TMI Blog2022 (1) TMI 1210X X X X Extracts X X X X X X X X Extracts X X X X ..... H COURT] has held that provisions conferring jurisdiction cannot be conferred on the authority by mere consent. The jurisdictional notice u/s 148 of the Act having been issued to a dead assessee and the defect therein being not curable by waiver or consent of the legal heirs, the said notice is an invalid notice and the proceedings conducted in pursuance thereof are not sustainable in the eyes of law. The assessment order passed therefore, we hold, is null and void and thus set aside. - Decided in favour of assessee. - ITA No. 2948/Ahd/2017 - - - Dated:- 28-1-2022 - Shri Rajpal Yadav, Vice President And Ms. Annapurna Gupta, Accountant Member For the Appellant : Shri A.C. Shah, A.R. For the Respondent : Shri S. S. Shukla, Sr. D.R. ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeal has been filed by the Assessee against the order passed by the Commissioner of Income Tax (Appeals)-7, Ahmedabad, (in short referred to as CIT(A)), dated 25-10-2017, u/s. 250(6) of the Income Tax Act, 1961(hereinafter referred to as the Act ) pertaining to Assessment Year (A.Y) 2012-13. 2. Briefly stated, reassessment proceedings u/s 147 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hpore, Surat of the assessee [Para No.6.1 of the assessment order] and therefore as per territorial jurisdiction [Section 120(3)(a)] rest with Assessing Officer, Surat. (b) The Notice under Section 148 dated 11-12-2015 [and not dated 11-12-2016 as mentioned inParaNo.2 of the assessment order since the approval was obtained on 10- 12-2015 and the assessment order is passed on 30-12-2016] is not served to all the legal heirs as referred to in Para No. 3 of the assessment order. (c) The Notice under Section 148 dated 11-12-2015 is served with affixture as per Inspector's Report [Para No.2 of the assessment order] and that in the assessment order it is not mentioned that the notice under Section 148 is affixed where and on what place and on what date and that it is not known whether the affixture is made as per Civil Procedure Code as provided in Section 282(l)(b). (d) The Notice under Section 142(1) dated 06-09-2016 is served with affixture as per Inspector's Report [Para No.2 of the assessment order] and that in the assessment order it is not mentioned that the notice under Section 142(1) is affixed where and on what place and on what date and that it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not received by any of the legal heirs of the asseseee and therefore the entire proceedings were invalid and bad in law and the assessment order passed, therefore, needed to be quashed. 8. The Ld. D.R. on the other hand contended that since one of the legal heir had participated in the proceedings, the proceedings could not be held to be null and void merely because the notice had been issued against the dead person. 9. We have heard both the parties. The issue of validity of proceedings where the jurisdictional notice u/s. 148 of the Act for reopening of cases is issued to a dead person has been dealt with by the Jurisdictional High Court in a number of decisions. We shall be dealing with each of the said decisions in chronological order to bring out and to cull out the proposition of law laid down with regard to the said issue. 10. Beginning with the decision of the Jurisdictional High Court in the case of Rasid Lala Vs. ITO, Ward-1(3)(6) reported in (2017) 77 taxmann.com 39 vide judgment dated 29.11.2016, we find that in the facts of the said case a petition under Article 226 of the Constitution of India was filed to quash the notice issued u/s. 148 of the Act to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Hon ble High Court in the case of Jaydeepkumar Dhirajlal Thakkar vs. ITO reported in 401 ITR 302 (Guj), judgment dated 22.01.2018, wherein relying upon the aforesaid decision of the jurisdictional High Court in the case of Rasid Lala(supra), holding that where the assessee was deceased on the date of issue of notice u/s. 148, Section 159 required notice u/s. 148 to be issued to the legal representatives/ heirs of the assessee and not against the deceased. The Hon ble High Court further went on to hold that the provisions of Section 292 BB of the Act, providing that where assessee appears in any proceeding and cooperates in any enquiry relating to an assessment or re-assessment, it shall be deemed that any notice which has been duly served upon him and the assessee shall be precluded from raising any objection in any proceedings or enquiry under the Act vis-a-vis the irregularity of the notice ,also did not apply since the assessee had objected to the completion of the re-assessment.The relevant findings of the Hon ble High Court at para 7 to 12 of the order is as under: 7.This court has considered the submissions advanced on behalf of the respective parties and has perused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me would not be applicable where the assessee had passed away and the notice has not been issued in favour of the heir of the deceased. On a plain reading of section 159 of the Act, it is apparent that for the purpose of making