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TMI Blog2022 (1) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... n the transaction was Rs. 35,79,625/- ,but no return of income had been filed by the asseseee. Subsequently assessment was framed , subjecting the Long Term Capital Gain earned thereon, amounting to Rs. 32,63,644/-, to tax by taking the assessee's share as the sale consideration received and reducing therefrom the cost of acquisition on the basis of DVO report in the case of one of the Co-owners Shri Ramjanibhai Bikhubhai Shekh. 2.1. The assessee challenged the assessment so framed before the Ld. CIT(A) where, despite several opportunities given, none appeared on behalf of the assessee and the Ld. CIT(A) accordingly noted that since the assessee had nothing to state in his appeal, she dismissed the appeal filed by the assesee. 3. Aggrieved by the same, the assessee has now come up in appeal before us raising the following grounds: 1. The reassessment is bad in law since there is no escapement of income. 2. The learned CIT(A) has erred in passing the exparty order and thereby has erred in confirming the addition of Long Term Capital Gain [LTCG] of Rs. 32,63,644 in as much as the fair market value as on 01-04-1981 should have been adopted as per Registered Valuer Report. 2.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Show Cause Notice [SCN] dated 03-10-2016 was served by the speed post to all the legal heirs [as per Para No .4 of the assessment order] but it is not mentioned in the assessment order whether speed post is served to all the legal heirs and if yes, on what date and on what place or whether speed post is returned unserved to any legal heirs or all legal heirs. 02. The learned AO has erred in not accepting the Registered Valuer's Report furnished by letter dated 29-12-2016 - Para No.5 on Page No.3 of top of the assessment order without giving any reasons and has erred in following the DVO Report in case of another co-owners Ramjanibhai Bhikhubhai Shekh without giving any notice to all the legal heirs and therefore the assessment order is void ab initio. 5. During the course of hearing before us, Ld. Counsel for the assessee first made arguments vis-à-vis additional ground no1.3 to the effect that the notice u/s. 148 was not served on the legal representatives at all and therefore the reassessment proceedings was without valid jurisdiction and hence void. Ld.Counsel for the assessee contended that the said ground being a legal ground, with all facts necessary for adju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o longer surviving on the date of issue of notice u/s. 148 ,then even as per Section 159 of the Act the notice was required to be issued in the name of the heirs of the deceased assessee. The Hon'ble High Court held that Section 159 of the Act would not be of any assistance to the revenue. Accordingly, the writ petition filed by the asessee was allowed by the Hon'ble High Court, the relevant findings of the Hon'ble High Court at para 5 to 7 of the order is as under: "5. Heard learned advocates for the respective parties at length. 6. It is an admitted position that the assessee died on 2nd December 2009. It is also an admitted fact that the notice under Section 148 of the Income-tax Act, 1961 to re-open the assessment for Assessment Year 2009-2010 has been issued against the dead person i.e., the deceased assessee. Thus, the re-assessment proceedings have been initiated after the death of the assessee. Though it was pointed out by the heir of the deceased assessee that the assesee has expired long back, and therefore, the notice issued in her name and/or against a dead person is not valid, instead of taking corrective measures as provided under Section 292 [b] of the Income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact. Against the order passed by the Commissioner (Appeals) the department has preferred an appeal before the Tribunal, wherein the name of the petitioner is reflected as the legal heir of Shri Dhirajlal Dayaljibhai Thakkar. While seeking to reopen the assessment, the Assessing Officer has issued notice dated 30.03.2017 in relation to the assessment year 2010-11 to Shri Dhirajlal Dayaljibhai Thakkar. Admittedly, the notice has been issued against a dead person. This court in the case of Rasid Lala (supra) wherein the re-assessment proceedings had been initiated after the death of the assessee and the notice was issued against a dead person, held that the reassessment proceedings having been initiated against the dead person and that too after a long delay, 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 heir of the deceased assessee. The court held that in the facts and circumstances of the case, section 159 of the Act would not be of any assistance to the revenue and, accordingly, set aside the impugned notice issued under section 148 of the Act. 9. The facts of the present case are similar to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him in time; or (c) served upon him in an improper manner. The proviso thereto says that nothing contained in the section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment. In the present case, apart from the petitioner is not the assessee, the petitioner has raised objection before completion of the reassessment and, therefore, the provisions of section 292BB would not be applicable in the facts of the present case. 12. In the light of the above discussion, the impugned notice under section 148 of the Act having been issued against a dead person, is a nullity and cannot be sustained. The petition, therefore, succeeds and is accordingly allowed. The impugned notice dated 30.03.2017 issued against late Shri Dhirajlal Dayaljibhai Thakkar, father of the petitioner, for assessment year 2010-11 is hereby quashed and set aside. RULE is made absolute accordingly. 