Late Smt. Laxmibai Karanpuria, V. The ACIT, Cir. 1(3),

ITA 195/IND/2005

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8019 (ITAT-INDORE)
• Duration Of Justice: 5 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-03-2010
• Assessment Year: 1990-1991
• Appeal Filed On: 25-02-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Loose papers; Set aside
• Section: 142(1); 69B; 143(2); 147; 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER ITA NOS.194 & 195/IND/2005 ASSESSMENT YEARS: 1989-90 & 1990-91 LATE SMT. LAXMIBAI KARANPURIA (L/H SHRI RAJENDRA KARANPURIA) (PAN OF L/H AHIPK 8981 D) C/O M/S. KAILASH C. AGRAWAL & CO., CA 309, CHETAK CENTRE, 12/2, RNT MARG, INDORE APPELLANT VS ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1(3), INDORE RESPONDENT ASSESSEE BY : SHRI KAILASH AGRAWAL, CA DEPARTMENT BY : SMT. APARNA KARAN, SR. DR O R D E R PER JOGINDER SINGH, JM THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST THE SEPARATE ORDERS OF THE LD. COMMISSIONER OF INCOME T AX (APPEALS)I, INDORE DATED 17.11.04 RELATING TO THE ASSESSMENT YE ARS 1989-90 AND 1990-91 WHEREIN THOUGH VARIOUS GROUNDS HAVE BEEN RA ISED CHALLENGING THE SUSTENANCE OF ADDITION MADE U/S 69B OF THE ACT ON THE BASIS OF LOOSE PAPERS AND GIRVI BOOKS FOUND AT THE TIME OF T HE SEARCH. HOWEVER, 2 DURING HEARING OF THESE APPEALS, THE LD. COUNSEL FO R THE ASSESSEE SHRI K.C. AGRAWAL RAISED A LEGAL GROUND WHETHER ASSESSME NT CAN BE FRAMED ON A DEAD PERSON. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT SEARCH WAS CARRIED OUT ON 13.9.1990 AND THE DECEASE D ASSESSEE DIED ON 2.2.1990 I.E. PRIOR TO THE DATE OF SEARCH AND THE H USBAND OF THE ASSESSEE ALSO DIED ON 18.3.2009. IT WAS ALSO POINTE D OUT THAT THE L/H IS ALSO A DRUG ADDICT HAVING NO KNOWLEDGE OF ACCOUNTAN CY AND IS NOT UNDER THE NORMAL STATE OF MIND. THE L/H ALSO LOST B OTH HIS PARENTS IN A VERY SHORT SPAN PRIOR TO SEARCH AND ALSO THAT THE L /H WAS NOT CROSS- EXAMINED ABOUT TRANSACTIONS. IT WAS POINTED OUT THA T EVEN IN THE STATEMENT, HE TENDED HIS IGNORANCE ABOUT GIRVI ITEM S/TRANSACTIONS. THE LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON T HE DECISION 148 ITR 385 (AP), 313 ITR 305 (P & H), 273 ITR 384 (DEL). O N THE OTHER HAND, THE LD. SR. DR MRS. APARNA KARAN DEFENDED THE IMPUG NED ORDER BY INVITING OUR ATTENTION TO SEC. 159(2) OF THE ACT BY PLACING RELIANCE UPON THE DECISION IN 85 ITR 407 (SC). 