2010 (9) TMI 875 - AT - Income Tax

Reopening under s. 147 of the Act - assessment made on a dead person - Held that - On the date of initiation of proceedings under s. 147/148 of the Act the person had expired and the proceedings initiated and completed on such dead person are invalid AO directed to delete the penalty levied under s. 271(1)(c) of the Act appeals of the assessee allowed

Summary

Issues Involved:
1. Validity of proceedings initiated under Section 147 and reassessment without service of notice under Section 143(2).
2. Penalty levied under Section 271(1)(c).
3. Validity of reassessment proceedings initiated and completed on a deceased person.

Detailed Analysis:

1. Validity of proceedings initiated under Section 147 and reassessment without service of notice under Section 143(2):

Facts and Arguments:
- The assessee argued that the proceedings initiated under Section 147 were illegal and void ab initio, as no notice under Section 143(2) was issued or served.
- The AO noted that the assessee had not filed any return of income for the assessment year 2000-01 and had made unexplained bank investments.
- Notices under Sections 148, 142(1), and 144 were served by affixture at the last known address, which was locked by the Vigilance Department.
- The CIT(A) condoned the delay in filing the appeal and partly allowed the addition made on the merits.

Judgment:
- The Tribunal found that the assessee had filed original and revised returns at the said address, but the documents were not legible, and no evidence was provided to substantiate the claim of premises being locked.
- The issue of valid service of notice and non-issue of notice under Section 143(2) was restored to the CIT(A) for a fresh decision in accordance with the law, providing a reasonable opportunity of hearing to the assessee.
- The grounds of appeal regarding the merits of the addition were also remitted back to the CIT(A).

2. Penalty levied under Section 271(1)(c):

Facts and Arguments:
- The assessee was aggrieved by the penalty levied under Section 271(1)(c) for the assessment year 2000-01.

Judgment:
- In line with the reasoning for the first issue, the Tribunal restored the issue of levy of penalty under Section 271(1)(c) back to the CIT(A) for a fresh decision.

3. Validity of reassessment proceedings initiated and completed on a deceased person:

Facts and Arguments:
- The reassessment proceedings were initiated on 29th March 2007 against a deceased person who had expired on 27th December 2001.
- The legal heir argued that the proceedings initiated and the assessment order passed in the name of the deceased person were null and void.

Judgment:
- The Tribunal found no merit in the assessment made on a dead person, citing the Hon'ble Punjab & Haryana High Court's decision in CIT v. Rakesh Kumar, Mukesh Kumar.
- The reassessment proceedings initiated and completed on a deceased person were held to be invalid and void ab initio.
- The Tribunal annulled the assessment orders for the assessment years 2000-01 and 2001-02.
- Consequently, the penalty levied under Section 271(1)(c) was also directed to be deleted.

Conclusion:
The appeals were allowed for statistical purposes, with the issues of valid service of notice and non-issue of notice under Section 143(2) remitted back to the CIT(A) for a fresh decision. The reassessment proceedings initiated and completed on a deceased person were annulled, and the related penalty under Section 271(1)(c) was directed to be deleted.