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TMI Blog2019 (9) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... and operation of the notice at Annexure-A to this petition and stay the further proceedings for the Assessment Year 2011-12; (c) any other and further relief deemed just and proper be granted in the interest of justice; (d) to provide for the cost of this petition." 3. The case of the writ-applicant in her own words as pleaded in the writ-application is as follows : 2.2 The petitioner filed return of income for the Assessment Year 2011-12 on 30.07.11 declaring total income at Rs. 4,56,090/- and the same was processed under section 143(1) of the Act on 21.09.11. 2.3 The petitioner, unfortunately, passed away on 27.9.16. Copy of Death Certificate of the petitioner is annexed herewith and marked as Annexure-C. 2.4 Thereafter, suddenly after a period of four years from the end of the relevant assessment year, the respondent issued the impugned notice dated 28.3.18 under section 148 of the Act on the email ID of the concerned Chartered Accountant (i.e. M/s. H.V.Vasa & Co.) for reopening the assessment for the year under consideration. 2.5 In response thereto, the concerned Chartered Accountant of the petitioner, vide email dated 31.3.18, intimated the respondent tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s for reopening. A bare perusal of reasons recorded for reopening reveals that the case of the petitioner has been reopened broadly on the count that certain payments made towards booking a plot have not been reflected in the return of income. Briefly, it is the case of the respondent that certain information was received from the DCIT, Central Circle - 2(4), Ahmedabad vide letter dated 22.3.18 to the effect that the petitioner had paid money to the tune of Rs. 28,00,000/- (Rs. 20,00,000/- in cash and Rs. 8,00,000/- through cheque) towards booking of Plot No.66 in a project namely Dipal Palm developed by J.P.Iscon Pvt. Ltd. and its group concerns. Such payments are not reflected in the return of income of the petitioner. Hence, the respondent has reason to believe that income of the petitioner to the tune of Rs. 28,00,000/- has escaped assessment for the year under consideration. 2.13 The petitioner states that the impugned notice under section 148 of the Act is bad, illegal, barred by limitation and without jurisdiction and therefore deserves to be quashed and set-aside in the larger interest of justice. The petitioner therefore, has not other alternative but to approach this H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eafter for the purpose of re-opening of the assessment in accordance with law. 7. Ms.Bhatt laid much emphasis on the fact that issue of a notice to a dead person at best could be termed as a procedural defect or, to put it in other words, it could be termed as an irregularity, which is curable and it has been cured. 8. Ms.Bhatt, in support of her submissions, has placed reliance on few decisions of different High Courts. Ms.Bhatt first relied upon a decision of the Allahabad High Court in the case of Commissioner of Income Tax v. Trans Travels, reported in (250) CTR 89. The second decision relied upon by Ms.Bhatt is that of the Madhya Pradesh High Court in the case of Smt.Kaushalyabai v. Commissioner of Income-tax, reported in (1999) 238 ITR 1008 (Madhya Pradesh). The third decision relied upon is that of the Karnataka High Court in the case of Commissioner of Income Tax, Central Circle v. Sri Durga Enterprises, reported in 231 Taxmann 886. 9. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is, whether the reopening of the assessment would be sustainable in law if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng reliance on Section 292B of the Act that the impugned notice would not become a nullity or invalid merely by reason of some mistake/defect. In such circumstances, according to Ms. Bhatt, if a notice under Section 148 of the Act is issued to a dead person instead of upon his/her legal representatives, the same shall be valid in view of the provisions of Section 292B of the act. Ms. Bhatt further placed reliance on Section 159(2)(b) and Section 159(3) of the Act. She submitted that in view of Section 159(2) (b) and Section 159(3) of the Act, the legal representative of the deceased shall for all practical purposes be deemed to be an assessee. 6.00. Having heard the learned counsel appearing for the parties and having gone through the materials on record, the only question that falls for our consideration is whether the notice issued by the department under Section 148 of the Act to a dead person could be termed a valid notice. 7.00. Both the submissions of Ms. Raval, the learned senior standing counsel appearing for the Revenue are covered by the decision of this Court in the case of Chandreshbhai Jayantibhai Patel vs. Income-tax Officer [(2019) 101 taxmann.com 362 (Gujarat) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s a complete answer to the contention raised on validity of the notice under section 147/148 of the Act as it was addressed to the erstwhile company and not to the limited liability partnership. There was no doubt and debate that the notice was meant for the petitioner and no one else. Legal error and mistake was made in addressing the notice. Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated April 11, 2017. They had objected to the notice being issued in the name of the company, which had ceased to exist. However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was replied and dealt with by them. The fact that notice was addressed to M/s. Sky Light Hospitality Pvt. Ltd., a company which had been dissolved, was an error and technical lapse on the part of the respondent. No prejudice was caused." 