an assessment, (including an assessment, reassessment or re-computation 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) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative. Therefore, in the light of the provisions of section 159 of the Act the proceedings are required to be initiated against a legal representative and not against the deceased. The impugned notice under section 148 of the Act is therefore, not in consonance with the provisions of section 159 of the Act. 11. Insofar as the provisions of section 292B of the Act are concerned, the same would not be applicable in the facts of the present case. As regards section 292BB of the Act, the same provides that where an assessee appears in any proceeding and cooperates in any inquiry relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) of the Act, meaning thereby that in pursuance to notice issued u/s. 148 of the Act to a dead person, proceedings cannot be continued against the legal representative and notice u/s. 148 is to be issued to the legal representatives. The contentions of the revenue that the issuance of notice to a dead person is some technical defect which can be corrected u/s. 292B, The Hon ble High Court held that the notice issued u/s. 148 against a dead person is invalid , unless the legal representatives submit to the jurisdiction of the Assessing Officer without raising any objection on receipt of the notice.The Hon ble High Court noted that where the legal representatives filed return of income in response to notice u/s 148 of the Act and thus participated in the proceedings, it could be said that the legal representatives had waived their right to notice u/s. 148 and the notice therefore could not be said to be invalid. The relevant findings of the Hon ble High Court at para 7 to 20 of the order is as under: 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice under section 142(1) read with section 129 of the Income Tax Act, 1961. 10. By an order 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 automatical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of whom any proceeding under the Act has 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 subsection (1).- (a) any proceeding taken against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. 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 subsection (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 a proceeding has already been initiated against the deceased before his death, in which case such proceeding 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 da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 invalid merely by reason of any mistake, defect or omission in such notice if such notice, summons is in substance and effect in conformity with or according to the intent and purpose of the Act. 18. The question that therefore arises for consideration is whether the notice under section 148 of the Act i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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. 20. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 28.03.2018 issued by the respondent under section 148 of the Income Tax Act, 1961 as well as all proceedings pursuant thereto, are hereby quashed and set aside. Rule is made absolute accordingly with no order as to costs. 13. In the case of Nanduben Ratilal Patel vs. DCIT, the Hon ble High Court reiterated the proposition laid down in Chandreshbhai Jayantibhai Patel, vide judgment dated 25.06.2019 reported in [2019] 417 ITR 31.In substance the Hon ble High Court reiterated the position that where the jurisdictional notice is issued to a dead person and on receipt of the same the legal representative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sponse to which it was divulged that assessee had died on 29.03.2012 and she had several legal heirs. The A.O. thereafter issued notice u/s. 142(1) to all the legal heirs to which none responded and thereafter a show cause notice was issued to all the legal heirs on 28.11.2016 in response to which only one of the legal heir, i.e, Abdulvahed Abdulrashid Shekh, responded through duly Authorized Representative C.A. Faruk Y. Patel. Para 2-5 of the assessment order bring out the above facts as under: 2. Notice u/s 148 of the act was issued on 11/12/2015 after recording the reasons and taking the necessary approval vide approval letter dated 10/12/2015 and duly served on the assessee. But the notice returned unserved by postal department. Then this notice was served by affixture by the then AO. The affixture was made by Kishor kumar inspector of income tax O/o. ITO ward 7(2)(5), Ahmedabad. Subsequently notice u/s 142(1) of the Act was issued on 06/09/2016 along with a specific questionnaire by the under signed, on change in incumbent and served by the undersigned. The affixture was made by Kishor- kumar inspector of income tax O/o ITO ward 7(2)(5), Ahmedabad. 