Jt. Commissioner of Income Tax (OSD)(Insitu), Lucknow V. Late Shri Ramesh Chand Bajpai (L/H Shri Vivek Kumar Bajpai), Lucknow

ITA 251/LKW/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4030 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-08-2016
• Assessment Year: 2013-2014
• Appeal Filed On: 10-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 143(3); 142(1); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. P . K. BANSAL , ACCOUNTANT MEMBER AND SHRI ABY T VARKEY , JUDICIAL MEMBER ITA NO. 251/LKW/2016 ASSESSMENT YEAR: 2013 - 14 JOINT CIT (OSD) CENTRAL CIRCLE 1 LUCKNOW V. LATE SHRI RAMESH CHAND BAJPAI L/H SHRI VIVEK KUMAR BAJPAI BANTHARA, SIKANDARPUR LUCKNOW T AN /PAN : AXQPIOB6222Q (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI O. P. MEENA, CIT (DR) RESPONDENT BY: SHRI RAHUL KUMAR, DATE OF HEARING: 10 08 2016 DATE OF PRONOUNCEM ENT: 30 08 2016 PER ABY T VARKEY, J.M : O R D E R THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - III, LUCKNOW DATED 21.3.2016 FOR THE ASSESSMENT YEAR 2013 - 14. 2 . THE MAIN GRIEVANCE OF THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A) IN ANNULLING THE ASSESSMENT ON THE GROUND THAT NOTICE 143(2) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED IN SHORT 'THE ACT') HAS NOT BEEN ISSUED AGAINST THE LEGAL HEIR OF THE ASSESSEE , WHO H AS DIE D BEFORE THE STATUTORY NOTICES WERE SERVED ON HIM. 3 . THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE PREMISES OF SHRI RAMESH CHAND BAJPAI ON 6.2 .2013. SHRI RAMESH CHAND BAJPAI DIED ON 29.7.2013. NOTICE [ ITA NO.251/LKW/2016, A.Y. 2013 - 14 ] 2 UNDER SECTION 142(1) OF THE ACT ADDRESSED TO SH RI RAMESH CHAND BAJPAI WAS ISSUED ON 29.10.201 3. PURSUANT TO THE SAID NOTICE TO THE DECEASED ASSESSEE, SHRI VIVEK KUMAR BAJPAI (SON OF SHRI RAMESH CHAND BAJPAI) REPLIED TO THE ASSESSING OFFICER THAT THE ASSESSEE SHRI RAMESH CHAND BAJPAI HAD DIED ON 29.7.2 013. THEREAFTER RETURN WAS FILED ON 20.10.2013 BY SHR I VIVEK KUMAR BAJPAI, SON OF LATE SHRI RAMESH CHAND BAJPAI SHOWING A TOTAL INCOME OF RS.7,20,810/ - . AGAIN NOTICE WAS SENT BY THE ASSESSING OFFICER UNDER SECTION 143(2) OF THE ACT ON 26.12.2013 IN THE N AME OF SHRI RAMESH CHAND BAJPAI AND THEREAFTER ANOTHER NOTICE DATED 10.2.2015 UNDER SECTION 143(2) OF THE ACT WAS ALSO ISSUED IN THE NAME OF SHRI RAMESH CHAND BAJPAI. THEREAFTER THE ASSESSMENT WAS COMPLETED ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS .2,42,90,800/ - . 4 . AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) AND RAISED A LEGAL GROUND REGARDING NON - ISSUANCE AND SERVICE OF NOTICE UNDER SECTION 143(2) OF THE ACT TO THE LEGAL HEIR ; AND THE LD. CIT(A) WAS PLEASED TO UPHOLD THE SAID CO NTENTION OF THE ASSESSEE AND ANNULLED THE ASSESSMENT. AGGRIEVED BY THE SAID ORDER OF THE LD. CIT(A), THE REVENUE IS BEFORE US. 5 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORD. WE TAKE NOTE THAT A SEARCH OPERATION UNDER SECTION 132 OF THE ACT WAS CA RRIED OUT AT THE RESIDENTIAL PREMISES OF SHRI RAMESH CHAND BAJPAI ON 6.2. 