L/H Arushiben U. Shah of Late Bhavnaben K. Punjani, RAJKOT-GUJARAT V. The Pr. CIT-2, RAJKOT-GUJARAT

ITA 138/RJT/2017

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 8705 (ITAT-RAJKOT)
• Duration Of Justice: 6 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 31-01-2024
• Assessment Year: 2007-2008
• Appeal Filed On: 26-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Revision of order; Cost of acquisition; Set aside
• Section: 148; 263; 144; 143(3); 50C; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT (Conducted through E-Court at Ahmedabad) BEFORE SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER & SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER I .T .A . N o .1 3 8 /R j t /2 01 7 ( A s se ss m e nt Y e a r : 20 07- 0 8 ) Lat e S mt. B h a vn ab en K . P u nj a ni C/ o . L/ H . S mt . A r u s hi b e n U . Sh a h, 2 n d Fl oo r , J yo ti A p ar t m e nt , Nr . B a n s h id h a r D ai r y, N ir ma la Co nv e nt R o a d, R a j kot V s. Pr i ncip a l C o m mi s s i o ne r o f I nc o m e Ta x- 2, R a jk o t [P AN N o. A J W P D6 60 9 H ] (Appellant) .. (Respondent) Appellant by : Shri Mehul Ranpura, A.R. Respondent by: Shri Shramdeep Sinha, CIT DR D a t e of H ea r i ng 01.02.2024 D a t e of P r o no u n ce me nt 15.02.2024 O R D E R PER SIDDHARTHA NAUTIYAL, JM: This appeal has been filed by the assessee against the order passed by the Ld. Principal Commissioner of Income Tax-2, (in short “Ld. PCIT”), Rajkot vide order dated 24.03.2017 passed for Assessment Year 2007-08. 2. The assessee has taken the following grounds of appeals:- “1.0 The grounds of appeal mentioned hereunder are without prejudice to one another. 2.0 The order u/s 263 of the Income-tax Act, 1961 [hereinafter referred to as the “Act”] passed by the learned Principal Commissioner of Income Tax-2, Rajkot (hereinafter referred to as the “Pr CIT”) is without jurisdiction and bad in law as also on facts and deserves to be quashed any may kindly be quashed. 3.0 The Ld. Pr. CIT erred on facts as also in law in alleging that the order u/s. 143(3) of the Act is not only erroneous but also prejudicial to the interest of the ITA No.138/Rjt/2017 Late Smt. Bhavnaben K. Punjani L/h. Smt. Arushiben U. Shah vs. PCIT Asst.Year –2007-08 - 2 - revenue as the Assessing Officer (AO) has not made any inquiry and verification regarding the cost of the property and taken the document price for the purpose of cost which was deducted from the sale consideration as determined by the stamp duty authority and thereby setting aside the assessment order passed u/s. 143(3) of the Act dated 16.02.2015. The order passed by the ld. CIT is totally unjustified on facts as also in law therefore the same kindly be quashed. 4.0 The ld. Pr CIT further erred on facts in not properly considering the facts on record and appellant’s submission. The order passed u/s 263 of the Act is therefore, totally unjustified on facts as also in law and may kindly be quashed. 5.0 Your Honor’s appellant craves leave to add, amend, alter or withdraw any or more grounds of appeal on or before the hearing of the appeal.” 3. The brief facts of the case are that an order under Section 144 r.w.s 147 of the I.T. Act was passed by the AO on 16.02.2015 by making an addition of Rs. 12,25,500/- as Long Term Capital Gain in the hands of the assessee. The AO was under information that during the relevant previous year, the assessee had sold one immovable property for Rs. 9,25,000/-, vide Sale Deed Document No. 4295 dated 20.04.2006. While registering the sale deed, the Stamp Duty Authority had adopted the value of the property at Rs. 21,50,000/- and charged stamp duty accordingly. Thus, there was difference of Rs. 12,25,000/- in the sale value of the property as declared by the assessee and as adopted by the Stamp Duty Authority. Since the assessee did not file return of income under Section 139(1) of the Act and as the valuation of the property was on the higher side, there was escapement of income and hence, the AO reopened the assessment. The assessee did not file return of income in response to the notice under Section 148 of the Act. Even the notices issued during the assessment proceedings remained unattended. Therefore, the best judgment assessment was passed on 23.02.2015 under Section 143(3) r.w.s. 147 of the Act, determining total income of Rs. 12,25,000/- on account of Long Term Capital Gain. In the order passed under Section 144 r.w.s. 147, the AO had adopted the ITA No.138/Rjt/2017 Late Smt. Bhavnaben K. Punjani L/h. Smt. Arushiben U. Shah vs. PCIT Asst.Year –2007-08 - 3 - stamp duty valuation as full value of consideration by invoking the provisions of Section 50C of the Act. 4. However, the PCIT observed that while framing the assessment order, the Ld. Assessing Officer did not ascertain the cost and year of acquisition of the capital asset. Thus the assessment was made without proper inquiry and investigation. Therefore, as per the PCIT, assessment order was not only erroneous but also prejudicial to the interest of the Revenue as envisaged under Section 263 of the Income tax Act 1961. Further, during the course of 263 proceedings, it was claimed that the capital gain on the property was chargeable to tax in AY. 2003-04 as per provisions of Section 53A of the Transfer of Properties Act, 1882. Further, it has been claimed that in A.Y. 2003-04, the assessee had no taxable income, hence, no return of income was filed. In support, a notarized stamp paper dated 24.07.2000 showing receipt of full