TMI Blog2018 (5) TMI 1572X X X X Extracts X X X X X X X X Extracts X X X X ..... and there was no adverse material for formation of belief that income had escaped assessment. (2) That the learned CIT (A) has erred in law and under the facts and circumstances of case in affirming initiation of proceedings under section 147/148 of the Act, while there was no proper and valid service of notice under section 148 to all the legal heirs in the case thereby proceedings are void ab-initio. (3) That 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 ₹ 52,76,866/- (page-14 of CIT (A) order) instead of ₹ 54.34,120/- ( page-7 of CIT(A) order) resulting excess computation of short-term capital Gain by ₹ 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iled, but regular assessment was completed subsequent to his death. On the other hand, in the present case, the jurisdiction to assess the deceased was created by issuance of notice under section 148 of the Act. 7. Moreover, even if 'Sumantbhai' (supra), were to be considered, it goes against the Department, rather than in its favour. Therein, it has been observed, inter alia, as under: The object of s. 159, therefore, is to provide a machinery 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therein laid down or in taking any of such steps commits an error or even deviates from the statutory mandate, the assessment would be null and void, only if the omission, error or breach, as the case may be, is so fundamental as could not be waived because it affects inherent jurisdiction. The legal representative 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld. CIT(A) is correct. But reference by the ld. CIT(A), in this regard, to 'Sumantbhai', (supra), is misplaced. What the judgment, as extracted hereinabove, deals with, qua this issue, is the locus standi of an LR of a deceased assessee to object non-service of notice, for the first time at the appellate stage, after having himself expressly waived such objection by having voluntarily participated in the assessment proceedings before the AO. It is trite that 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 specifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equires that where an assessee dies leaving more than one legal representative, the Income Tax Officer must proceed to assess the income of the deceased by serving notice on all the legal representative. These exceptions proceed on the same principle on which the general rule is based, namely, that there must be complete representation of the estate of the deceased in the proceedings before the Income Tax Officer and it is because in the cases falling within the exceptions one or 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 represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has wrongly been relied on by the ld. CIT(A) to decide the matter against the assessee. 18. The ld. CIT(A) has also relied on 'Maharaja of Patiala' (supra). Therein also, the notices in question were, again, not issued under section 148 of the Act. 'Maharaja of Patiala' (supra) stands considered in 'Sumantbhai', (supra), and it has been observed in 'Sumantbhai', (supra), to bear a close resemblance to 'Sumantbhai', (supra). Therefore, reliance by the 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und that besides those served, there were other LRs of the deceased. In 'Chooharmal' (supra), it was found that the AO knew that there were other LRs of the deceased and yet, he did not choose to serve notices on them. No inquiry was, thus, required to be made and none was found made. In the present case, the assessment order simply states that on perusal of the record of the assessee, it was seen that assessee has not shown the correct amount of capital gain, hence notice under section 148 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 ₹ 3,56,837/- for the A.Y. 2008-09 but the correct capital gain was ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 to 149 of the 1961 Act. 26. 'CIT v. NA Mandagi', [1967] 63 ITR 173 (Mys.) is to the same effect. 27. 'Chooharmal' (supra) and NA Mandagi' (supra) have been relied on in: i. 'Smt. Pushpa Devi v. Asstt CIT', [1993] 46 ITD 468 (Jp.). ii. 'ITO v. Umedram', [1995] 54 ITD 191 (Jp.). iii. Mangl Lal (supra)). 28. It would also be pertinent to notice here the provisions of section 159(4) of the Act, as per which, the personal liability of every LR for any tax payable by him in his capacity as 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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