2013. THEREAFTER, WE TAKE NOTE THAT SHRI RAMESH CHAND BAJPAI DIED ON 29.7.2013. THE ASSESSING OFFICER ISSUED NOTICE DATED 29.10.2013 UNDER SECTION 142(1) OF THE ACT ADDRESSED TO SHR I RAMESH CHAND BAJPAI. PURSUANT TO THE SAID NOTICE, THE LEGAL HEIR, SHRI VIVEK KUMAR BAJPAI REPLIED TO THE ASSESSING OFFICER THAT SHRI RAMESH CHAND BAJPAI HAS EXPIRED ON 2 9.7.2013. THEREAFTER THE SON OF THE DECEASED ASSESSEE [ ITA NO.251/LKW/2016, A.Y. 2013 - 14 ] 3 FILED THE RETURN OF INCOME SH OWING TOTAL INCOME OF RS.7,20,810/ - . WE TAKE NOTE THAT THE ASSESSING OFFICER ISSUED NOTICE DATED 26.12.2013 UNDER SECTION 143(2) OF THE ACT ADDRESSED TO SHRI RAMESH CHAND BAJPAI , WHICH WA S ALSO REPLIED BY THE SON OF ASSESSEE VIDE LETTER DATED 15.1.2014. THEREAFTER ANOTHER NOTICE DATED 10.2.2015 UNDER SECTION 143(2) OF THE ACT WAS ALSO ISSUED BY THE ASSESSING OFFICER ADDRESSED TO SHRI RAMESH CHAND BAJPAI AND THE ASSESSMENT ORDER WAS ALSO PASSED IN THE NAME OF SHRI RAMESH CHAND BAJPAI. THE LD. CIT(A) WHILE PASSING THE IMPUGNED ORDER, HAS TAKEN INTO CONSIDERATION ALL THESE FACTS AND THE SAID FACTS COULD NOT BE CONTROVERTED BY THE LD. CIT (DR) BE FORE US. THE FACT IS THAT THERE WAS A SEARCH CONDUCTED ON 6.2 .2013 AT THE PREMISES OF SHRI RAMESH CHAND BAJPAI A ND HE DIED ON 29.7.2013. WHEN THE NOTICE WAS ISSUED UNDER SECTION 142(1) OF THE ACT, THE LEGAL HEIR OF LATE SHRI RAMESH CHAND BAJPAI INFORMED THE ASSESSING OFFICER THAT SHRI RAM ESH CHAND BAJPAI IS NO MORE. DESPITE THIS INFORMATION THE ASSESSING OFFICER K EPT ON SENDING THE NOTICES UNDER S ECTION 143(2) OF THE ACT TO SHRI RAMESH CHAND BAJPAI AS IF HE WAS ALIVE, IGNORING THE INFORMATION OF HIS DEATH . THE REPLIES TO THE STATUTORY NOTICES WERE GIVEN BY THE LEGAL HEIR, SHRI VIVEK KUMAR BAJPAI. SO THE UNDISPUT ED FACT IS THAT NOTICE UNDER SECTION 143(2) OF THE ACT HAS NOT BEEN ISSUED ON THE LEGAL HEIR OF LATE SHRI RAMESH CHAND BAJPAI BEFORE COMPLETING THE ASSESSMENT AND THE ASSESSMENT ORDER HAS ALSO BEEN PASSED IN THE NAME OF LATE SHRI RAMESH CHAND BAJPAI. THE LD. CIT(A) HAS RIGHTLY DWELLED INTO THE ISSUE BY TRACING THE LEGISLATIVE HISTORY AND DISCUSSED THE BACK - GROUND AS TO HOW THE SAID PROVISION I.E SECTION 159 OF THE ACT UNDER CHAPTER XV WAS ENAC TED IN THE INCOME - TAX ACT, TO DEAL WITH A SITUATION WHEN THE AS SESSEE DIES DURING THE ASSESSMENT PROCEEDINGS AND HAS OBSERVED AS UNDER: - [ ITA NO.251/LKW/2016, A.Y. 2013 - 14 ] 4 4(6) I HAVE EXAMINED THE FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE APPELLANT HAD EXPIRED ON 29.07.2013 AND THE ASSESSMENT ORDER HAS BEEN PASSED UNDER SECTION 143(3) OF TH E ACT ON 09.03.2015 IN THE NAME OF THE APPELLANT SHRI RAMESH CHAND BAJPAI, A PERSON WHO WAS NOT ALIVE ON THE DATE OF THE ORDER. IN THE CASE OF ELLIS C. REID VS CIT [1930] 5 ITC 100 (BOM), THE BOMBAY HIGH COURT POINTED OUT THAT ACCORDING TO THE LAW AS IT TH EN STOOD, WHERE A PERSON DIED AFTER THE COMMENCEMENT OF THE ASSESSMENT YEAR BUT BEFORE HIS INCOME OF THE PREVIOUS YEAR WAS ASSESSED HIS EXECUTOR WAS NOT LIABLE TO PAY THE TAX AND IF THE DEATH OCCURRED WHILST ASSESSMENTS WERE PENDING, THE PROCEEDINGS COULD NOT BE CONTINUED AND THE ASSESSMENT COULD NOT BE MADE AFTER THE PERSON'S DEATH. THIS LACUNA WAS REMOVED BY THE ENACTMENT OF SECTION 24B IN THE INCOME TAX ACT, 1922, WHICH MADE THE LEGAL REPRESENTATIVE LIABLE TO PAY THE TAX WHICH MIGHT HAVE BEEN ASSESSED BU T NOT PAID BY THE DECEASED PERSON OR WHICH MIGHT BE ASSESSED AFTER HIS DEATH. THE LIABILITY, THOUGH ABSOLUTE, WAS, HOWEVER, LIMITED TO THE EXTENT TO WHICH THE ESTATE OF THE DECEASED PERSON WAS CAPABLE OF MEETING THE CHARGE. THE MACHINERY FOR ASSESSMENT OF THE INCOME OF A DECEASED PERSON AFTER HIS DEATH WAS ALSO PROVIDED AND THE AO WAS AUTHORIZED TO ASSESS THE TOTAL INCOME OF THE DECEASED PERSON AS IF THE LEGAL REPRESENTATIVE WERE THE ASSESSEE. 4(7) WHEN THE PRESENT ACT (INCOME TAX ACT, 1961) WAS ENACTED, SE CTION 159 OF THE ACT OCCURRING IN CHAPTER XV WHICH IS TITLED 'LIABILITY IN SPECIAL CASES', MADE A PROVISION TO MEET WITH A SIMILAR SITUATION. UNDER THE ACT, THE WORDS 'LEGAL REPRESENTATIVE' HAVE THE MEANING ASSIGNED TO THEM IN THE CODE OF CIVIL PROCEDURE ( SECTION 2(29) OF THE ACT) AND, ACCORDINGLY, IN SO FAR AS IT IS RELEVANT FOR THE PURPOSES OF THE PRESENT CASE, THEY MEAN A PERSON WHO, IN LAW, REPRESENTS THE ESTATE OF A DECEASED PERSON AND INCLUDE ANY PERSON WHO INTERMEDDLES WITH THE ESTATE OF THE DECEASED . WHERE AN ASSESSEE DIES, HIS LEGAL REPRESENTATIVE BECOMES 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 (SECTION 159(1) OF THE ACT). THE LIABILITY OF A LEGAL REPRESENTATIVE IS, HOWEVER, LIMITED TO THE EXTENT TO WHICH THE ESTATE IS CAPABLE OF MEETING THE LIABILITY (SECTION 159(6) OF THE ACT), UNLESS THE LEGAL REPRESENTATIVE, WHILE HIS LIABILITY FOR TAX REMAINS UN - DISCHARGED, CREATES A CHARGE ON OR DISPOSES OF OR PARTS WITH ANY - ASSETS OF THE ESTATE OF THE DECEASED, WHICH ARE IN OR MAY COME INTO, HIS POSSESSION. EVEN IN SUCH [ ITA NO.251/LKW/2016, A.Y. 2013 - 14 ] 5 EXCEPTIONAL CASES, HOWEVER, THE LIABILITY IS LIMITED TO THE PAYMENT OF TAX ONLY AND IT IS CONFINED TO THE VALUE OF THE ASSET SO CHARGED, DISPOSED OF, OR PARTED WITH (SECTION 159(4) OF THE ACT). FOR THE PURPOSE OF MAKING AN ASSESSMENT OF