12. The matter again came up for consideration before the Hon'ble High Court in the case of Chandreshbhai Jayantibhai Patel vs. ITO where the aforesaid position of law was reiterated vide judgment dated 10.12.2018 reported in [2019] 413 ITR 276(Guj). The Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, requested him to drop the proceedings. Thereafter, another notice dated 10.07.2018 came to be issued under sub-section (1) of section 142 of the Act to Shri Jayantilal Harilal Patel calling upon him to furnish the details mentioned therein. In the annexure to the said notice, the assessee was called upon to show cause as to why penalty proceedings under section 217F of the Act should not be initiated in his case as he had not furnished return of income in response to the notice under section 148 and stating that this may be treated as a notice under section 142(1) read with section 129 of the Income Tax Act, 1961. 8. The petitioner addressed a letter dated 02.08.2018 to the Income Tax Officer objecting to the notices issued under section 148 as well as under section 142(1) of the Act and drew his attention to the earlier letter dated 27.04.2018 informing him about the death of his father and requesting him to drop the proceedings. The attention of the Income Tax Officer was further invited to the provisions of section 159 of the Act, to submit that the proceedings are required to be initiated against a legal representative and not against the deceased and, therefore, the notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee (the petitioner) had introduced himself as a son of the deceased assessee and as legal heir and has produced death certificate in response to the notice issued under section 148 of the Act. Therefore, as the legal heir, upon being served with the notice under section 148, has participated in the proceedings, the reassessment proceedings initiated are legal and valid. Reliance has been placed upon the decision of the Madras High Court in the case of V. Ramanathan v. Commissioner of Income Tax, (1963) 49 ITR 881 (Madras). It is further stated therein that it is not in dispute that Shri Chandreshbhai J. Patel is the legal heir of the deceased assessee; therefore, the proceedings initiated against the legal representative/legal heir are valid and legal. 12. In the backdrop of the aforesaid facts, it is an admitted position that the notice under section 148 of the Act was issued to a dead person. The petitioner being the heir and legal representative of the deceased, upon receipt of the notice, immediately raised objection against the validity of the impugned notice and did not submit to the jurisdiction of the Assessing Officer by filing a return of income, but kept on objectin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the purposes of this Act, be deemed to be an assessee. (4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undercharged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of, or parted with. (5) The provisions of sub-section (2) of section 161, section 162 and section 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." "292B. Return of income, etc., not to be invalid on certain grounds. - No return of income, assessment, notice, summons or other proceeding furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding can be taken against the legal representative. Now, it cannot be gainsaid that a proceeding under section 147 of the Act of reopening the assessment is initiated by issuance of notice under section 148 of the Act, and as a necessary corollary, therefore, for taking a proceeding under that section against the legal representative, necessary notice under section 148 of the Act would be required to be issued to him. In the present case, the impugned notice under section 148 of the Act has been issued against the deceased assessee. In the opinion of this court, since this is not a case falling under clause (a) of sub-section (2) of section 159 of the Act, the proceeding pursuant to the notice under section 148 of the Act issued to the dead person, cannot be continued against the legal representative. 16. On behalf of the revenue, it has been contended that issuance of the notice to the dead assessee is merely a technical defect which could be corrected under section 292B of the Act. Reliance has been placed on the above referred decisions of the Supreme Court as well as the High Courts for contending that the proceedings would not be null and void merely because the notice has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or assessment or reassessment. A notice issued under section 148 of the Act against a dead person is invalid, unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection. Therefore, where the legal representative does not waive his right to a notice under section 148 of the Act, it cannot be said that the notice issued against the dead person is in conformity with or according to the intent and purpose of the Act which requires issuance of notice to the assessee, whereupon the Assessing Officer assumes jurisdiction under section 147 of the Act and consequently, the provisions of section 292B of the Act would not be attracted. In the opinion of this court, the decision of this court in the case of Rasid Lala v. Income Tax Officer, Ward-1(3)(6)(supra) would be squarely applicable to the facts of the present case. Therefore, in view of the provisions of section 159(2)(b) of the Act, it is permissible for the Assessing Officer to issue a fresh notice under section 148 of the Act against the legal representative, provided that the same is not barred by limitation; he, however, cannot continue the proceedings on the basis of an inval ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court vis-à-vis the issue of validity of proceedings where the jurisdictional notice for reopening cases, u/s. 148 of the Act, is issued on a dead person, is that the proceedings are null and void since the statute requires that where the assessee is deceased the proceedings have to be undertaken on their legal representatives as per Section 159(2)(b) of the Act. The Jurisdictional High Court has consistently