6.5. It was pointed out that the above decision of the Delhi High Court came to be challenged before the Supreme Court in Sky Light Hospitality LLP v. Assistant Commissioner of Income Tax, [2018] 92 Taxman.com 93 (SC), which dismissed the special leave petition holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal representatives are not null and void in law, but are merely irregular/defective proceedings which can be set right by remitting the matters to the Income Tax Officer for making fresh assessments with notice to all legal representatives. 6.7. Reliance was placed upon the decision of this court in the case of Commissioner of Income Tax v. Sumantbhai C. Munshaw, (1981) 128 ITR 142, wherein though the notice was issued to the deceased person, the proceeding was continued against the legal representative who participated in the proceeding and also filed return of income without raising any objection as to the validity of the assessment proceedings. The legal representative had, therefore, submitted to the jurisdiction of the Assessing Officer. The court held that if the legal representative 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 dead person and is heard by the Income Tax Officer in regard to the tax liability of the deceased and invites an assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings are required to be initiated against a legal representative and not against the deceased and, therefore, the notices issued to the dead person are invalid. Reliance was placed upon the decision of this court in Jaydeep Kumar Dhirajlal Thakkar v. Income Tax Officer, (2018) 401 ITR 302 (Guj.) and Vipin Walia v. Income Tax Officer, (2016) 381 ITR 19 (Delhi). 9. Thereafter, by a notice dated 03.08.2018 issued under section 142(1) of the Act, the respondent called upon the petitioner as legal heir of deceased Shri Jayantilal Harilal Patel to furnish the documents mentioned therein. In the annexure thereto, the petitioner is called upon to show cause as to why penalty proceedings under section 217F of the Act should not be initiated in his case as he had not furnished return of income in response to the notice under section 148 of the Act and stating that this may be treated as notice under section 142(1) read with section 129 of the Income Tax Act, 1961. 10. By an order dated 14.08.2018, the respondent disposed of the objections raised by the petitioner stating that the notice under section 148 of the Act was issued in the name of the deceased as the department was not aw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice and did not submit to the jurisdiction of the Assessing Officer by filing a return of income, but kept on objecting to the continuation of the assessment proceedings pursuant to the impugned notice. The Assessing Officer, however, instead of taking corrective steps under section 292B of the Act and issuing notice to the heirs and legal representatives, insisted on continuing with the proceedings pursuant to the impugned notice which was issued in the name of a dead person. Since strong reliance has been placed by the learned counsel for the respondent on the provisions of section 2(7) and 2(29) read with sections 159 and 292B of the Act, reference may be made to the said provisions, which read as under: "Section 2(7) "assessee" means a person by whom any tax or any other sum of money is payable under this Act, and includes - (a) every person in respect of whom any proceeding under the Act has been taken for the assessment of his income or of the income of any other person in respect of which he is assessable, or of the loss sustained by him or by such other person, or of the amount of refund due to him or to such other person; (b) every person who is deemed to be an as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act." 13. Thus, the expression "assessee" includes every person who is deemed to be an assessee under any provision of the Act. Sub- section (3) of section 159 of the Act, postulates that the legal representative of the deceased shall, for the purposes of the Act, be deemed to be an assessee. Sub-section (2) of section 159 of the Act says that for the purpose of making an assessment (including an assessment, reassessment or recomputation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1), - (a) any proceeding taken against the deceased bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the Supreme Court as well as the High Courts for contending that the proceedings would not be null and void merely because the notice has been issued against a dead person as the legal representative had received the notice and has objected to the validity of the notice and further continuation of the proceedings. In the opinion of this court, here lies the distinction between those cases and the present case. In the relied upon cases, the legal representative, in response to the impugned notice, filed return of income and participated in the proceeding and then raised an objection to the validity of the proceeding and, therefore, the court held that this was a case of waiver and that a technical defect can be waived; whereas in this case, right from the inception the petitioner has objected to the validity of the notice and thereafter to the continuation of the proceeding and has at no point of time participated in the proceeding by filing the income tax return in response to the notice issued under section 148 of the Act. Had the petitioner responded to the notice by filing return of income, he could have been said to have participated in the proceedings, however, merely bec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legal representative, provided that the same is not barred by limitation; he, however, cannot continue the proceedings on the basis of an invalid notice issued under section 148 of the Act to the dead assessee. 