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TMI Blog2023 (8) TMI 931X X X X Extracts X X X X X X X X Extracts X X X X ..... in brief would indicate that late Shri Pradeep Roshanlal Jain filed his return of income for the AY 2017- 18 on 30.10.2017 declaring total income of Rs.16,97,640/-. Shri Jain (since deceased) died on 30.9.2020. A death certificate is annexed as Annexure `D' to the petition. It is the case of the legal heir who has filed this petition that by various letters and emails between 16.12.2020 and 20.3.2022, the department was informed of the death of Shri Pradeep Jain. It appears that respondent issued a notice u/S.148 on 30.7.2022. The notice is addressed to the deceased Shri P.R. Jain. The order under Section 148(d) of the Act was passed on 30.7.2022. 5. This Court on 26.9.2022 issued notice for final disposal. 6. Mr. Dhinal Shah, learned counsel for the petitioner would submit that the issue that proceedings against dead persons are void ab intio is an issue which is settled by several decisions of this Court as in the case of Krishnaawtar Kabra of Jagannath Rampal Kabra (SCA No. 1515 of 2022) and in the case of Chandreshbhai Jayantibhai Patel v. Income Tax Officer (SCA No. 15172 of 2018). He would also rely on a decision of the Coordinate Bench of this Court in SCA No. 5451 of 202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased, Rajendra Kumar Sehgal (hereafter called the "petitioner") and he was intimated this fact; without prejudice. Thereafter, vide letter dated 15.05.2017, the petitioner also sought a copy of the "reasons to believe". The revenue furnished the "reasons to believe" recorded on its file in support of its opinion that reassessment was necessary. This indicated that according to information received, the deceased had shown some transactions which led to a claim for losses brought forward, pertaining to one Varun Capital Services Limited. The petitioner protested that this was not correct; after rejecting the objections received from the petitioners, the AO issued a clarification, ostensibly "clarifying" that the entity from which the deceased had received the amounts and claimed losses was different, and that the original "reason to believe" contained a typographical error. 3. The petitioner approached this court, seeking the reliefs that she has claimed, primarily on three grounds: firstly, the Act does not provide any mechanism for issuing and carrying on reassessment in respect of the dead person, if the reassessment notice is issued against a deceased. It is urged, secondly, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounsel for the Revenue that in view of the provision of Section 292 BB of the Act and the regular response by the petitioner has cured the defect of issuance of notice to the dead person. We are not in agreement with such contention, inasmuch as, Section 292 BB does not save complete absence of notice. It is only the infirmities in the manner of service of notice that this section seeks to cure, but in no case this section will save the revenue from issuing a notice to the dead person. In the case of RAJENDRA KUMAR SEHGAL vs. I.T.O. (Delhi High Court) reported in [2018 (12) TMI 697 (Delhi)], it is held that Section 292 BB of the Act, 1961 is applicable to an assessee and not to a legal representative. It is not a case where the proceedings under Section 147/148 were initiated against the assessee and during its pendency the assessee died and after his death the legal representative did not step into the shoes of the deceased assessee; it is a case where the first notice for reassessment was issued against the dead person, as such Section 159 of the Act, 1961 does not apply to the present case. Recently, in the case of PRINCIPAL COMMISSIONER OF INCOME TAX, NEW DELHI Versus MARUTI SU ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t company which renders it void. This, in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law : "11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said "dead person‟. When notice under Section 143 (2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day. In such proceedings an assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law. 12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he remedial measure of transposing the transferee as the company which had to be assessed. Instead, the original assessee was described as one in existence and the order mentioned the transferee's name below that of the original assessee. The Division Bench adverted to the judgment in Dimension Apparels wherein the High Court had discussed the ruling in Spice Entertainment. It was held that this was a case where the assessment was contrary to law, having been completed against a non-existent company. 