THE INCOME, OF THE DECEASED AND LEVYING ANY SUM IN THE HANDS OF THE LEGAL REPRESENTATIVE, ANY PROCEEDING TAKEN AGAINST THE DECEASED BEFORE HIS DEATH IS DEE MED TO HAVE BEEN TAKEN AGAINST THE LEGAL REPRESENTATIVE AND IT MAY BE CONTINUED AGAINST THE LEGAL REPRESENTATIVE FROM THE STAGE AT WHICH IT STOOD ON THE DATE OF THE DEATH OF THE DECEASED AND ALL THE PROVISIONS OF THE ACT ARE TO APPLY ACCORDINGLY (SECTION 1 59(2) OF THE ACT). THE LEGAL REPRESENTATIVE, FOR THE PURPOSES OF THE ACT, IS DEEMED TO BE AN ASSESSEE (SECTION 159(3) OF THE ACT). THE INCOME OF A DECEASED CAN BE ASSESSED ONLY UNDER THIS SECTION AND THE LEGAL REPRESENTATIVE HAS THE RIGHT TO REIMBURSEMENT AND TO RECOVER ANY SUM PAID BY HIM UNDER THE ACT FROM THE ESTATE AND TO RETAIN OUT OF ANY MONIES THAT MAY BE IN HIS POSSESSION OR MAY COME TO HIM AS A LEGAL REPRESENTATIVE AN AMOUNT EQUAL TO THE SUM SO PAID. THE DEPARTMENT HAS A RIGHT TO RECOVER ALL DUES F ROM THE PROPERTY UNDER THE CONTROL OR MANAGEMENT OF THE LEGAL REPRESENTATIVE (SECTION 159(5) OF THE ACT). 6 . THE LD. CIT(A) HAS CORRECTLY HELD AS ABOVE AND WE AGREE WITH THE SAME. WE TAKE NOTE THAT SEARCH IN THE CASE OF SHRI RAMESH CHAND BAJPAI WAS CONDUCTE D ON 6.2.2013 AS NOTED BY THE AO AND SO THE ASSESSMENT IN RESPECT TO ASSESSMENT YEAR 2013 - 14 CANNOT BE UNDER SECTION 153A OF THE ACT. 7 . AS PER THE ORDER OF THE HONBLE SUPREME COURT IN THE CASE OF CIT & ANOTHER VS. M/S HOTEL BLUE MOON, 321 ITR 362 (SC) BEF ORE COMPLETION OF THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT THE ASSESSEE HAS TO BE SERVED WITH NOTICE UNDER SECTION 143(2) OF THE ACT, WHICH IS MANDATORY AND FAILURE TO DO SO WOULD VITIATE THE ENTIRE ASSESSMENT PROCEEDINGS COMPLETED UNDER SECTION 143( 3) OF THE ACT. WE TAKE NOTE THAT DESPITE THE INFORMATION GIVEN BY THE SON OF SHRI RAMESH CHAND BAJPAI THAT HIS FATHER I.E. SHRI RAMESH CHAND BAJPAI WAS NO MORE, STILL THE AO ISSUED NOTICE UNDER SECTION 142(3) AND 143(2) OF THE [ ITA NO.251/LKW/2016, A.Y. 2013 - 14 ] 6 ACT IN THE NAME OF SHRI RAME SH CHAND BAJPAI AND NOT TO THE LEGAL HEIR AS PER SECTION 159 OF THE ACT. THE LD. CIT(A) HAS RIGHTLY HELD THAT FAILURE OF THE AO TO ISSUE AND SERVE NOTICE UNDER SECTION 143(2) OF THE ACT TO THE LEGAL HEIR IN ACCORDANCE WITH THE LAW COULD NOT BE CURED UNDER SECTION 292B AND 292BB OF THE ACT IS ALSO CORRECT AND THEREFORE WE ARE NOT INCLINED TO INTERFERE IN THE ORDER PASSED BY THE LD. CIT(A) AND WE UPHOLD THE SAME. 8 . IN THE RESULT, APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.8.2016. SD/ - SD/ - [P. K. BANSAL ] [ ABY T VARKEY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH 1 . APPELLANT AUGUST , 2016 JJ: 1108 COPY FORWARDED TO: 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR ASSISTANT REGISTRAR