19. In the facts of the present case, as noticed herein above, the notice under section 148 of the Act, which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has not complied with the same. The 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. In the absence of a valid notice, the Assessing Officer has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding under section 147 of the Act pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation for issuance of the notice under Section 147/148 of the Act was 31st March 2015. On 27th March 2015, when the notice was issued, the Assessee was already dead. If the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31st March 2015 by issuing a notice to the LRs of the deceased. Beyond that date it could not have proceeded in the matter even by issuing notice to the LRs of the Assessee. 13. Learned counsel for the Revenue sought to place reliance on the decision of the Supreme Court in CIT v. Jai Prakash Singh [1996] 219 ITR 737/85 Taxman 407 in support of his contention that the ITO was justified in initiating proceeding under Section 147 of the Act even against the Petitioner who admittedly was the LR of the deceased Assessee in this case. 14. A perusal of the said judgment reveals that it is clearly distinguishable on facts. Para 2 of the said decision shows that the son of the deceased Assessee there had filed returns for the three Assessment Years ('AYs') for which the deceased Assessee had failed to file the returns. In other words, the proceedings at the instance of the LR of the deceased Assessee were already in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not valid, instead of taking corrective measures as provided under Section 292 [b] of the Income-tax Act, 1961 and to issue fresh notice against the legal heirs of the deceased, the Assessing Officer has continued with the re-assessment proceedings against the dead person. Section 159 of the Income-tax Act which has been relied upon by the learned counsel for the Revenue shall not be applicable to the facts of the case on hand. 7. In the present case, admittedly, the reassessment proceedings have been initiated against the dead person and that too after a long delay, therefore, even if Section 159 of the Act is attracted, in that case also, the notice was required to be issued against and in the name of the heirs of deceased assessee. Under the circumstances, in the facts and circumstances of the case, Section 159 of the Act shall not be of any assistance to the Revenue." 14. The Madhya Pradesh High Court, in the case of Shaikh Abdul Kadar v. Income Tax Officer, reported in (1958) 34 ITR 451, had the occasion to consider the very same issue. While discussing Section 34 of the old Act, Justice M.Hidayatullah (as His Lordship then was), speaking for the Bench, observed as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Non Corporate Ward 2(2), Chennai (Writ Petition No.30060 of 2017, decided on 7th June 2018), has observed as under : "14. The issue, which falls for consideration, is as to whether the impugned notice under Section 148 of the Act issued in the name of the dead person - the said Mr.S.Veerappan is enforceable in law and the subsidiary issue being as to whether the petitioner, being the wife of the said Mr.S.Veerappan, can be compelled to participate in the proceedings and respond to the impugned notice. The fact that the said Mr.S.Veerappan died on 26.1.2010 is not in dispute. If this fact is not disputed, then the notice issued in the name of the dead person is unenforceable in the eye of law. 15. The Department seeks to justify their stand by contending that they were not intimated about the death of the assessee, that the legal heirs did not take any steps to cancel the PAN registration in the name of the assessee and that therefore, the Department was justified in directing the petitioner to co-operate in the proceedings pursuant to the impugned notice. 16. The settled legal principle being that a notice issued in the name of the dead person is unenforceable in law. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above reasons are fully supported by the decision in the case of Vipin Walia. (supra). In that case, the notice dated 27.3.2015 was issued under Section 148 of the Act to the assessee, who died on 14.3.2015. The validity of the said notice was put to challenge. The Income Tax Officer took a stand that since the intimation of death of the assessee on 14.3.2015 was not received by her, the notice was issued on a dead person. However, the fact regarding the death of the assessee could not be disputed by the Department. The Department continued the proceedings under Section 147/148 of the Act and at that stage, the son of the deceased approached the High Court of Delhi. The High Court of Delhi pointed out that what was sought to be done by the Income Tax Officer was to initiate proceedings under Section 147 of the Act against the deceased assessee for the assessment year 2008-09, for which, the limitation for issuance of notice under Section 147/148 of the Act was 31.3.2015 and on 02.7.2015 when the notice was issued, the assessee was already dead and if the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31.3.2015 by issuing the notice to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guishable on facts and it does not support the case of the Revenue." 