3. Issued notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... To Vahed Abdul Rashid Shaikh, The Legal Heir of Smt. Sharifaben Bikhubhai, 12/1859, Sosa Mohalla, Near J.J. School, Surat-395003 18. The facts that emerge from the above therefore is that: (1) The jurisdictional notice u/s. 148 of the Act was issued and served on an already deceased assessee. (2) The aforesaid notice was neither served to nor received by the legal representatives who resided in another city, i.e Surat, as opposed to Ahmedabad in which the assessee resided. The legal heir who responded to the show cause notice , Vahed Abdul Rashid Shaikh , resided in Surat where notices u/s 142(1) and the show cause notice was served. (3). No notice u/s. 148 of the Act was issued to the legal heirs in their names. (4) Only notice u/s 142(1) of the Act was issued to the legal heirs which remained unresponded. (5)The participation by one of the assessee s legal heirs was only in response to the show cause notice issued to it. 19. In the above factual backdrop of the notice u/s 148 of the Act being issued and served on an already deceased assessee, who had expired more than three years back , the absence of issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in cl. (a) on the part of the assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of ss. 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in ss. 148 to 153 referred to as the relevant assessment year). It is not necessary to consider the Explanation. Sec. 148 provides for issue of notice where income has escaped assessment as under: 148. (1) Before making the assessment, reassessment or re-computation under s. 147, the ITO shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-s. (2) of s. 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. (2) The ITO shall, before issuing any notice under this section, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f material on record to show that the ITO had formed the requisite belief, recorded his reasons for taking action under s. 34(1)(a) and obtained the sanction of the Central Board of Revenue or the CIT, as the case may be, it is not open to the Tribunal to justify the proceedings taken by the ITO under s. 34(1)(a). Three conditions were found to be mandatory by their Lordships. At page 441, it was pointed out that before proceedings under s. 34(1)(a) could be validly initiated, the ITO must have reasons to believe that by reason of the omission or failure on the part of the assessee to make a return of his income under s. 22 for any year or to disclose fully and truly all material facts necessary for his assessment for that year, income, profits and gains chargeable to income-tax have escaped assessment for that year, or have been under assessed or assessed at too low a rate, or have been made the subject-matter of excessive relief under the Act, or excessive loss or depreciation allowance have been computed. The formation of the required opinion by the ITO is a condition precedent. Without formation of such an opinion he will not have jurisdiction to initiate proceedings under s. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordships pointed out that it was well-settled that the jurisdiction of the ITO to reopen assessment under s. 34 was dependent upon the issuance of a valid notice. If the notice issued by him was invalid for any reason, the entire proceedings taken by him would become void for want of jurisdiction. Therefore, the view taken by this Court was upheld that the notice in question by the ITO which sought to reopen the assessment of the assessee for the asst. yr. 1948-49, when in fact he reopened the assessment for the year 1949-50, being an invalid notice, the ITO had no jurisdiction to revise the assessment of the assessee for the year 1949-50. In S. Narayanappa vs. CIT (1967) 63 ITR 219 (SC), at page 222, their Lordships pointed out that the proceeding for assessment or reassessment under s. 34(1)(a) started with the issue of a notice and it was only after the service of the notice that the assessee, whose income was sought to be assessed or reassessed, became a party to those proceedings. The earlier stages of the proceeding for recording the reasons of the ITO and for obtaining the sanction of the CIT were administrative in character and were not quasi-judicial. There was no requirem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deviation from a rule of law which does not take away the foundation or authority for the proceeding, or apply to its whole operation, whereas a nullity is proceeding that is taken without any foundation for it, or is so essentially defective as to be of no avail or effect whatever, or is void and incapable of being validated. Thereafter, their Lordships pointed out that whether a provision fell under one category or the other was not easy of discernment, as in the ultimate analysis, it depended upon the nature, scope and object of the particular provision. Their Lordships in terms approved a workable test laid down by Justice Coleridge in Holmes vs. Russel (1841) 9 Dowl 487 as under: It is difficult sometimes to distinguish between an irregularity and a nullity; but the safest rule to determine what is an irregularity and what is a nullity is to see whether the party can waive the objection; if he can waive it, it amounts to an irregularity; if he cannot, it is a nullity. Thereafter it was pointed out that a waiver is an