TMI Blog2019 (9) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... In our opinion, a case in which notice is issued to a dead person could be termed as nullity. It is something like a safeguard passing a decree against a dead person which cannot be executed through the legal representatives of the judgment-debtor. We also take notice of the fact that in Sri Durga Enterprises [ 2014 (2) TMI 1297 - KARNATAKA HIGH COURT] the assessee had not only responded to the notice under Section 148 of the Act within one month but, on the basis of the return filed earlier, participated in the proceedings till the matter reached the FAA and was disposed of. None of the three decisions on which reliance has been placed on behalf of the Revenue would make any difference - the proceedings are not tenable in law. - Decided in favour of assessee - R/SPECIAL CIVIL APPLICATION NO. 15310 of 2018 - - - Dated:- 27-8-2019 - MR J. B. PARDIWALA AND MR A. C. RAO, JJ. For The Petitioner : MR TUSHAR HEMANI, SR.ADVOCATE with MS VAIBHAVI K PARIKH For The Respondent (s) : MRS MAUNA M BHATT ORAL JUDGMENT ( PER : HONOURABLE MR.JUSTICE J.B.PARDIWALA) 1. RULE return ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le replying to the above submissions vide his email dated 9.4.18, asked the petitioner to file the return of income in response to the impugned notice through the legal heir. 2.7 The petitioner, vide letter dated 28.4.18 (filed on 1.5.18) again informed the respondent that since the petitioner has expired on 27.9.16, the impugned notice issued in the name of a deceased person is an invalid notice. It was further stated in the said notice that the return of income can be filed by the legal heir of the petitioner only after they have knowledge about the reasons for reopening since the legal heirs are unaware of the income of the deceased. It was, thus, submitted that if such details are known to the legal heir, the particulars of income could be found out and return of income could be filed. 2.8 The respondent, instead of providing reasons for reopening, issued another notice dated 25.6.18 under section 142(1) r.w.s. 129 of the Act in the name of the deceased assessee calling upon him to furnish certain further details and information, as specified therein. 2.9 The petitioner, vide letter dated 9.7.18, again reiterated the above s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arch 2018 (Annexure-A to this writ-application) issued by the respondent under Section 148 of the Income Tax Act, 1961 (for short, 'the Act'), seeking to reopen the writ-applicant's income tax assessment for the Assessment Year 2011-12. 5. The principal argument of Mr.Tushar Hemani, the learned senior counsel appearing for the writ-applicant, is that the impugned notice came to be issued in the name of a dead person. Mr.Hemani submitted that the notice came to be issued in the name of the husband of the writ-applicant, namely Anirudhhasinhji Mohabbatsinhji Jadeja. The husband of the writ-applicant passed away on 27th September 2016, i.e. prior to the issuance of the impugned notice. Mr.Hemani submitted that upon receipt of the notice by the writ-applicant, she immediately brought to the notice of the respondent by way of an e-mail that her husband had passed away. Mr.Hemani submitted that although as per clause (b) of sub-section (2) of Section 149 of the Act any proceeding which could have been taken up against the deceased, if he had survived, yet may be taken against the legal representatives. However, according to Mr.Hemani, the respondent initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on referred to above has been duly considered by this Court in the case of Chandreshbhai Jayantibhai Patel v. Income Tax Officer, reported in 261 Taxmann 137. Relying upon this decision, this very court has delivered a judgment in the case of Bipinbhai Bachubhai Kataria, L/R of Late Bachubhai Rambhai v. Income Tax Officer (Special Civil Application No.7850 of 2019 decided on 9th July 2019). We quote the relevant observations made therein as follows : 5.00. The issue raised in this writ application is very limited and no longer res integra. It appears that the writ applicant is the son of late Late Bachubhai Rambhai Kataria. Late Bachubhai Rambhai Kataria was assessed in the office of the Income Tax Officer, Rajkot. It is the case of the Revenue that late Bachubhai Rambhai Kataria sold land bearing Revenue Survey No.65/1 situated at village Lamdhar, Taluka Una, District Junagadh admeasuring about 36,725 sq.mtrs. For ₹ 23,87,127 by executing a registered sale deed on dated 2/3/2012, however, the late Bachubhai Rambhai Kataria had not filed his return of income under Section 139 for the Assessment Year 2012-13 and had not declared his total income. In s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant observations : 6.1. Reference was made to the decision of the Supreme Court in the case of Girijanandini Devi v. Bijendra Narain Choudhary, AIR 1967 SC 1124, for the proposition that death of the person liable to render an account for property received by him does not affect the liability of his estate. It was submitted that therefore, even after his death, deceased Jayantibhai does not cease to be an assessee and consequently, the legal representative is responsible for filing the return of income and answering to the notice. It was submitted that the Madras High Court in the case of Alamelu Veerappan v. Income Tax Officer, Non-corporate Ward- 2(2), Chennai (supra), on which reliance has been placed on behalf of the petitioner, does not refer to section 292B of the Act and, therefore, the said decision would be not applicable to the facts of the present case. It was submitted that in this case, the petitioner had knowledge of the proceedings and has responded to the same as legal representative of the deceased and, therefore, the procedural defect which is otherwise curable may be permitted to be cured. 