SHRI ATTARCHAND KHATRI, Nagpur V. Principal C.I.T.-2, Nagpur

ITA 170/NAG/2017

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0065 (ITAT-NAGPUR)
• Duration Of Justice: 4 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRADEEP HEDAOO
• Keywords: Opportunity of being heard
• Section: 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER ITA No.170/Nag./2017 Assessment Year: 2012-13 Sh. Attarchand Khatri, C/o- J.S. Uberoi & Co., Chartered Accountants, Satpratap, Plot No. 2, Bezonbagh, Kamptee Road, Nagpur Vs. Principal Commissioner of Income Tax-2, Sadar, Nagpur PAN :ACHPK0684P (Appellant) (Respondent) ORDER PER O.P. KANT, AM: This appeal by the assessee is directed against order dated 06/03/2017 passed by the Ld. Principal Commissioner of Income Tax-2, Nagpur [in short „the ld. PCIT‟] for assessment year 2012- 13 in terms of section 263 of Income-tax Act, 1961 (in short „the Act‟). 2. The learned counsel of the assessee filed revise grounds of the appeal, wherein he challenged legality of the order passed on the legal heir, even when the appellant is surviving. The assessee Appellant by Sh. Mahavir Atal, Adv. Respondent by Sh. Pradeep Hedaoo, Sr.DR Date of hearing 25.10.2021 Date of pronouncement 18.01.2022 2 ITA No.170/Nag/2017 (Sh. Attarchand Khatri) has also challenged, invoking of Explanation-2 below section 263 of the Act for a period prior to the amendment. 3. Addressing the ground related to validity of assessment on legal heir, the learned Counsel submitted that in the impugned order ld. PCIT has mentioned that notice u/s 263 sent to the assessee was sent to the assessee, however same returned back with acknowledgement that the assessee had passed away. He submitted that in the subsequent notice dated 19/01/2017 served on the so called legal heir Sh. Sudhir Khatri, there was no mention of the fact of return back of notice issued to the assessee with the endorsement that addressee (i.e.assessee) had passed away. He submitted that even the legal heir was not brought on record and therefore impugned order of the PCIT is void ab initio as the assessee is still alive and the order should have been passed in the name of the assessee rather than in the name of legal heir. 4. The learned DR, on the other hand, submitted that the notice dated 11/01/2017 for initiation of proceeding under 263 of the Act was sent on the address of the assessee, however same was returned back with the comment that “there addressee has passed away”. In view of the endorsement on the notice, the learned PCIT sent another notice in the name of Sh. Sudhir Khatri, who is legal heir of the assessee. The legal heir did not disclose the fact that assessee was alive and he simply camouflaged this fact while contesting the notice issued to him. The learned PCIT has acted bonafidely on the basis of the information made available to him, and therefore, there is no fault on the part of him. The learned DR submitted that in such 3 ITA No.170/Nag/2017 (Sh. Attarchand Khatri) circumstances, matter may be restored back to the PCIT for deciding on merit. 5. We have heard rival submission of the parties on the issue of validity of the impugned order made on the legal heir of the assessee. The learned PCIT has recorded the fact of the issue of notice on the assessee and returned back with endorsement that the addressee has passed away. The relevant portion of the impugned order is reproduced as under: “2.3 In view of the above, a show cause notice u/s 263 of the Income-tax Act, 1961, dated 11.01.2017 was issued and served on the assessee fixing the case for hearing on 31.01.2017. However, the said notice was returned back to this office with the comments “The addressee has passed away”. Therfore, a notice u/s. 263 of the Income Tax Act, 1961 dated 19.01.2017 was sent to Shri Sudhir Khatri, legal heir of the assessee, fixing the date of hearing as 01.02.2017. In response to the notice, a written submission dated 01.02.2017 was filed by the legal heir of assessee which is placed on record.” 5.1 Further, the reply of the notice served on legal heir is also reproduced by the learned PCIT in para 3 of the order as under: “3. The relevant portion of the submission is reproduced as under: “- That as per the advance of my counsel the notice is erroneous, improper and hence is bad in law. Your Honour is requested to please take cognizance of the same.” para three of the impugned order.” 5.2 In view of the reply of the legal heir reproduced above, it is evident that information of assessee being alive was conspicuously suppressed. The assessee has referred of taking advice of the Counsel. When the notice was issued in the name of the legal heir, it was quite evident to mean that it was issued on the premise that assessee was not alive. Sh. Sudhir Khatri has 4 ITA No.170/Nag/2017 (Sh. Attarchand Khatri) not denied that he is legal heir of the assessee. In such circumstances, the onus was on him to bring real facts before the authority, who had served notice on him. The PCIT has relied on the endorsement of the notice and further name of his legal heir was brought on his record, otherwise we cannot presume the name of the legal heir. In such circumstances, the learned PCIT is not a fault and order in the name of legal heir has been obtained by „fraud‟. 5.3 The impugned notice has been sent to the assessee through postal authorities. The said authority is presumed to have served the said notice in good faith on the address provided. The postal authority has not pointed out any deficiency in the address, which means, the comment of “ addressee passed away” has been endorsed by him on the basis of the information supplied by the person available at the address. This was the beginning of „fraud‟ on the part of the assessee. Subsequently, when the notice was served upon legal heir, he has taken advice of legal counsel and thereafter sent a cryptic reply, conspicuously suppressing the fact of assessee being alive during that period. This is perpetuation of „fraud‟ on the part of the assessee. Thus, this order under 263 of the Act has been obtained by the assessee by way of fraud on his part. The “fraud vitiates everything” and therefore, we feel it appropriate to set aside the impugned order and restore the matter back to the ld PCIT for passing a fresh order under section 263 of the Act within six months of receipt of this order. It is needless to mention that assessee shall be afforded adequate opportunity of being heard. 5 ITA No.170/Nag/2017 (Sh. Attarchand Khatri) 6. In the result, the appeal of the assessee is adjudicated for statistical purposes as indicated above. Order pronounced under Rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1963 by placing the details on the notice board. Sd/- Sd/- (SANDEEP GOSAIN) (O.P. KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 18 th January, 2022. RK/-(DTDC) Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Nagpur City concerned; (5) The DR, ITAT, Nagpur; (6) Guard file. True Copy By Order (A.R./Sr. P.S./P.S.) ITAT, Nagpur 6 ITA No.170/Nag/2017 (Sh. Attarchand Khatri)