HANSABEN LALUBHAI GOKALBHAI V. THE INCOME TAX OFFICER WARD 2(2)(2), SURAT

SCA/20842/2019

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The case involves a challenge to notices issued under Section 148 of the Income Tax Act, 1961, for reopening the income tax assessment of Lalubhai Gokalbhai for the assessment year 2012-13, after his death. The notices were initially issued in the name of the deceased and later in the name of his legal heir, Hansaben Lalubhai Gokalbhai. The petitioner contested the validity of the notices, arguing that they were issued against a deceased person and thus were bad in law. The court found the notice issued in the name of the deceased invalid but upheld the notice issued to the legal heir as valid.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 768513 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 22-03-2021
• Assessment Year: misc
• Other Referred Cases: Chandreshbhai Jayantibhai Patel Vs. Income Tax Officer [SCA/157172/2018]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: KALPANA RAVAL
• Assessee Lawyers: B S SOPARKAR
• Keywords: Income tax reassessment; Notice Invalidity; Legal Heir Assessment
• Section: 147; 148; 133(6); 292B

Judgement Text

"C/SCA/20842/2019 ORDER DATED: 22/03/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20842 of 2019 ========================================================= HANSABEN LALUBHAI GOKALBHAI Versus THE INCOME TAX OFFICER WARD 2(2)(2), SURAT ============================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 1 ============================================================== CORAM: HONOURABLE MR. JUSTICE J.B.PARDIWALA and HONOURABLE MR. JUSTICE ILESH J. VORA Date : 22/03/2021 ORAL ORDER (PER : HONOURABLE MR. JUSTICE ILESH J. VORA) 1. By filing this writ application under Article 226 of the Constitution of India, the writ applicant seeks to challenge the Notices dated 28.03.2019 (Annexure-A and B) issued by the respondent under Section 148 of the Income Tax Act, 1961 (for short “the Act, 1961”) seeking to reopen the writ applicant’s income tax assessment for the A.Y. 2012- 13. 2. Brief facts of the case can be summarized as under: (i) Mr. Lalubhai Gokalbhai was non-filer for A.Y 2012- 13. He died on 16.05.2014. The AO was in receipt of the information that, Lalubhai Gokalbhai had deposited cash amount of Rs.57,76,730/- in the bank accounts maintained with HDFC Bank & Surat Dist. Cooperative Bank and had purchased units of mutual funds for various companies amounting to Rs.5,06,00,000/-. Page 1 of 9 C/SCA/20842/2019 ORDER DATED: 22/03/2021 (ii) On 28.01.2019, notice under Section 133 (6) of the Income Tax Act for verification of transactions made by Shri Lalubhai Gokalbhai for the A.Y. 2012-13 was issued; (iii) Pursuant to the notice dated 28.01.2019, the writ applicant being a wife of Lalubhai Gokalbhai had filed reply, stating inter alia that, her husband is died on 16.05.2014 and also sought necessary details with respect to the cash deposition and the investment as mentioned in the notice; (iv) Vide letter dated 18.02.2019, the writ applicant had furnished necessary details of the cash deposition as sought for by the revenue vide its notice dated 28.01.2019; (v) The case was reopened in the name of legal heir Smt. Hansaben Lalubhai Gokalbhai - wife of the deceased assessee and on 28.03.2019, the impugned notices addressed to Lalubhai Gokalbhai and Smt. Hansaben Lalubhai Gokalbhai, legal heirs of late Lalubhai Gokalbhai were issued under Section 148 of the Act on the ground that, AO has ‘reason to believe’ that the cash deposition and investment made in the mutual funds is liable for tax and has escaped assessment; (vi) The writ applicant filed her objections against the impugned notice, vide letter dated 24.04.2019, inter alia, contending that, the notice issued in the name of Lalubhai Gokalbhai is bad in law since the reassessment notice cannot be issued in the name of deceased person and therefore, the initiation of reassessment proceedings is bad in law and against the provisions of the Act and notice Page 2 of 9 C/SCA/20842/2019 ORDER DATED: 22/03/2021 under Section 148 is to be treated as invalid and requested to drop the reassessment proceedings. (vii) The objections filed by the writ applicant came to be rejected by the revenue vide order dated 17.09.2019 observing as under: “1. In this case, from the ITD System it was gathered that the assessee is non-filer for A.Y.2012-13, Further, it was gathered from AIR/CIB information that the assessee has deposited cash in bank account maintained with HDFC and Surat Dist. Co, Op. Bank for Rs.57,76,730/-. As per the said information, the assessee had also purchased units of Mutual Funds of various companies for Rs.5,06,00,000/-. These information were primarily verified by issuing notices u/s. 133(6) of the I.T. Act. The issue of cash deposit made by the assessee as well as source of purchases of mutual funds were remained unverified during verification. Therefore, after recording reason to. believe that income to_the extent of Rs,.5,63,76,730/has escaped the assessment for A.Y.2012-13 by reason of failure on the part of the assessee to file his return of income. It.is pertinent to mention here that during the verification process, Smt. Hansaben Lalu Gokalbhai, Wife of Lalu Gokalbhai had replied vide letter dated Nil received in this office on 14.02.2019 that her husband Lalu Gokalbhai was expired on 16.05.2014. Therefore, the case was re- opened u/s. 147 of the I.T. Act in the name of legal heir after taking approval 0320 petent authority vide letter No. SRT/Pr.CIT 2/HQ/147/Wart-2(2)(2)/2018-19 dated 28.03.2019 and notice u/s. 148 was issued to Smt. Hansa Lalu Gokalbhai, L/h of Late Shri tak Albhai which was duly served upon the legal heir of the assessee. 