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TMI Blog2022 (1) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 of the assessment order] and therefore as per territorial jurisdiction [Section 120(3)(a)] rest with Assessing Officer, Surat. (b) The Notice under Section 148 dated 11-12-2015 [and not dated 11-12-2016 as mentioned inParaNo.2 of the assessment order since the approval was obtained on 10- 12-2015 and the assessment order is passed on 30-12-2016] is not served to all the legal heirs as referred to in Para No. 3 of the assessment order. (c) The Notice under Section 148 dated 11-12-2015 is served with affixture as per Inspector's Report [Para No.2 of the assessment order] and that in the assessment order it is not mentioned that the notice under Section 148 is affixed where and on what place and on what date and that it is not known whether the affixture is made as per Civil Procedure Code as provided in Section 282(l)(b). (d) The Notice under Section 142(1) dated 06-09-2016 is served with affixture as per Inspector's Report [Para No.2 of the assessment order] and that in the assessment order it is not mentioned that the notice under Section 142(1) is affixed where and on what place and on what date and that it is not known whether the affixture is made as per Civil Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire proceedings were invalid and bad in law and the assessment order passed, therefore, needed to be quashed. 8. The Ld. D.R. on the other hand contended that since one of the legal heir had participated in the proceedings, the proceedings could not be held to be null and void merely because the notice had been issued against the dead person. 9. We have heard both the parties. The issue of validity of proceedings where the jurisdictional notice u/s. 148 of the Act for reopening of cases is issued to a dead person has been dealt with by the Jurisdictional High Court in a number of decisions. We shall be dealing with each of the said decisions in chronological order to bring out and to cull out the proposition of law laid down with regard to the said issue. 10. Beginning with the decision of the Jurisdictional High Court in the case of Rasid Lala Vs. ITO, Ward-1(3)(6) reported in (2017) 77 taxmann.com 39 vide judgment dated 29.11.2016, we find that in the facts of the said case a petition under Article 226 of the Constitution of India was filed to quash the notice issued u/s. 148 of the Act to the assessee who had expired approximately 6 years back since the date of issue of n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), judgment dated 22.01.2018, wherein relying upon the aforesaid decision of the jurisdictional High Court in the case of Rasid Lala(supra), holding that where the assessee was deceased on the date of issue of notice u/s. 148, Section 159 required notice u/s. 148 to be issued to the legal representatives/ heirs of the assessee and not against the deceased. The Hon'ble High Court further went on to hold that the provisions of Section 292 BB of the Act, providing that where assessee appears in any proceeding and cooperates in any enquiry relating to an assessment or re-assessment, it shall be deemed that any notice which has been duly served upon him and the assessee shall be precluded from raising any objection in any proceedings or enquiry under the Act vis-a-vis the irregularity of the notice ,also did not apply since the assessee had objected to the completion of the re-assessment.The relevant findings of the Hon'ble High Court at para 7 to 12 of the order is as under: 7.This court has considered the submissions advanced on behalf of the respective parties and has perused the decisions cited at the bar. 8. It is an admitted position that Shri Dhirajlal Dayaljibhai Thakkar, fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceased. On a plain reading of section 159 of the Act, it is apparent that for the purpose of making an assessment, (including an assessment, reassessment or re-computation 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) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative. Therefore, in the light of the provisions of section 159 of the Act the proceedings are required to be initiated against a legal representative and not against the deceased. The impugned notice under section 148 of the Act is therefore, not in consonance with the provisions of section 159 of the Act. 11. Insofar as the provisions of section 292B of the Act are concerned, the same would not be applicable in the facts of the present case. As regards section 292BB of the Act, the same provides that where an assessee appears in any proceeding and cooperates in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of the Act, which is required to be serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the legal representative and notice u/s. 148 is to be issued to the legal representatives. The contentions of the revenue that the issuance of notice to a dead person is some technical defect which can be corrected u/s. 292B, The Hon'ble High Court held that the notice issued u/s. 148 against a dead person is invalid , unless the legal representatives submit to the jurisdiction of the Assessing Officer