held that in such cases where the assessee was deceased on the date of the issue of notice u/s. 148,the same is to be issued on their legal representatives. Going further and taking note of various judicial decisions and the provisions of Section 292B/BB, the Hon'ble High Court has held that the notice shall not be held invalid where the legal representatives, on receipt of such notice issued to a dead person, participate in the proceedings and thus waive their right to issuance of notice u/s. 148 of the Act. 16. Having said so, we now bring out the facts of the case before us for applying the aforesaid proposition of law. As emerges from para 2 to 5 of the assessment order in the present case, the assessee, Late Smt. Sarifaben Bikhubhai Shekh, had died on 29.03.2012, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and duly served by speed post to all the legal heirs of the assessee. In response to the notice u/s.142 (1) dated 3.10.2016 neither anyone has attended the hearing nor submitted any reply. Then, this office has issued a show cause notice for proposed addition on 28/11/2016 and duly served to all the legal heirs by speed post. 5. After receiving the show cause notice only an authority letter of CA Faruk Y Patel, duly authorized by one of the legal heirs Shri Vahed Abdul Rashid Shaikh has been received by speed post in this office on 13/12/2016. On 29.12.2016 the representative of the assessee has attended and filed written submission with three different letters in response to the show cause and earlier notices issued. Same has been verified and kept on record. The contention of the assesse has been consider but the same has not acceptable in view of the DVO report received on 29.12.2016 vide letter No. DVO/ITD/Ahm/2016-17/882 dated 28.12.2016. 17. Certified copy of the notices issued u/s. 148 and 142(1) in the present case were filed by the ld. D.R. before us. A perusal of the same reveals that while the notice u/s. 148 was issued to the deceased assessee at the address: To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by them. The legal heirs are in fact not even aware of the proceedings being undertaken on them. The question of waiver of notice u/s 148 therefore cannot arise where the person concerned has no knowledge of the proceeding initiated. Being a jurisdictional notice, these defects cannot be termed as mere irregularities which can be cured by participation of the assesses/legal heirs, even as per the aforementioned decisions of the jurisdictional High Court.The Hon'ble jurisdictional High Court in the case of P.V Doshi vs Commissioner of Income Tax (1978) 113 ITR 22(Guj) has held that provisions conferring jurisdiction cannot be conferred on the authority by mere consent. The Hon'ble High Court has elaborately dealt with the same at para 4-12 of the order as under: 4.In order to consider whether such a question going to the root of the jurisdiction by initiating proceeding of reassessment under s. 147 could be waived or not, it would be proper at this stage to consider the settled legal position is to the nature of this reassessment proceeding under s. 147 or the corresponding s. 34 of the earlier Act in the light of the safeguards which have been laid down as conditions prec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come has escaped the original assessment even when the procedure of original assessment contemplated such wide powers of appeal, revision and even rectification under the various provisions of the Act. That is why the conditions laid down for the reasonable belief to be reached by the ITO under sub- cl. (a) or under sub-cl. (b), and his recording of the reasons under s. 148(2), and for the sanction before issuing the said notice under s. 148 by the higher authorities under s. 151 have been considered as mandatory conditions. The reasons which are now in terms under s. 148(2) required to be recorded by the ITO have not to be communicated to the assessee but they are to be available for the authorities who have to give the sanction. 6. In Kasturbhai Lalbhai vs. R. K. Malhotra, ITO (1971) 80 ITR 188 (Guj) Bhagwati C.J. (as he then was) in terms pointed out at page 191 that it must be remembered that s. 147 empowered the ITO to disturb the finality of an assessment already made and to assess or reassess the income of the assessee. Such an action is bound to result in considerable anxiety and harassment to the assessee and the legislature has, therefore, imposed certain conditions sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons for taking action under s. 34(1)(a) and obtain the sanction of the Central Board of Revenue or the CIT, as the case may be. It was pointed out that the CIT or the Board of Revenue, while granting sanction would have to examine the reasons given by the ITO and come to an independent decision and the authority in question should not act mechanically. The ITO having himself proceeded only under s. 34(1)(b) and not on the basis of s. 34(1)(a), the order in those circumstances could not be justified under s. 34(1)(a). Therefore, it was held that without the three relevant conditions precedent being first fulfilled, the proceedings could not be initiated for reassessment under s. 34(1)(a). The same would be true for s. 34(1)(b) where the ITO had in consequence of information in his possession to form that belief that income chargeable to tax had escaped assessment for any assessment year. Therefore, these three conditions precedent having been introduced by way of safeguards in wider public interest so that the finally concluded proceedings which at the time of original assessment could be reopened through initial procedure of appeal, revision or rectification before the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not even intended to be supplied with the reasons for reopening the assessment and the entire matter is looked upon as an administrative matter, at the earlier stages where the ITO is to record his reasons and obtain sanction of