TMI Blog2021 (7) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... verted before us. As evident therefore that the assessment framed in the present case is not in accordance with law. The reliance placed by assessee on the decision of Dhalumal Shyamumal [ 2004 (11) TMI 57 - MADHYA PRADESH HIGH COURT] is apt, wherein in identical set of facts where the assessee had expired during the pendency of assessment proceedings, which fact was duly intimated to the AO, who despite the same, issued no notice to the legal representatives of the assessee and framed the assessment in the name of the deceased assessee, the Hon'ble High court held that the order so passed was a nullity having been passed against a dead person. The Hon'ble High court held that it was the duty of the AO to have followed the procedure prescribed in law in such cases u/s. 159. The non compliance by the AO of the statutorily prescribed procedure, applicable in the facts of the present case, cannot be said to be a mere technical error as held by the Ld. CIT(A). - Decided in favour of assessee. - ITA No. 1335/Chd/2019 - - - Dated:- 14-6-2021 - Diva Singh, Member (J) And Annapurna Gupta, Member (A) For the Appellant : Sudhir Sehgal, Adv. For the Respondents : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #8377; 12,49,340/- (Plus Agricultural income of ₹ 2,15,250/- for rate purpose). On going through the Trading and profit Loss Account of the assessee it reveals that the assessee has shown liasoning receipts of ₹ 10,74,196/- (Net) only. During the course of assessment proceeding for assessment year 2006-07, the assessee has stated that liasoning commission is from M/s. Saravshaktiman Traders Private Limited and the figures reported in Profit Loss account are net of the expenses incurred by the assessee for rendering services by the sub-agents/service providers. But the expenses so claimed by the assessee were disallowed and added back to the income of the assessee to the tune of ₹ 41,14,518/-. Though, the same have been deleted by the Ld. CIT(A), but the department has not accepted the order of the CIT(A). Therefore in order to safeguard the interest of revenue and keeping in view the above discussion, I have reason to believe that the income of the assessee has escaped assessment on the issue of liasoning commission. Similarly, an addition of ₹ 3,02,600/- was made by the Assessing Officer on account of low household expenses shown by the assessee during ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... derived, that the income had escaped assessment. The Ld. Counsel for the assessee pointed out that even the AO was not sure whether there was any unaccounted household expenses having noted that the matter needed enquiry, so how could there possibly be any formation of belief of escapement on this count. The Ld. Counsel for the assessee stated that it was obvious that there was no information at all in the possession of the AO for the formation of belief of escapement of income either on account of claim of expenses against liasoning receipts or on account of unaccounted household expenses and, therefore, assumption of jurisdiction to reopen the case of the assessee u/s. 147 of the Act, was bad in law and the order passed as a consequence thereof needed to be quashed. The Ld. Counsel for the assessee referred to the following decisions in support: 1) CIT Vs. Orient Craft Ltd., 354 ITR 536 (Del) 2) M/s. Amit Engineering Vs. ACIT, 156 ITD 556 (Chd. Trib.) 3) M/s. Samart Plywood Ltd. Vs. ACIT in ITA No. 514/Chd/2017 for A.Y. 2008-09 7. The Ld. DR, on the other hand, heavily relied upon the order of the CIT(A). He drew our attention to the findings of the CIT(A) at p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 of the Act was bad since the reasons recorded by the AO for reopening the case did not reveal any information worth its while being in the possession of the AO to form the belief of escapement of income. 9. We are in agreement with the contention of the Ld. Counsel for the assessee. We have gone through the reasons as recorded by the AO and reproduced in earlier part of our order above. We have noted, that the AO has recorded his belief of escapement of income on two counts; i) incorrect claim of expenses against liasoning receipts and; ii) against unaccounted household expenses. 