2. Smt. Hansa Lalu Gokalbhai, Uh. of the. assessee vide letter dated 24.04.2019 received in this office on 26.04.2019 has raised objection mainly related to issue that the assessee has expired on 16.05.2014 and notice issued u/s. 148 of the Act to a deceased person is bad in law as reassessment notice cannot be issued in the name of deceased person. The assessee has also relied upon the various judgments of the Hon'ble Courts. 3, The objections filed against reopening of the case by the assessee have been gone through by the undersigned and duly considered. However, the same is not found acceptable on merits. In this case, the case has been re- opened in the name of legal heir Smt. Hansa Lalu Page 3 of 9 C/SCA/20842/2019 ORDER DATED: 22/03/2021 Gokalbhai, wife of the deceased assessee Late Shri Lalu Gokalbhai. Hence, the contention put forth by the legal heir of the deceased assessee is incorrect and not acceptable as per law. Moreover, it is important to mention that during the verification process, the legal heir Smt. Hansa Lalu Gokalbhai of the deceased assessee has stated in her reply vide letter dated Nil received on 14.02.2019 that she will provide the details to the best possible extent and raised no objection towards any verification or proceedings to be initiated in future. 4. Considering the facts and circumstances of the case, the objections of the assessee against the re-opening of the case are hereby rejected. However, it may please be Clarified that your submission/evidences will be duly considered at the time of fresh assessment proceedings and the fresh assessment will be made after evaluating the submission and evidences filed by you.” 3. Being aggrieved by the impugned notices as well as the order of disposing of the objections, the writ applicant has come up before this Court with the present writ application and prayed to quash and set aside the impugned notices dated 28.03.2019 at Annexure-A & B to this writ application. 4. We have heard Mr. B.S.Soparkar, the learned counsel appearing for the writ applicant and Mrs. Kalpana Raval, the learned Sr. Standing Counsel assisted by Mr. Nikunt Raval, the learned counsel for the Revenue. 5. Mr. B.S.Soparkar, the learned counsel appearing for the writ applicant would submit that, the impugned Notices are absolutely bad in law and against the provisions of statute, more particularly under Section 147 of the Act; that the proceedings under Section 147 of the Act have been initiated against the dead person as deceased was expired prior to the issuance of the notice under Section 148 of the Act; that the action of the respondent is without Page 4 of 9 C/SCA/20842/2019 ORDER DATED: 22/03/2021 jurisdiction in issuing the impugned notice against a deceased person; that the revenue was aware about the death of the assessee as the writ applicant had informed about the same vide her letter dated 14.02.2019 and enclosed the death certificate and therefore, notice against the dead person is invalid; that merely supplying of information by the writ applicant does not confer the jurisdiction upon the respondent to issue notice as the writ applicant has never participated in the assessment after the issuance of the notice; that no notice issued in the name of the writ applicant and only one notice issued in the name of Lalubhai Gokalbhai (deceased); that it appears that, there is no distinct notices and the attempt on the part of the revenue to paste on the notice issued in the name of Lalubhai Gokalbhai replacing his name to the writ applicant is absolutely deplorable. 6. In view of the aforesaid contentions raised by the learned Counsel appearing for the writ applicant, it is submitted that, the impugned notice issued in the name of the husband of the writ applicant (Lalu Gokalbhai) is the only notice issued by the revenue and therefore, notice issued on the name of dead person is required to be quashed and set aside. 7. On the other hand, Mrs. Kalpana Raval, the learned Sr. Standing Counsel appearing for the Revenue opposed the writ application contending that the action taken by the AO is just, legal and proper and does not warrant any interference. It was submitted that, deceased was non-filer for the A.Y. 2012-13 and the explanation furnished by the Page 5 of 9 C/SCA/20842/2019 ORDER DATED: 22/03/2021 writ applicant was not satisfactory and the transactions remained unverified during the verification proceedings and therefore, the case was reopened in the name of legal heir after taking approval from the competent authority and notice issued under Section 148 of the Act in the name of Smt. Hansaben Lalubhai, legal heirs of late Shri Lalubhai Gokalbhai, which was duly served upon her. 8. In view of the aforesaid contentions, the learned counsel for the revenue submits that, there being no merits in the writ application, the same deserved to be dismissed. 