the CIT. 7. The legal position about waiver of such a mandatory provision created in the wider public interest to operate as fetter on the jurisdiction of the authority is well settled that there could never be waiver, for the simple reason that in such cases jurisdiction could not be conferred on the authority by mere consent, but only on conditions precedent for the exercise of jurisdiction being fulfilled. If the jurisdiction cannot be conferred by consent, there would be no question of waiver, acquiescence or estoppel or the bar of res judicata being attracted because the order in such cases would lack inherent jurisdiction unless the conditions precedent are fulfilled and it would be a void order or a nullity. The settled distinction between invalidity and nullity is now well brought out in the decision in Dhirendra Nath Gorai vs. Sudhir Chandra Ghosh, AIR 1964 SC 1300, 1304, where their Lordships had gone into this material question as to whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two years from the end of the return period. The procedure of best judgment assessment was laid down in s. 9(4) and the question arose whether, in view of the injunction order obtained by the assessee, ignoring the two years' limit laid down as a fetter for issuance of the notice under s. 7(2), the best judment assessment procedure was permissible. At page 2070, the learned Chief Justice first held that if a return under s. 7(1) was not made, the service of a notice under s. 7(2) of the Act was the only method for initiation of a valid assessment proceeding under the Act. The period of two years under s. 7(2) was a fetter on the power of the authority and was not just a bar of time. It was the scheme of the Act that the service of notice within two years from the end of the return period was an imperative requirement for initiation of assessment proceeding, as also reassessment proceeding under the Act. Further proceeding, at page 2071, their Lordships pointed out the settled legal distinction between the provisions which conferred jurisdiction and provisions which regulated procedure, because jurisdiction could neither be waived nor created by consent, while a procedural provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact, reiterates the same. In that case, the question had arisen regarding the waiver of a provision in s. 132(5) of the IT Act which permitted the ITO to pass an order of seizure within 90 days. The provision was held to be not a mandatory provision and at page 400 it was also pointed out that there was no question of the period of limitation under s. 132(5) involving public interest. It was intended for the benefit of the parties. The settled principle which had been stated on Craies on Statute Law, 6th edition, at page 259, was as under: "As a general rule, the conditions imposed by statutes which authorise legal proceedings are treated as being indispensable to giving the Court jurisdiction. But if it appears that the statutory conditions were inserted by the legislature simply for the security or benefit of the parties to the action themselves, and that no public interests are involved, such conditions will not be considered as indispensable, and either party may waive them without affecting the jurisdiction of the Court." Therefore, the period of limitation prescribed under s. 132(5) being intended for the benefit of the person concerned, it was held that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmit contracting out of the Acts so there could be no contracting in. A status of control of premises under the Rent Control Acts could not be acquired either by estoppel or by res judicata. Their Lordships in terms held that the principle was that neither estoppel nor res judicata could give the Court jurisdiction under the Acts which those Acts said it was not to have. Therefore, bar of res judicata or estoppel or waiver were negatived in such a case where the plea was outside the ambit of the Rent Control Act, for the simple reason that as one could not confer jurisdiction by consent, similarly one could not by agreement waive exclusive jurisdiction of the rent Courts over the buildings in question. It is true that s. 254(4) in terms provides that save as provided in s. 256 (which provides for the reference to the High Court), orders passed by the Tribunal on appeal shall be final. That finality or conclusiveness could only arise in respect of orders which are competent orders with jurisdiction and if the proceedings of reassessment are not validly initiated at all, the order would be a void order as per the settled legal position which could never have any finality or conclusiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... about the applicability of s. 28 of the Calcutta Thika Tenancy Act, 1949, and the plea having been rejected by the munsif trying a suit, revision, the High Court had held that operation of s. 28 of the Act was not affected by the subsequent amendment Act and the case was remanded to the munsif for disposal according to law. After the final decree was passed by the munsif and the appeal finally came to the Supreme Court, it was held by the Supreme Court that the order of the High Court holding s. 28 to be applicable could not operate as res judicata in appeal before the Supreme Court, because the High Court's order of remand was merely an interlocutory order, which did not terminate the proceeding pending before the munsif and which had not been appealed from at that stage. Consequently, in the appeal from the final decree or order it was open to the party concerned to challenge the correctness of the High Court's decision. The two special features which distinguished that case were: one, that the order of the High Court which was relied upon to invoke the principle of res judicata was an interlocutory order, and the other, that it was made in a pending suit which as a resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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