10. The basis for formation of belief of escapement of income on the aforesaid two counts by the AO, we find, rests on the assessment framed in the case of the assessee on identical issues in earlier assessment year, A.Y. 2006-07 wherein, as noted by the AO in his reasons, expenses against liasoning receipts were disallowed and addition made on account of household expenses. But going forward from here we find that in case of expenses claimed against liasoning receipts, the AO also noted the fact that the disallowance made of the same in assessment year 2006-07 stood deleted by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee the reasons recorded by the AO do not demonstrate any basis for formation of belief of escapement of income either on account of liasoning expenses claimed or unaccounted household expenses. The reasons recorded, therefore, we hold do not justify the assumption of jurisdiction to reopen the case of the assessee u/s. 147 of the Act and the order passed in consequence thereof is liable to be quashed. Ground No. 2 of the appeal is accordingly allowed. 13. Further vide application dated 18.01.2021 the assessee has raised the following additional grounds of appeal: 1. Notwithstanding the above said grounds of appeal, the assessment as framed by the Assessing Officer, in the name of 'dead person' is void ab initio, since the assessee concerned died on 21.07.2013 and, therefore, completion of assessment in the name of dead person is void ab initio and, as such, the assessment proceedings deserve to be quashed. 2. Notwithstanding grounds of appeal with regard to reopening of the case, the assessment having been reopened beyond four years and no permission from the Joint Commissioner of Income Tax/Commissioner of Income Tax, Patiala having been taken, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Legislature has provided for the manner in which the assessment is to be framed, u/s. 159 of the Act, as per which after the demise of the assessee all proceedings are to be carried on with the legal heir and the assessment framed in the name of the legal heir. It was contended that the said prescribed procedure by law has clearly not been followed in the present case and, therefore, also the assessment framed was bad in law, being in the name of a dead assessee and therefore liable to be quashed. The Ld. Counsel for the assessee in this regard drew our attention to the sequence of events bringing out the above facts as under: S. No. PARTICULARS DATE OF FILING/ISSUING 1. Return filed by the assessee during his life time 27.09.2008 2. Return processed u/s. 143(1) 26.03.2009 3. Notice u/s. 148 issued, placed at page 1 of the Paper Book in the name of Sh. Raj Kumar Wadhwa. 30.03.2013 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person vide notice dated 28.02.2014 and 1E page of assessment order u/s. 143(3) r.w.s. 147 as passed in, the name of dead person which is void ab-initio. 18. Further he relied upon the following decisions in support of his above contention: 1) CIT Vs. Dhalumal Shyamumal, 276 ITR 62 (MP) 2) Haryana Gramin Bank (Now Sarva Haryana Gramin Bank) Vs. DCIT, 83 ITR (Trib.) (S.N.) 8 (Del. Trib.) 3) B.G. Sharma (Deceased) Vs. ITO, ITA No. 387/Mum/2012 (Mum. Trib.) 19. The Ld. DR, on the other hand, relied upon the order of the Ld. CIT(A) stating that the same was only a technical error and which stood corrected in the appellate proceedings. He drew our attention to the relevant findings of the Ld. CIT(A) at page 10 of his order as under: Further the passing of the impugned order u/s. 143(3) r/w 147 of the Act in the appellant's name and not in the name of the estate/legal heir is a technical error which has been corrected in the appellate proceedings. The appellant fails on this ground of appeal. It is ordered accordingly. 20. We have considered the rival submissions and have also gone through all the documents referred to before us and also the orders o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative. (6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub-section (5), be limited to the extent to which the estate is capable of meeting the liability. 23. As is evident from the above, the Legislature has prescribed u/s. 159(2), that where an assessee expires during pendency of proceedings, the proceedings have to be continued with the legal heir and assessment is to be framed in the name of the legal heir. 24. In the facts of the present case, which stand recorded by the AO also in his assessment order, the AO we find has failed to follow the statutorily prescribed procedure. That despite the AO being duly informed on 08-01-2014, that the assessee had expired on 21-07-13 and that his wife was the legal heir, he continued the assessment proceedings, issuing notice u/s. 142(1) of the Act on 18-02-2014, in the name of the deceased assessee, and further even went on to frame the assessment and issue the demand notice dated 28-02-2014, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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