intentional relinquishment of a known right, but obviously an objection to jurisdiction could not be waived, for consent could not give a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emplated in the Act or an assessee being called upon to file a return as contemplated in the Act. The respondents challenged the Act. The order of injunction did not amount to a waiver of the statutory provisions. The issue of a notice under the provisions of the Act related to the exercise of jurisdiction under the Act in all cases. The learned Chief Justice in terms pointed out that the Revenue statutes are based on public policy. The Revenue statutes protect the public on the one hand and confer power on the State on the other. Therefore, even in the context of such a revenue statute like a taxation measure such fetter on the jurisdiction being a fetter laid to protect public on wider ground of public policy, it was held that such provisions which confer jurisdiction on assessment and reassessment could never be waived for the simple reason that jurisdiction could neither be waived nor created by consent. In the concurring judgment his Lordship, Beg. J., at page 2077, also pointed out that if the notice under s. 7(2) was a condition precedent to the exercise of jurisdiction to make the best judment assessment, the doctrine of waiver could never confer jurisdiction so as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person had no knowledge of his legal rights so that he could make any such conscious waiver. In the present case, the AAC in his order had pointed out that it was when he perused the order sheet that he found that there were no reasons recorded by the ITO for issuing notice under s. 148. The entry on the order sheet dated September 3, 1963, simply contained the direction: Issue notice under s. 148 , and no reasons were recorded by the ITO before reopening the assessment. Even the relevant sub-section of s. 147 under which the assessment was sought to be reopened was not mentioned. These facts, prima facie, disclosed that the reasons came to the notice of the assessee for the first time when the AAC perused this order sheet and brought this fact to the notice of the assessee. Even on that ground, therefore, there can be no question of any waiver on the facts of the present case. 11. Even the alternative ground of finality of this order of the Tribunal suffers from the same infirmity, as the Tribunal has failed to notice this material distinction between a mere procedural provision which could be waived and such jurisdictional provision or a mandatory provision enacted i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not confer any jurisdiction on the ITO by making the remand order, because of the settled legal principle that consent could not confer jurisdiction when jurisdiction could be created only by fulfilment of the condition precedent as in the present case. Therefore, no question of finality of the remand order could ever arise in the present context, if the mandatory conditions for founding jurisdiction for initiating reassessment proceeding were absent. This is the view in CIT vs. Nanalal Tribhovandas (1975) 100 ITR 734 (Guj), agreeing with the Madras view that there would be no such finality by remand because consent could not confer jurisdiction, and so, such objection in regard to the validity of the notice under s. 34 could be raised before the AAC. 12. The learned standing counsel in this connection marshalled in aid the decision in Northern Railway Co-operative Credit Society Ltd. vs. Industrial Tribunal, Rajasthan, AIR 1967 SC 1182; 31 FJR 511, which could hardly be invoked in the present case. There the High Court in writ jurisdiction had held at the earlier stage that the dispute in question was an industrial dispute and, therefore, the reference being a compet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be without jurisdiction. The first condition in invoking any bar of res judicata is the condition about the competence of the Court. Similarly, the provision of finality in this relevant provision in s. 254(4) could also not be attracted in such a case, where the question admittedly, went to the root of the jurisdiction and if that contention was upheld, it would have made all the proceedings of reassessment totally void and without jurisdiction. As per the aforesaid settled legal position such a point could not be waived and there can be no question of the earlier remand order operating as a final order, because if such a jurisdictional point could not be waived, even the fact of passing of the remand order by the Tribunal could not confer jurisdiction on the ITO, if the conditions to found his jurisdiction were absent. 20. In view of the above, the jurisdictional notice u/s 148 of the Act having been issued to a dead assessee and the defect therein being not curable by waiver or consent of the legal heirs, the said notice is an invalid notice and the proceedings conducted in pursuance thereof are not sustainable in the eyes of law. The assessment order passed therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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