without raising any objection on receipt of the notice.The Hon'ble High Court noted that where the legal representatives filed return of income in response to notice u/s 148 of the Act and thus participated in the proceedings, it could be said that the legal representatives had waived their right to notice u/s. 148 and the notice therefore could not be said to be invalid. The relevant findings of the Hon'ble High Court at para 7 to 20 of the order is as under: In the backdrop of the rival submissions, the facts as emerging from the record of the case may be adverted to. The impugned notice dated 28.03.2018 is issued to Shri Jayantilal Harilal Patel, father of the petitioner, seeking to reopen the assessment for assessment year 2011-12 under section 148 of the Income Tax Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 aware of the death of the assessee. It is only when the legal heir Shri Chandreshbhai Jayantilal Patel (the petitioner herein) filed a letter dated 27.04.2018 along with a copy of the assessee's death certificate, that this fact came to the notice of that office. It is stated that since the assessee's son - legal heir had received the notice (stated to have been received through the neighbour) and participated in the proceedings; the defect in issue of the notice is automatically cured. Reliance was placed upon the decision of the Madhya Pradesh High Court in the case of Kausalyabai v. Commissioner of Income Tax, 238 ITR 1008 (MP), wherein after the death of the assessee, the notice was issued in the name of a person who was dead. The court observed that the widow of such person participated in the assessment proceedings and hence, the defect in the notice stood automatically cured. It is further stated in the order disposing of the objections that even if the notice dated 28.03.2018 is issued defectively in the name of the deceased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee under any provision of this Act; (c) every person who is deemed to be an assessee in default under any provision of this Act; "Section 2(29) "legal representative" has the meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure, 1908;" "159. Legal representatives. - (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. (2) 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 subsection (1).- (a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of subsection (1), - (a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased; (b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and (c) all the provisions of the Act shall apply accordingly. 14. Thus, clause (a) of sub-section (2) of section 159 of the Act provides for the eventuality where a proceeding has already been initiated against the deceased before his death, in which case such proceeding shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased. In the present case, the proceeding under section 147 of the Act had not been initiated against the deceased before his death, and hence, clause (a) would not be applicable in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 because the petitioner has informed the Assessing Officer about the death of the assessee and asked him to drop the proceedings, it cannot, by any stretch of imagination, be construed as the petitioner having participated in the proceedings. 17. Insofar as reliance placed upon section 292B of the Act is concerned, the said section, inter alia, provides that no notice issued in pursuance of any of the provisions of the Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such notice if such notice, summons is in substance and effect in conformity with or according to the intent and purpose of the Act. 18. The question that therefore arises for consideration is whether the notice under section 148 of the Act issued against the deceased assessee can be said to be in conformity with or according to the intent and purposes of the Act. In this regard, it may be noted that a notice under section 148 of the Act is a jurisdictional notice, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, 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 taken pursuant thereto, therefore, cannot be sustained. 20. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 28.03.2018 issued by the respondent under section 148 of the Income Tax Act, 1961 as well as all proceedings pursuant thereto, are hereby quashed and set aside. Rule is made absolute accordingly with no order as to costs. 13. In the case of Nanduben Ratilal Patel vs. DCIT, the Hon'ble High Court reiterated the proposition laid down in Chandreshbhai Jayantibhai Patel, vide judgment dated 25.06.2019 reported in [2019] 417 ITR 31.In substance the Hon'ble High Court reiterated the position that where the jurisdictional notice is issued to a dead person and on receipt of the same the legal representatives participated in the proceedings by filing return and otherwise they can be said to have waived the requirements of notice u/s. 148 of the Act and the validity of notice u/s. 148 then cannot be challenged. 