17. The Supreme Court, in the case of Commissioner of Income-tax, Bombay City I, Bombay v. Amarchand N.Shroff by his heirs and legal Representatives, reported in AIR 1963 SC 1448, has discussed about the legal personality of a deceased assessee in context with Section 24B of the Income Tax Act, 1922. We may quote the relevant observations thus : "4. It was argued by counsel for the Commissioner of Income-tax that on a correct interpretation of S.24B the amounts which were received by the heirs and legal representatives of Amarchand after his death should be deemed by the fiction incorporated in sub-section (1) to be income received by Amarchand and liable to tax under S.24B(1) of the Income-tax Act. In other words the respondents as heirs and legal representatives of the deceased Amarchand were liable to pay out of the estate of the deceased Amarchand on these amounts to the extent of the estate as the estate was liable for tax on the amounts received by the heirs and legal representatives just as the deceased Amarchand would have been had he not died. The emphasis was on words in S.24B(1) 'or any tax whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax just as the deceased would have been liable when the income was received had he been living. But this interpretation is not in accord with the language used in S.24B All the sub-sections have to be read together Subsection (1) can be divided into too parts (1) where the income of the deceased was assessed before his death and (2) where the income was not so assessed but it would have been liable to tax had he not died. The second part or the words above quoted when read with sub-sections (2) and (3) show that they are confined to cases there mentioned. They show that those words also have to be restricted to the income received by the deceased person before his death and to the income received after his death by his heirs and legal representatives but in the "previous" year and which had not been assessed but would have been assessed as income received by him if death had not taken place. See Allen v. Trehearne, (1938) 22 Tax Cas 15 where the words "if he had nor died" were interpreted. Sub-section (2) provides that if a person dies before the publication of the public notice under Section 22(1) or before a notice is served on him under Sub-section (2) of S.22 or S.34 then th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion was enacted by the Legislature to bring to tax after his death, income received during his lifetime and fill up the lacuna which was pointed out by the High Court in Commissioner of Income-tax Bombay v. Ellis C. Reid, 5 ITC 100: (AIR 1931 Bom 333). Any income received in the year subsequent to the previous or the account year cannot be called income received by the person deceased. The provisions of S.24B do not extend to tax liability of the estate of a deceased person beyond the previous or the account wear in which that person dies. In support of his contention counsel for the Commissioner of Income-tax relied upon the scheme of the Act as given in Additional Incometax Officer v. E. Alfred' 1962-44 ITR 442 at p.445: (AIR 1962 SC 663 at p.665). There is nothing said in that case which supports the contention raised by the Commissioner of Income-tax. Reliance was next placed on certain observations in a judgment of the Bombay High Court In re B.M.Kamdarr (1946) 14 ITR 10: (AIR 1945 Bom 442) (FB). Those observations also are of no assistance to the Commissioner of Income-tax Kania J., (as he then was) there observed that the question whether a particular amount was income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R) it was observed : "It is to be noticed that there is throughout the Act no reference to the decease of a person on whom the tax has been originally charged, and it is very difficult to suppose the omission to have been unintentional. It must have been present to the mind of the legislature that whatever privilege the payment of income-tax may confer, the privileges of immortality is not amongst them. Every person liable to pay tax must necessarily die and, in practically every case, before the last installment has been collected, and the legislature has not chosen to make any provisions expressly dealing with assessment of, or recovering payment from the estate of a deceased person." The individual assessee has ordinarily to be a living person and there can be no assessment on a dead person and the assessment is a charge in respect of the income of the previous year and not a charge in respect of the income of the year of assessment as measured by the income of the previous year. Wallace Brothers and Co. Ltd. v. Commissioner of Income-tax Bombay, 1948-16 ITR 240 at p. 244: (AIR 1948 PC 118 at p. 120). By S.24B the legal representatives have, by fiction of law, become asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed firm or to an individual who was carrying on proprietary business. The Revenue, being dissatisfied, went in appeal before the High Court. The High Court took the view that the Tribunal ought not to have declared the notice under Section 148 to be illegal and without jurisdiction as the assessee did not dispute its status as a firm but the only distinction sought to be made was that it was a registered firm. The High Court took the view that it would not be correct to say that the distinction of status of the unregistered firm and registered firm is of such a nature that it may vitiate the entire proceedings, more so, when the assessee, as a firm, had participated in the proceedings in response to the notice issued under Section 148 of the Act without raising any objection. This is exactly what we have tried to convey in the earlier part of our judgment. This decision is in the facts of its case. We reiterate that in the facts of the present case, the writapplicant cannot be said to have participated in the proceedings in any manner except informing the Assessing Officer about the demise of the assessee. 20. In Smt.Kaushalyabai (supra), the Madhya Pradesh High Court took the vi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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