24. A batch of Civil Appeals was filed before this Court against the decisions of the Delhi High Court, the lead appeal being Spice Enfotainment. On 2 November 2017, a Bench of this Court consisting of Hon'ble Mr Justice Rohinton Fali Nariman and Hon'ble Mr Justice Sanjay Kishan Kaul dismissed the Civil Appeals and tagged Special Leave Petitions in terms of the following order : "Delay condoned. Heard the learned Senior Counsel appearing for the parties. We do not find any reason to interfere with the impugned judgment(s) passed by the High Court. In view of this, we find no merit in the appeals and special leave petitions." Accordingly, the appeals and special leave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kri and Hon'ble Mr Justice Ashok Bhushan. In assessing the merits of the above submission, it is necessary to extract the order dated 6 April 2018 of this Court: "In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act. The special leave petition is dismissed. Pending applications stand disposed of." Now, it is evident from the above extract that it was in the peculiar facts of the case that this Court indicated its agreement that the wrong name given in the notice was merely a clerical error, capable of being corrected under Section 292B. The "peculiar facts" of Skylight Hospitality emerge from the decision of the Delhi High Court34. Skylight Hospitality, an LLP, had taken over on 13 May 2016 and acquired the rights and liabilities of Skylight Hospitality Pvt. Ltd upon conversion under the Limited Liability Partnership Act 200835. It instituted writ proceedings for challenging a notice under Sections 147/148 of the Act 1961 dated 30 March 2017 for AY 2010-2011. The "reasons to believe" made a reference to a tax evasion report received from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pice Corp. Ltd., the Assessing Officer was informed about amalgamation but the Assessment Order was passed in the name of the amalgamated company and not in the name of amalgamating company. In the said situation, the amalgamating company had filed an appeal and issue of validity of Assessment Order was raised and examined. It was held that the assessment order was invalid. This was not a case wherein notice under Section 147/148 of the Act was declared to be void and invalid but a case in which assessment order was passed in the name of and against a juristic person which had ceased to exist and stood dissolved as per provisions of the Companies Act. Order was in the name of nonexisting person and hence void and illegal." 29. From a reading of the order of this Court dated 6 April 2018 in the Special Leave Petition filed by Skylight Hospitality LLP against the judgment of the Delhi High Court rejecting its challenge, it is evident that the peculiar facts of the case weighed with this Court in coming to this conclusion that there was only a clerical mistake within the meaning of Section 292B. The decision in Skylight Hospitality LLP has been distinguished by the Delhi, Gujarat a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act." In this case, the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B." In this context, it is necessary to advert to the provisions of Section 170 which deal with succession to business otherwise than on death. Section 170 provides as follows: "170. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,- (a) the predecessor shall be assesseed in respect of the income of the previous year in which the succession took place up to the date of succession; (b) the successor shall be assesseed in respect of the income of the previous year after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income Tax, Shillong v Jai Prakash Singh38 ("Jai Prakash Singh"). That was a case where the assessee did not file a return for three assessment years and died in the meantime. His son who was one of the legal representatives filed returns upon which the assessing officer issued notices under Section 142 (1) and Section 143 (2). These were complied with and no objections were raised to the assessment proceedings. The assessment order mentioned the names of all the legal representatives and the assessment was made in the status of an individual. In appeal, it was contended that the assessment proceedings were void as all the legal representatives were not given notice. In this backdrop, a two judge Bench of this Court held that the assessment proceedings were not null and void, and at the worst, that they were defective. In this context, reliance was placed on the decision of the Federal Court in Chatturam v CIT39 holding that the jurisdiction to assess and the liability to pay tax are not conditional on the validity of the notice : the liability to pay tax is founded in the charging sections and not in the machinery 38 (1996) 3 SCC 525 39 (1947) 15 ITR 302 (FC) provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment." 6.6 In the case of 'Savita Kapila' (Supra), the High Court of Delhi observed as under at Paragraphs- 23 and 24 and 35 to 37; "23. It is well settled law that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principles of natural justice or where the order or notice or proceedings are wholly without jurisdiction or the vires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons....." THE SINE QUA NON FOR ACQUIRING JURISDICTION TO REOPEN AN ASSESSMENT IS THAT NOTICE UNDER SECTION 148 SHOULD BE ISSUED TO A CORRECT PERSON AND NOT TO A DEAD PERSON. CONSEQUENTLY, THE JURISDICTIONAL REQUIREMENT UNDER SECTION 148 OF THE ACT, 1961 OF SERVICE OF NOTICE WAS NOT FULFILLED IN THE PRESENT INSTANCE. XXX XXX XXX 35. This Court is of the opinion that issuance of notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission. Consequently, Section 292B of the Act, 1961 does not apply to the present case. 36. In Skylight Hospitality (supra) notice was issued to Skylight Hospitality Pvt. Ltd. instead of Skylight Hospitality LLP. In that factual context, this Court had observed, "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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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