consideration and handing over of possession as well as irrevocable power of attorney in favour of purchaser; were produced before PCIT. On going through the records, PCIT observed that these evidences were not produced before the assessing officer, during the assessment proceedings. Accordingly, the assessment order was set aside and the assessing officer was directed that while making fresh assessment de-novo, with a direction that the capital gain on transfer of the capital asset should be worked out after ascertaining the year of acquisition and cost of acquisition of the impugned capital asset, according to law. 5. The assessee is in appeal before us against the aforesaid order passed by PCIT under Section 263 of the Act. ITA No.138/Rjt/2017 Late Smt. Bhavnaben K. Punjani L/h. Smt. Arushiben U. Shah vs. PCIT Asst.Year –2007-08 - 4 - 6. Before us, the Counsel for the assessee submitted that the order passed by PCIT under Section 263 of the Act is bad in law for the reason that the original assessment order has been framed in the name of a deceased person. It was submitted before us that it is a well established law that assessment order framed in the name of a deceased person is bad in law and hence, void ab initio. Therefore, since the original assessment order itself is void ab initio, therefore, the assessment order cannot be subject matter of revision under Section 263 of the Act. The Counsel for the assessee placed reliance on the case of Chandresh Bhai vs. ITO 101 taxman.com, 362 (Gujarat High Court) on the proposition that no order can be passed in the name of a deceased person. 7. In response, DR submitted that despite several notices issued to the assessee, no legal heir informed the Department that the assessee had since expired. Accordingly, the DR placed reliance on the observation made by PCIT in the 263 order. 8. We have heard the rival contentions and perused the material on record. In the instant facts, we observe that the assessee had expired on 15.10.2013, while the assessment order was passed on 16.02.2015 in the name of the assessee. Therefore, evidently at the time when the assessment order was framed, the assessee had since expired. 9. This, therefore leads us to the question that whether the legal heir of the deceased person is under legal obligation to inform the Tax Department about the demise of the assessee. Further, in absence of any specific intimation on part of the legal heirs of the assessee to the Department, can it be held that the assessment order passed in the nature of the deceased person is valid in the ITA No.138/Rjt/2017 Late Smt. Bhavnaben K. Punjani L/h. Smt. Arushiben U. Shah vs. PCIT Asst.Year –2007-08 - 5 - eyes of law. In the case of Savita Kapila v. ACIT 118 taxmann.com 46 (Delhi), the High Court held that in absence of a statutory provision, a duty cannot be cast upon legal representatives to intimate factum of death of assessee to Department and, thus, where Assessing Officer issued a notice to assessee under Section 148 after his death and, in such a case, it could not have been validly served upon assessee, said notice being invalid, was to be quashed. 10. Accordingly, in absence of any specific statutory provision under the Income Tax law which requires the legal heirs to intimate the Income Tax Department about the death of the assessee, we are of the view that the assessment order cannot be to be held to be valid in the eyes of law only for the reason that the legal heirs of the deceased assessee has not informed the Income Tax Department about the death of the assessee. Further, it is a well established law that no assessment can be framed in the name of a person who has since expired. Any assessment order framed in the name of a deceased person without bringing the legal y-heirs of such person on record, is invalid in the eyes of law. In the case of Pravinchandra A Shah 154 taxmann.com 616 (Gujarat), the High Court held that reopening notice under section 148 issued upon deceased assessee was a nullity, therefore, consequential proceedings and orders passed thereon were to be quashed and set aside. Further, the following decisions also support the above proposition of law: - 'Pr. CIT v. Maruti Suzuki India Ltd.' [2019] 107 taxmann.com 375/265 Taxman 515/416 ITR 613 (SC); - 'Krishnaawatar Kabra v. ITO' [2022] 140 taxmann.com 423 (Gujarat); ITA No.138/Rjt/2017 Late Smt. Bhavnaben K. Punjani L/h. Smt. Arushiben U. Shah vs. PCIT Asst.Year –2007-08 - 6 - - 'Rajender Kumar Sehgal v. ITO [2019] 101 taxmann.com 233/260 Taxman 412/414 ITR 286 (Delhi); - Sandeep Chopra v. Pr. CIT' [2023] 149 taxmann.com 225/292 Taxman 269 (Jharkhand); - 'SavitaKapila v. Asstt. CIT[2020] 118 taxmnann.com 46/273 Taxman 148/426 ITR 502 (Delhi); 11. Accordingly, in light of the above Rulings, we are of the considered view that the order passed under section 263 of the Act is not valid in the eyes of law, since the original assessment order having been framed in the name of a deceased person is not valid in the eyes of law, and therefore the same cannot be revised by taking recourse to 263 proceedings. In the result, it is directed that the order passed under section 263 be set aside. 12. In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 15/02/2024 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 15/02/2024 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, राजोकट / DR, ITAT, Rajkot 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार Dy./Asstt.Registrar) आयकर अपील य अ धकरण, राजोकट / ITAT, Rajkot