9. Mr. B.S.Soparkar, learned counsel for the writ applicant raised the substantial issue with regard to the valid notice as the notice is the foundation of validity of assessment. Reliance was placed upon the decision of this Court in the case of Chandreshbhai Jayantibhai Patel Vs. Income Tax Officer [SCA/157172/2018] to submit that, the impugned notice which is jurisdictional notice, has been issued to a dead person and the impugned notice (at Annexure-B) served upon the writ applicant bearing identical notice number, wherein, on the name of assessee, an additional piece of paper is pasted bearing the name of the writ applicant, which cannot be said to be two distinct notices and the defect in the notice goes to the root of the validity of the notice and is not an inadvertent error to cure under Section 292B of the Act and therefore, the notice alleged to have issued in the name of the writ applicant as legal heir be required to be quashed and set aside. Page 6 of 9 C/SCA/20842/2019 ORDER DATED: 22/03/2021 10. On the other hand, the stance of the revenue is that, the notices are distinct and the notice (at Annexure-B) was served to the writ applicant and therefore, by virtue of sub- section (3) of Section 159 of the Act, the writ applicant shall for the purposes of the Act, be deemed to be an assessee and in view of Section 292B of the Act, the notice served upon the writ applicant is valid and legal. 11. We have considered the submissions advanced by learned counsel for the respective parties and perused the case papers. 12. In the present case, we find that, impugned notice dated 28.03.2019 under Section 148 of the Act addressed to Lalubhai Gokalbhai was issued to a dead person. The reason is that, the revenue had served notice dated 28.01.2019 under Section 133(6) of the Act which was in the name of Lalubhai Gokalbhai and the same was replied by the writ applicant vide her letter dated 14.12.2019 inter alia stating that, her husband Lalubhai Gokalbhai died on 16.05.2014, therefore, the revenue was aware that, prior to the issuance of impugned notice, the assessee Lalubhai Gokalbhai died. Record indicates that, the writ applicant being a legal representative of the deceased raised the objection and did not have filed any return of income. Under such circumstances, we have no hesitation to hold that, the impugned notice dated 28.03.2019, issued in the name of Lalubhai Gokalbhai (at Annexure-A) was issued to a dead person and is liable to be quashed and set aside. Page 7 of 9 C/SCA/20842/2019 ORDER DATED: 22/03/2021 13. We have carefully examined the impugned notice dated 28.03.2019 (at Annexure-B) which was issued in the name of Hansaben Lalubhai – legal representative of the deceased, the writ applicant. It has been vehemently submitted by learned advocate Mr. B.S.Soparkar that, the notice issued in the name of Gokalbhai Lalubhai was served upon the writ applicant replacing the name of her husband by pasting the paper as the notice number of bot the notices are same. We are not convinced with the submission of the learned counsel Mr. Soparkar. We have carefully examined the case record. It is true that, the notice number of both the notices (at Annexures-A & B) are same. It appears from the record that, the notice at Annexure-A had been uploaded on web portal, whereas, the notice at Annexure-B addressed to the writ was served upon the writ applicant. A bare perusal of the order disposing of the objections against reopening of the assessment, it was observed by the AO that, the case has been reopened in the name of legal heir Smt. Hansaben Lalubhai Gokalbhai, wife of the deceased assessee as the assessee did not have filed his return of income for the year under consideration and the income of Rs.5,63,76,730/- is liable for tax, has escaped assessment. In this context, we are of the considered view that, after uploading the impugned notice at Annexure-A on the web portal, the revenue took corrective measure as provided under Section 292B of the Act and issued a fresh notice (at Annexure-B) to the writ applicant as legal heir of the deceased. Page 8 of 9 C/SCA/20842/2019 ORDER DATED: 22/03/2021 14. Section 292B of the Income Tax Act is required to be referred which reads as under:- “Section 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 pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.” 15. In view of the facts and circumstance of the present case and the legal provisions as referred to above, we are of the considered view that the notice at Annexure-B dated 28.03.2019 is a distinct and fresh notice and has been rightly issued to the writ applicant as legal heir and representative of the deceased and therefore, the notice issued under Section 148 of the Act cannot be said to be invalid and bad in law. It is also pertinent to note that, the Principal Commissioner of Income Tax had perused the reasons recorded by the AO and relevant facts and information available on record and was satisfied that it is a fit case for issuanee of Notice under Section 148 of the Act. 16. In view of the foregoing reasons, the writ application is allowed in part. The notice dated 28.03.2019 at Annexure- A is hereby quashed and set aside. J. B. PARDIWALA, J) (ILESH J. VORA,J) SUCHIT Page 9 of 9 "