2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. SINCE LEGAL ISSUE HAS BEEN RAISED BY THE ASSESSEE, THEREFORE, W ITHOUT GOING INTO THE MERITS OF THE APPEALS, THE LEGAL GROUND RAISED BY THE ASSESSEE IS ADMITTED, THEREFORE, FIRST, WE ARE SUPPOSED TO DISP OSE OF THE LEGAL 3 ISSUE. BRIEF FACTS ARE THAT A SEARCH WAS CARRIED OU T U/S 132 OF THE ACT ON 13.9.1990 WHEREIN CERTAIN LOOSE PAPERS AND GIRVI BOOKS WERE SEIZED. AS PER THE REVENUE, ON THE BASIS OF SEIZED MATERIAL , ENTIRE MONEY LENDING BUSINESS WAS NOT DISCLOSED TO THE DEPARTMEN T. ORIGINALLY, THE ASSESSMENT WAS FRAMED ON 31.3.1993 RESULTING INTO A DDITION OF RS.2,94,086/-. THE ORIGINAL ASSESSMENT WAS SET ASID E BY THE LD. CIT(A) VIDE ORDER DATED 11.3.97. THE FIRST HEARING WAS FIX ED ON 10.3.1999. DURING THE COURSE OF THE SEARCH, CERTAIN LOOSE PAPE RS RELATING TO PAWNING WERE SEIZED WHICH WERE PRESUMED TO BE PERTA INED TO THE ASSESSEE. EVEN AS PER THE LD. CIT(A), ONUS LIES HEA VILY ON THE ASSESSEE TO EXPLAIN THE ENTRIES RECORDED IN THE SEIZED BOOKS /PAPERS FOUND DURING COURSE OF SEARCH OPERATION. WE DO NOT AGREE WITH THIS OBSERVATION BECAUSE HOW THE ONUS LIE ON THE ASSESSE E WHEN SHE HAD ALREADY EXPIRED. THERE IS NO DISPUTE TO THE FACT TH AT THE ASSESSEE HAD ALREADY DIED ON 2.2.1990 AND THE SEARCH WAS CONDUCT ED THEREAFTER ON 13.9.1990. IN SUCH A SITUATION, WE ARE OF THE CONSI DERED OPINION THAT NO ASSESSMENT CAN BE FRAMED ON A DEAD PERSON BECAUS E U/S 159 OF THE ACT, PROCEEDINGS COULD BE CONTINUED AGAINST THE LEG AL REPRESENTATIVE OF THE DECEASED ASSESSEE ONLY IF THE SAME HAD SAME ALR EADY BEEN STARTED DURING THE LIFE TIME OF THE ASSESSEE. IN THE PRESEN T APPEAL, SINCE THE ASSESSEE HAD ALREADY DIED ON 2.2.1990 AND THE SEARC H WAS CONDUCTED 4 AFTER HIS DEATH ON 13.9.1990, THEREFORE, NO VALID A SSESSMENT COULD BE FRAMED ON THE DECEASED PERSON. OUR VIEW FINDS SUPPO RT FROM THE RATIO LAID DOWN IN THE FOLLOWING CASES: 1. CIT VS. RAKESH KUMAR [2009] (313 ITR 305) (P & H); 2. R.C. JAIN (DECD.) VS. CIT AND OTHERS (273 ITR 3 84) (DEL); 3. CIT VS. MOTI RAM (DECD.) [2009] 316 (ITR 321) ( P & H); 4. CIT VS. PRABHAVATI GUPTA & OTHERS (231 ITR 188) (MP); 5. CIT VS. C.V. RAGHVA REDDY (148 ITR 385) (AP); 3. DURING HEARING, THE LEARNED SR. DR RELIED UPON T HE DECISION IN CIT V. JAI PRAKASH SINGH; 85 TAXMAN 407 (SC). IN THAT C ASE AFTER THE DEATH OF ONE B, WHO HAD NOT FILED RETURN FOR ASSESSMENT Y EARS 1965-66 TO 1967-68, J, ONE OF HIS TEN LEGAL REPRESENTATIVES, F ILED RETURN FOR THE AFORESAID ASSESSMENT YEARS DISCLOSING INCOME OF B. AO ISSUED NOTICE TO J U/S 142(1) AND 143(2) AND J COMPLIED WITH THE SAM E. ASSESSMENT ORDERS WERE MADE MENTIONING NAMES OF ALL TEN LEGAL REPRESENTATIVES AS ASSESSEE. ON APPEAL, J CONTENDED FOR THE FIRST TIM E THAT INASMUCH AS ALL LEGAL REPRESENTATIVES OF B WERE NOT GIVEN NOTIC E FOR ASSESSMENT PROCEEDINGS, THE