and reality, it has been so continued. If and when an assessment order is consequently made in such a proceeding in the name of the deceased assessee, even that would not be a nullity qua the legal representative, not only because he was afforded a full opportunity of being heard in respect of it but also because he having not raised an objection at the appropriate time with regard to the continuance of the assessment proceeding against the deceased person, he must be taken to have known the inevitable outcome of the assessment be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t it is a waiver in personem, and not a waiver in rem, that is binding on the person making such a waiver. It is precisely for this reason that their Lordships have held in 'Sumantbhai' (supra), that: "The LR has a right to waive the advantage of any of the statutory provisions made solely for his protection or benefit and not conceived in public interest". 11. In the present case, the objection raised is not that the notice was not addressed to him, i.e., the LR, Sh. Pradeep Kapoor, but to the deceased assessee. The objection is that notices were not sent to the other two LRs, namely, Sudheer Kapoor and Achla Dhawan. Concerning this aspect, in 'Sumantbhai', (supra), their Lordships have specifically observed that: "Therefore, if the legal representative (which term includes plurality of persons) is present before the taxing authority in some capacity or voluntarily appears in the proceeding without service of notice or upon service of notice not addressed to him but to the deceased assessee, and does not object to the continuance of the proceeding against the deceased person and is heard by the ITO, in regard to the tax liability of the deceased and invites an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... more legal representative completely represent the estate of the deceased that it is held that service on them is enough to bind the estate of the deceased." 14. In 'Sumantbhai', (supra), three types of cases were noted to be taken, in 'Chooharmal' (supra), as exceptions to the general rule that if the notice is served only on one out of more than one LRs, there would be no complete representation of the estate of the deceased and the proceedings would be wholly invalid as not being in compliance with the requirement of section 24B(2) of the Indian IT Act, 1922 (section 159 of the Indian IT Act, 1961). These exceptions are: i. '. Where, even though there are several legal representatives, one may represent the whole interest of the deceased, such as when one legal representative is managing the estate of the deceased. ii. Where though one legal representative is served, he appears in the proceedings, with consent, express or implied, of the other LRs. iii. Where the AO bona fide and diligently believes one or more persons to be the only LRs of the deceased and initiates proceedings by serving notices on them and subsequently it is found that besides thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. CIT(A) on 'Maharaja of Patiala' (supra) is also misplaced and our above observations with reference to 'Sumantbhai', (supra) are equally applicable qua this decision also. 19. 'Chooharmal' (supra), as rightly relied on by the assessee, on the other hand, is directly applicable to the present case. The exceptions to the general rule of non-service of notices on all of several LRs amounting to a nullity, as referred to hereinabove, have been considered in 'Chooharmal' (supra). Therein, as in the case at hand, the notice being dealt with was a notice issued under section 148 of the Act. It was taken into consideration in the light of the observations of the Hon'ble Supreme Court in Suseela Sadanandair (supra), which was also considered in 'Sumantbhai', (supra). As to the first exception, i.e., where there are several LRs, one may represent the whole interest of the deceased and in such cases, there being complete representation of the interest of the deceased before the AO, the assessment made would bind the estate of the deceased, it has been observed that there was nothing to show that Daulat Ram (the only one out of several LRs ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act was issued on 12.05.2011 after recording reasons to believe". The reasons recorded (relevant portions) by the AO to believe escapement of income, as reproduced in the assessment order, are as under: "During the course of assessment proceedings in the case of Sh. Pradeep Kapoor and Sh. Sudheer Kapoor, 181, Civil Lines Agra for the assessment year 2008-09, it was observed that Smt. Shanta Kapoor, who was mother of both the person has sold two plots...................................." (emphasis supplied). ".................................... Smt. Shanta Kapoor has shown the capital gain of Rs. 3,56,837/- for the A.Y. 2008-09 but the correct capital gain was Rs. 19,85,501/-. Therefore, AO was enough material in his possession for assuming that Rs. 16,28,664/- has escaped assessment". 22. Therefore, as in 'Chooharmal' (supra), the AO was aware (here by way of the admission in the reasons recorded by the AO) that Shanta Kapoor was survived by more than one LR. Again, he did not choose to serve notice on them. Like in 'Chooharmal' (supra), the AO, as such, did not believe and could not possibly have believed Sh. Pradeep Kapoor to be the sole LR of Shanta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such LR, if he creates a charge on or disposes of or parts with any asset of the estate of the deceased, shall be limited to the value of the asset so charged, dispose of or parted with. This is entirely in consonance with the requirement of serving reassessment notices on all the LRs of a deceased assessee, so as to enable a complete representation of the estate of the deceased in order to make the recovery of the liability fruitful and to enable the passing of an order effective to realize the entire sum due from the deceased assessee. The rights and interest of the LRs in the estate of the deceased cannot be taken away from them without giving them a proper opportunity of defending their rights and interest, in accordance with the natural justice principle of audi alterem partem, as held in 'Umedram' (supra). 29. In view of the above, Ground No. 2 is accepted. The impugned order on this issue is reversed. It is held that the initiation of reassessment proceedings, in the absence of service of notices under section 148 on all the LRs of the deceased Shanta Kapoor is bad in law, being void ab initio. Nothing further survives for adjudication, as such. 30. In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