6.2. Reference was mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come Tax, [2018] 92 Taxman.com 93 (SC), which dismissed the special leave petition holding that the wrong name given in the notice was merely a clerical error which could be corrected under section 292B of the Act. 6.6. Reliance was also placed upon the decision of the Supreme Court in the case of Commissioner of Income Tax, Shillong v. Jai Prakash Singh, [1996] 219 ITR 737, wherein the assessee did not file returns for three assessment years and died in April 1967, leaving behind him, in all, ten legal heirs. The eldest son Jai Prakash Singh filed the returns for the three assessment years. Such returns were signed by him alone and not by the other legal representatives. Scrutiny assessment came to be carried out by the Income Tax Officer, during the course of which, notices under section 142(1) of the Act came to be issued to Jai Prakash to appear and produce documents, accounts and other material, who complied with the same and did not raise any objection that notices must be issued to the other legal representatives of the deceased. Assessment orders were made in the name of all the ten legal representatives who were described as legal representatives of the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the dead person and is heard by the Income Tax Officer 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. 6.8. The learned counsel submitted that issuance of notice in the name of the deceased being a procedural defect, can be cured under section 292B of the Act and that on account of such technical defect, the notice is not void. Moreover, the petitioner having responded to the notice under section 148 of the Act, the Assessing Officer is justified in continuing the proceedings against him. It was, accordingly, urged that the petition being devoid of merits, deserve to be dismissed. 7. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 sub-section ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 inval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l 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 taken pursuant thereto, therefore, cannot be sustained. 11. Section 159 of the Act, on which strong reliance has been placed on behalf of the Revenue, has been exhaustively considered by this Court in the case of Chandreshbhai (supra). In Chandreshbhai (supra), this Court drew a fine distinction between clause (a) of sub-section (2) of Section 159 and clause (b) of sub-section (2) of Section 159 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 progress when the question arose about the notice being issued only to the LR who filed the returns or to all the LRs. The question was whether the failure to issue notice to all the LRs would render the proceedings invalid. It is in those circumstances it was held that the non-issuance of notice to all the LRs wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment 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 under : In these circumstances, it was incumbent on the Income-tax Officer to cause the notice to be issued to the legal representatives of Shakir Hussain. See Alfred y. First Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : 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 such is the legal position, would the Revenue be justified in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. All the 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 n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Sky Light Hospitality LLP case (supra) is clearly distinguishable 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 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er this Act if he had not died mean that irrespective of the date of receipt of income receivable by a person, if the income is received by his heirs and legal representatives after his death, they are liable for payment of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich he died and therefore the income received by him before his death and that received by his heirs and legal representatives after his death but in that previous year becomes assessable to income-tax in the relevant assessment year. The section 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 Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acted, a person was served with a notice under Section 22(2) of the Income-tax Act but no return was made within the period specified and he dies. It was held that no assessment could be made under S.23(4) of the act after his death. At page 106 (of ITC) : (at p.335 of AIR) 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. On appeal, the Commissioner (Appeals) upheld the said order. Before the Tribunal, the assessee challenged the notice issued under Section 148 in status of unregistered firm as illegal and without jurisdiction. The Tribunal held that the notice under Section 148 was bad in law as it did not indicate, whether it was issued to a registered 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 ju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other proceedings, if the same is in conformity with or according to the intent and purpose of the Act, the notice cannot be termed as invalid. To put it in other words, the notice should be in conformity with and in accordance with the intent and purpose of the Act. In our opinion, a case in which notice is issued to a dead person could be termed as nullity. It is something like a safeguard passing a decree against a dead person which cannot be executed through the legal representatives of the judgment-debtor. We also take notice of the fact that in Sri Durga Enterprises (supra), the assessee had not only responded to the notice under Section 148 of the Act within one month but, on the basis of the return filed earlier, participated in the proceedings till the matter reached the FAA and was disposed of. 24. In such circumstances referred to above, none of the three decisions on which reliance has been placed on behalf of the Revenue would make any difference. 25. In the overall view of the matter, we are convinced that the proceedings are not tenable in law. 26. In the result, this writ-application succeeds and is hereby allowed. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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