ASSESSMENTS MADE WERE ILLEGAL AND VOID. THIS CONTENTION OF THE ASSESSEE WAS REJECTED BY THE AAC HOLDING THAT COMPLETING ASSESSMENT WITHOUT SERVING NOTICE ON ALL LEGAL REPRESENTATIVES WAS ONLY AN IRREGULARITY. THE TRIBU NAL AFFIRMED THE 5 VIEW. HOWEVER, THE HONBLE HIGH COURT HELD THAT IN THE ABSENCE OF NOTICE TO ALL REPRESENTATIVES, ASSESSMENT MADE UPON THEM WAS A NULLITY AND NOT MERELY IRREGULARITY, THEREFORE, THE DIRECTI ON OF AAC WAS SET ASIDE. ON A QUESTION WHETHER IT CAN BE SAID THAT O MISSION TO SERVE OR ANY DEFECT IN SERVICE OF NOTICES PROVIDED BY PROCED URAL PROVISIONS EFFACES OR ERASES LIABILITY TO PAY TAX WHERE SUCH L IABILITY IS CREATED BY DISTINCT SUBSTANTIVE PROVISIONS. IT WAS HELD IN NEG ATIVE. ON ANOTHER QUESTION WHETHER IT COULD BE SAID THAT NON-SERVICE OF NOTICE U/S 143(2) AGAINST NINE OUT TEN LEGAL REPRESENTATIVES OF DECEA SED B INVALIDATED ASSESSMENT ORDERS. IT WAS ALSO DECIDED IN NEGATIVE . HOWEVER, IN THE PRESENT APPEAL THE ISSUE BEFORE US IS DIFFERENT I.E . WHETHER THE ASSESSMENT CAN BE FRAMED ON A DEAD PERSON, THEREFOR E, THE FACTS OF THE AFORESAID CASE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEAL, CONSEQUENTLY, THIS JUDICIAL PRONOUNCEMENT M AY NOT HELP THE REVENUE. 4. ANOTHER PLEA RAISED BY THE LEARNED SR. DR IS THA T SECTION 159(2) IS APPLICABLE AS PER WHICH ANY PROCEEDING WHICH COULD HAVE BEEN TAKEN AGAINST THE DECEASED, IF HE HAD SURVIVED, MAY BE TA KEN AGAINST THE LEGAL REPRESENTATIVES. WE ARE REPRODUCING HEREUNDER SECTION 159 OF THE ACT :- 159. (1) WHERE A PERSON DIES, HIS LEGAL REPRESENTATIVE SHALL BE LIABLE TO PAY ANY SUM WHICH 6 THE DECEASED WOULD HAVE BEEN LIABLE TO PAY IF HE HA D 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 SUB-SECTION (1), (A) ANY PROCEEDING TAKEN AGAINST THE DECEASED BEFOR E HIS DEATH SHALL BE DEEMED TO HAVE BEEN TAKEN AGAINS T 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 AG AINST THE DECEASED IF HE HAD SURVIVED, MAY BE TAKEN AGAIN ST THE LEGAL REPRESENTATIVE; AND (C) ALL THE PROVISIONS OF THIS ACT SHALL APPLY AC CORDINGLY. (3) THE LEGAL REPRESENTATIVE OF THE DECEASED SHALL, FOR THE PURPOSES OF THIS ACT, BE DEEMED TO BE AN ASSESS EE. (4) EVERY LEGAL REPRESENTATIVE SHALL BE PERSONALLY LIABLE FOR ANY TAX PAYABLE BY HIM IN HIS CAPACITY A S LEGAL REPRESENTATIVE IF, WHILE HIS LIABILITY FOR TA X REMAINS UNDISCHARGED, HE CREATES A CHARGE ON OR DISPOSES OF OR PARTS WITH ANY ASSETS 27 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 PARTE D 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 INCONSISTEN T WITH THE PROVISIONS OF THIS SECTION, APPLY IN RELAT ION TO A LEGAL REPRESENTATIVE. (6) THE