14. This position was again reiterated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal heirs on 28.11.2016 in response to which only one of the legal heir, i.e, Abdulvahed Abdulrashid Shekh, responded through duly Authorized Representative C.A. Faruk Y. Patel. Para 2-5 of the assessment order bring out the above facts as under: 2. Notice u/s 148 of the act was issued on 11/12/2015 after recording the reasons and taking the necessary approval vide approval letter dated 10/12/2015 and duly served on the assessee. But the notice returned unserved by postal department. Then this notice was served by affixture by the then AO. The affixture was made by Kishor kumar inspector of income tax O/o. ITO ward 7(2)(5), Ahmedabad. Subsequently notice u/s 142(1) of the Act was issued on 06/09/2016 along with a specific questionnaire by the under signed, on change in incumbent and served by the undersigned. The affixture was made by Kishor- kumar inspector of income tax O/o ITO ward 7(2)(5), Ahmedabad. 3. Issued notice u/s 133(6) of the Act., calling information, to the court receiver of C.S. No. 4149/78, on receiving the reply it is came to know that the assessee has died on 29/03/2012 and her legal heirs are : (1) Afsarbhai Abdul Rashid Shaikh (2) Vahed . Abdul Rashid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the legal representatives who resided in another city, i.e Surat, as opposed to Ahmedabad in which the assessee resided. The legal heir who responded to the show cause notice , Vahed Abdul Rashid Shaikh , resided in Surat where notices u/s 142(1) and the show cause notice was served. (3). No notice u/s. 148 of the Act was issued to the legal heirs in their names. (4) Only notice u/s 142(1) of the Act was issued to the legal heirs which remained unresponded. (5)The participation by one of the assessee's legal heirs was only in response to the show cause notice issued to it. 19. In the above factual backdrop of the notice u/s 148 of the Act being issued and served on an already deceased assessee, who had expired more than three years back , the absence of issuance of this jurisdictional notice in the name of the legal heirs, as required by law, and also service of the same on the legal heirs in any capacity, i.e in the name of the deceased assessee or even in their own name, the defects in the service of notice cannot be said to be an irregularity which can be cured by waiver. The Hon'ble jurisdictional High Court, we find, has held the waiver of the requirement of issuanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in ss. 148 to 153 referred to as the relevant assessment year)." It is not necessary to consider the Explanation. Sec. 148 provides for issue of notice where income has escaped assessment as under: "148. (1) Before making the assessment, reassessment or re-computation under s. 147, the ITO shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-s. (2) of s. 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. (2) The ITO shall, before issuing any notice under this section, record his reasons for doing so." Sec. 149 provides for time limits for such notice. Sec. 151 provides as under: "(1) No notice shall be issued under s. 148 after the expiry of eight years from the end of the relevant assessment year, unless the Board is satisfied on the reasons recorded by the ITO that it is a fit case for the issue of such notice. (2) No notice shall be issued under s. 148 after the expiry of fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 34(1)(a) could be validly initiated, the ITO must have reasons to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under s. 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits and gains chargeable to income-tax have escaped assessment for that year, or have been under assessed or assessed at too low a rate, or have been made the subject-matter of excessive relief under the Act, or excessive loss or depreciation allowance have been computed. The formation of the required opinion by the ITO is a condition precedent. Without formation of such an opinion he will not have jurisdiction to initiate proceedings under s. 34(1)(a). The fulfilment of this condition is not a mere formality but it is mandatory. The failure to fulfil that condition would vitiate the entire proceedings. As per the settled legal position, the ITO would be acting without any jurisdiction if the reason for his belief that the conditions are satisfied did not exist or was not material or relevant to the belief required by that section. Courts would not go into the sufficiency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for the asst. yr. 1948-49, when in fact he reopened the assessment for the year 1949-50, being an invalid notice, the ITO had no jurisdiction to revise the assessment of the assessee for the year 1949-50. In S. Narayanappa vs. CIT (1967) 63 ITR 219 (SC), at page 222, their Lordships pointed out that the proceeding for assessment or reassessment under s. 34(1)(a) started with the issue of a notice and it was only after the service of the notice that the assessee, whose income was sought to be assessed or reassessed, became a party to those proceedings. The earlier stages of the proceeding for recording the reasons of the ITO and for obtaining the sanction of the CIT were administrative in character and were not quasi-judicial. There was no requirement in any provisions of the Act or any section laying down as a condition for the initiation of proceedings that the reasons which induced the CIT to accord sanction to proceed under s. 34 must also be communicated to the assessee. The ITO need not communicate to the assessee the reasons which led him to initiate the proceedings under s. 34. These reasons have to be considered as pointed out by their Lordships in the other decision, whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t easy of discernment, as in the ultimate analysis, it depended upon the nature, scope and object of the particular provision. Their Lordships in terms approved a workable test laid down by Justice Coleridge in Holmes vs. Russel (1841) 9 Dowl 487 as under: "It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity." Thereafter it was pointed out that a waiver is an intentional relinquishment of a known right, but obviously an objection to jurisdiction could not be waived, for consent could not give a Court jurisdiction where there was none. Even if there was inherent jurisdiction, certain provisions could not be waived. What can be waived would be only those provisions which are for the private benefit and protection of an individual in private capacity, which might be dispensed with without infringing any public right or public policy. 8. This settled legal position was again reiterated in Superintendent of Taxes vs. Onkarmal Nathmal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atutes protect the public on the one hand and confer power on the State on the other. Therefore, even in the context of such a revenue statute like a taxation measure such fetter on the jurisdiction being a fetter laid to protect public on wider ground of public policy, it was held that such provisions which confer jurisdiction on assessment and reassessment could never be waived for the simple reason that jurisdiction could neither be waived nor created by consent. In the concurring judgment his Lordship, Beg. J., at page 2077, also pointed out that if the notice under s. 7(2) was a condition precedent to the exercise of jurisdiction to make the best judment assessment, the doctrine of waiver could never confer jurisdiction so as to enable the parties to avoid the effect of violating a mandatory provision on a jurisdictional matter even by agreement. This decision completely settles the legal position. It makes a distinction between the provisions which confer jurisdiction and provisions which merely regulate the procedure by holding that such provisions which confer jurisdiction or such mandatory provisions which are enacted in public interest on ground of public policy even in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening the assessment. Even the relevant sub-section of s. 147 under which the assessment was sought to be reopened was not mentioned. These facts, prima facie, disclosed that the reasons came to the notice of the assessee for the first time when the AAC perused this order sheet and brought this fact to the notice of the assessee. Even on that ground, therefore, there can be no question of any waiver on the facts of the present case. 11. Even the alternative ground of finality of this order of the Tribunal suffers from the same infirmity, as the Tribunal has failed to notice this material distinction between a mere procedural provision which could be waived and such jurisdictional provision or a mandatory provision enacted in public interest which could not be waived, because by consent no jurisdiction could be conferred on the authority unless the conditions precedent were first fulfilled. In Dasa Muni Reddy vs. Appa Rao, AIR 1974 SC 2089, 2092, such a question of waiver was examined also in the context of the bar of estoppel or of res judicata. At page 2091, it was pointed out that want of jurisdiction must be distinguished from irregular or erroneous exercise of jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This is the view in CIT vs. Nanalal Tribhovandas (1975) 100 ITR 734 (Guj), agreeing with the Madras view that there would be no such finality by remand because consent could not confer jurisdiction, and so, such objection in regard to the validity of the notice under s. 34 could be raised before the AAC. 12. The learned standing counsel in this connection marshalled in aid the decision in Northern Railway Co-operative Credit Society Ltd. vs. Industrial Tribunal, Rajasthan, AIR 1967 SC 1182; 31 FJR 511, which could hardly be invoked in the present case. There the High Court in writ jurisdiction had held at the earlier stage that the dispute in question was an industrial dispute and, therefore, the reference being a competent reference, the writ petition was dismissed. The order of the High Court was a final judgment which terminated the independent writ proceeding. It was held at page 1186 that that order having not been appealed before the Supreme Court, it had become final and it was no longer open to the parties to raise a plea of jurisdiction in appeal against the subsequent award given by the Industrial Tribunal after exercising jurisdiction which the Tribunal was permitted ..... X X X X Extracts X X X X X X X X Extracts X X X X
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