LIABILITY OF A LEGAL REPRESENTATIVE UNDER T HIS SECTION SHALL, SUBJECT TO THE PROVISIONS OF SUB-SEC TION (4) AND SUB-SECTION (5), BE LIMITED TO THE EXTENT T O WHICH THE ESTATE IS CAPABLE OF MEETING THE LIABILIT Y. (EMPHASIS SUPPLIED) 7 IF THE AFORESAID SECTION IS ANALYSED, WE ARE OF THE VIEW THAT SECTION 159(2) IS SUBJECT TO SUB-SECTION (1)(A) THAT ANY PR OCEEDINGS TAKEN AGAINST THE DECEASED BEFORE HIS DEATH SHALL BE DEEM ED TO HAVE TAKEN AGAINST THE LEGAL REPRESENTATIVES AND MAY BE CONTIN UED AGAINST THE LEGAL REPRESENTATIVES FROM THE STAGE AT WHICH IT ST OOD ON THE DATE OF THE DEATH OF THE DECEASED. IT CAN BE SAID THAT NO P ROCEEDINGS WERE TAKEN AGAINST THE ASSESSEE BEFORE HIS DEATH AS THE SEARCH TOOK PLACE EVEN AFTER ABOUT 7 MONTHS OF THE DEATH OF THE ASSES SEE, THEREFORE, SUB-SECTION (2) OF SECTION 159 OF THE ACT IS NOT AP PLICABLE TO THE PRESENT APPEAL. IN VIEW OF THESE FACTS, THE RATIO LAID DOWN BY THE HONBLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F RAKESH KUMAR (SUPRA) SUPPORTS THE CASE OF THE ASSESSEE WHEREIN S EARCH WARRANTS WERE ISSUED IN THE NAME OF DEAD PERSON. THE SEARCH WAS HELD TO BE INVALID AND THE ASSESSMENT BASED ON SUCH SEARCH WAS ALSO HELD TO BE INVALID. WHILE COMING TO THIS CONCLUSION, THE HONB LE COURT ALSO CONSIDERED THE DECISION OF THE HONBLE APEX COURT I N THE CASE OF PRATAP SINGH (DR.) V. DIRECTOR OF ENFORCEMENT; 155 ITR 166 (SC) (PARA 4) AND ANOTHER DECISION IN PURANMAL V. DIRECTOR OF INSPECTION (INV.) INCOME TAX; 93 ITR 505 (SC) (PARA 4). IT IS PERTIN ENT TO MENTION HERE THAT THE SPECIAL LEAVE PETITION FILED BY THE DEPART MENT,AGAINST THE AFORESAID DECISION, WAS ALSO DISMISSED BY HONBLE A PEX COURT(2009) 8 313 ITR (ST.) 29 ED. THE RATIO LAID DOWN BY THE C HANDIGARH BENCH OF THE TRIBUNAL, IN THE CASE OF SHRI SOHANLAL GOYAL V. DCIT (ITA NO. 610/CHD/2009) ORDER DATED 16.9.2009, WHEREIN ONE OF US (JUDICIAL MEMBER), WAS SIGNATORY TO THE ORDER ON THE ISSUE WH ETHER ASSESSMENT CAN BE FRAMED ON A DEAD PERSON AND WAS DECIDED IN N EGATIVE I.E. IN FAVOUR OF THE ASSESSEE, FURTHER FORTIFIES OUR VIEW. IN VIEW OF THE AFORESTATED FACTS AND JUDICIAL PRONOUNCEMENTS, WE A RE OF THE CONSIDERED OPINION THAT SINCE IN THE PRESENT CASE T HE PROCEEDINGS WERE INITIATED AFTER THE DEATH OF THE ASSESSEE, CONSEQUE NTLY, THE AO WAS NOT JUSTIFIED IN FARMING THE ASSESSMENTS. WE, THERE FORE, SET ASIDE THE ASSESSMENTS. RESULTANTLY, BOTH THESE APPEALS OF THE ASSESSEE A RE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16.3.2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16.3.2010 {VYAS} COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE