ITO, Ludhiana V. Smt. Urmil Gupta (Deceased), Ludhiana

ITA 270/CHANDI/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1007 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2013
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 15-10-2012
• Assessment Year: 1997-1998
• Appeal Filed On: 28-02-2012
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: ARUN GUPTA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 270/CHD/2012 ASSESSMENT YEAR: 1997-98 THE ITO, WARD-II(3), VS SMT. URMIL GUPTA (DECEASED ), LUDHIANA L/H SHRI SUNIL KUMAR, C/O M/S SUNIL SONS, LUDHIANA (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. SAINI RESPONDENT BY : SHRI ARUN GUPTA DATE OF HEARING : 4.3.2013 DATE OF PRONOUNCEMENT : 13.3.2013 ORDER PER SUSHMA CHOWLA, JM THE PRESENT APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A)- II, LUDHIANA DATED 30.12.2011 RELATING TO ASSESSMEN T YEAR 2007-08 AGAINST PENALTY LEVIED U/S 271(1) (C) OF THE ACT. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FAC TS IN HOLDING THE ORDER PASSED U/S 271(1) (C) AS NULL AND VOID IGNORING THE DECISION OF HON'BLE SUPREME COURT IN THE CASE O F CIT V JAI PRAKASH SINGH 219 ITR 737 (SC) WHEREIN IT IS HELD T HAT NON- SERVICE OF NOTICE TO ALL LEGAL HEIRS IS A CURABLE D EFECT WHICH CANNOT HAVE EFFECT TO MAKE THE ASSESSMENT ORDER VOI D. 2 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FAC TS IN DELETING THE PENALTY AMOUNTING TO RS. 4,18,450/- U/ S 271(1)(C) AS THE ASSESSEE FAILED TO COMPUTE AND DISCLOSE HER TRU E INCOME AS PER PROVISIONS OF LAW. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST DELETION OF PENALTY U/S 271(1) (C) OF THE ACT. 4. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT D URING THE YEAR UNDER CONSIDERATION THE ASSESSEE CLAIMED TO HAVE PURCHASE D A HOUSE FOR A SUM OF RS. 1,50,000/- FOR WHICH REGISTRATION DEED WAS EXECUTED ON 24.2.1997. THE ASSESSING OFFICER, HOWEVER, RECEIVED INFORMATION F ROM DDI, LUDHIANA THAT THE HUSBAND OF THE ASSESSEE HAD PURCHASED THE SAID HOUS E FOR TOTAL INVESTMENT OF RS. 11,92,586/- AND THE REGISTRATION WAS DONE IN THE NA ME OF HIS WIFE I.E. ASSESSEE FOR RS. 1,50,000/-. THE REVENUE MADE AN ADDITION O F RS. 10,42,856/- ON SUBSTANTIVE BASIS IN THE HANDS OF THE ASSESSEES HU SBAND SHRI SUNIL KUMAR AGGARWAL. SIMILAR ADDITION WAS MADE IN THE HANDS O F THE ASSESSEE ON PROTECTIVE BASIS. HOWEVER, THE TRIBUNAL CONFIRMED THE ADDITIO N IN THE HANDS OF THE ASSESSEE AND DELETED THE ADDITION MADE ON SUBSTANTI VE BASIS IN THE HANDS OF THE HUSBAND. THE PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT WERE INITIATED IN THE CASE OF THE ASSESSEE. AFTER THE PASSING OF THE ORD ER BY THE TRIBUNAL, THE ASSESSING OFFICER ISSUED NOTICE U/S 274 READ WITH S ECTION 271 OF THE INCOME TAX ACT FIXING THE CASE FOR 9.6.2009. THE COUNSEL FOR THE ASSESSEE MOVED AN APPLICATION FOR ADJOURNMENT AND THE PROCEEDINGS WER E ADJOURNED TO 15.6.2009. THE REPLY OF THE ASSESSEE FILED ON 15.6.2009 IS REF ERRED TO BY THE ASSESSING OFFICER IN PARA 5 UNDER WHICH HE WAS INFORMED THAT THE ASSESSEE HAD EXPIRED ON 25.2.2007. THE FIRST PLEA WAS THAT THE PROVISIONS OF SECTION 271(1) (C) OF THE ACT WERE NOT ATTRACTED IN THE CASE AS THE ASSESSMEN T WAS INITIALLY MADE ON PROTECTIVE BASIS IN THE HAND OF THE ASSESSEE . THE ASSESSEE ALSO SOUGHT 3 PERMISSION TO INSPECT THE FILE WHICH WAS ALLOWED BY THE ASSESSING OFFICER. AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER HELD THAT THE ASSESSEE TO HAVE FURNISHED INACCURATE PART ICULARS OF INCOME AND CONSEQUENTLY PENALTY U/S 271(1) (C) OF THE ACT WAS LEVIED AT RS. 4,18,450/-. 5. BEFORE THE CIT(A), THE LD. AR FOR THE ASSESSEE F URNISHED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED IN PARA 5 AT PAGES 2 TO 8 OF THE APPELLATE ORDER. THE FIRST PLEA OF THE ASSESSEE WAS THAT THE FACT OF THE DEMISE OF THE ASSESSEE BEING HAVING EXPIRED WAS BROUGHT TO THE NO TICE OF THE ASSESSING OFFICER VIDE LETTER DATED 19.1.2009 SUBMITTED ON 20.1.2009. IN THE SAID LETTER IT WAS INTIMATED TO THE ASSESSING OFFICER THAT THE DECEASE D ASSESSEE HAD LEFT BEHIND FOUR LEGAL HEIRS. THE NEXT PLEA OF THE LD. AR WAS THAT NO COGNIZANCE OF THE SAID LETTER WAS TAKEN BY THE ASSESSING OFFICER AND ANOTH ER NOTICE DATED 28.5.2009 WAS ISSUED IN THE NAME OF LATE SMT. URMILA GUPTA U/ S 274 R.W.S. 271 OF THE INCOME TAX ACT. THE ASSESSEE IN REPLY DATED 15.6.2 009 AGAIN REITERATED THAT THE SAID NOTICE DATED 28.5.2009 WAS WRONGLY ISSUED IN T HE NAME OF THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER DID NOT ISSUE ANY NO TICE TO THE LEGAL HEIRS AND THE ORDER LEVYING PENALTY U/S 271(1) (C) OF THE ACT WAS ISSUED IN THE NAME OF SMT. URMILA GUPTA, DECEASED THROUGH LEGAL HEIR SHRI SUNIL KUMAR AGGARWAL. THE LD. CIT(A) ADDRESSED THE ISSUE OF VALIDITY OF P ROCEEDINGS ON THE GROUND OF NON ISSUANCE OF THE NOTICE TO ANY OF THE LEGAL HEIR S AND THAN PASSED ORDER LEVYING PENALTY ONLY IN THE NAME OF ONE LEGAL HEIR VIDE PARA 6 AND IN VIEW OF THE VARIOUS CASE LAWS AND LEGAL POSITION, VIDE PARA 7, HELD AS UNDER:- 7. IN THIS CASE IT IS BEYOND DOUBT THAT PENALTY O RDER FAILS ON BOTH OF THE ABOVE COUNTS. FIRST, THE NOTICE HAS NOT BEEN ISSUED TO ANY OF THE LEGAL HEIR, LEAVE ASIDE NOTICE BEING ISSUED IN NAME OF ONE LEGAL HEIR. THE ASSESSING OFF ICER ISSUED THE NOTICE IN NAME OF 'LATE SMT. URMIL GUPTA'. ISSU ING NOTICE IN NAME OF SMT. URMIL GUPTA PREFIXING THE WORD 'LAT E' WITH IT CLEARLY GOES TO PROVE THAT THE ASSESSING OFFICER HAS ISSUED 4 THE NOTICE IN NAME OF DEAD PERSON AND HAS NOT PROCE EDED AS PER LAW. THEN AGAIN EVEN WHEN IT WAS REPEATEDLY CON VEYED TO ASSESSING OFFICER ABOUT THE DEFECT IN NOTICE, HE DI D NOT TOOK COGNIZANCE OF THE SAME AND WENT ON TO LEVY THE PENA LTY AS IT IS. IT IS NOT A CURABLE DEFECT AND HENCE PROCEEDING S WOULD FAIL ON THIS ACCOUNT. SECOND WITHOUT ISSUING THE LE GAL NOTICE THE PENALTY ORDER HAS BEEN PASSED ONLY IN NAME OF O NE LEGAL HEIR WHEREAS IT HAS BEEN CLEARLY LAID DOWN THAT ONE OUT OF MANY LEGAL HEIRS WOULD NOT REPRESENT WHOLE INTEREST OF THE CASE AND ALL THE LEGAL HEIRS HAVE TO BE IMPLEADED, HENCE ON BOTH OF ABOVE POINTS THE PENALTY ORDERS FAILS AND I S LIABLE TO BE HELD NULL AND VOID. HENCE GROUND OF APPEAL NO. 3 OF THE ASSESSEE STANDS ALLOWED. 6. THE CIT(A) ALSO DELETED THE PENALTY LEVIED U/S 2 71(1) (C) OF THE ACT IN VIEW OF THE FACTS OF THE CASE OBSERVING AS UNDER:- 8.1 THE ASSESSEE HAS FIERCELY CONTENDED THAT ONLY BASIS ON WHICH ADDITIONS HAS BEEN MADE ARE A PHOTOCOPY OF AG REEMENT AND CONTRADICTORY STATEMENTS OF SH. DARSHAN SINGH, EVEN THE AMOUNTS MENTIONED BY SH.DARSHAN SINGH IN HIS BOTH T HE STATEMENTS AND THE AMOUNT WRITTEN IN AGREEMENT VARI ES TO A LARGE EXTENT, IT HAS BEEN CONTENDED BY THE ASSESSEE THAT STATEMENT OF SH. DARSHAN SINGH CANNOT BE RELIED UPO N HE HAS MADE DIFFERENT STATEMENTS TO COVER UP THE LAPSES IN HIS OWN STATEMENT OF AFFAIRS AND ALSO TO COVER UP ANOTHER U NCONNECTED AND UNRELATED DEPOSIT IN HIS OWN BANK ACCOUNT. EVEN SH. DARSHAN SINGH IN HIS STATEMENTS NEVER ACCEPTED THAT HE HAS PAID SUM OF RS. 11,62,800 TO THE ASSESSEE OR HER HU SBAND AND HE QUOTED RS. 1,50,000 IN HIS FIRST STATEMENT AND R S.6,50,000 IN HIS SECOND. EVEN WHILE PASSING ASSESSMENT ORDER RELIANCE WAS PLACED UPON THE PHOTOCOPY OF THE ALLEGED AGREEM ENT AND ORIGINAL AGREEMENT WAS NEVER PLACED ON RECORD. IT I S NOT EVEN THE CASE THAT REGISTRY HAS BEEN GOT DONE AT RATES L ESS THAN THE CIRCLE RATE FIXED BY THE GOVERNMENT. THE ASSESSING OFFICER HAS NOT PASSED ANY FINDING TO CONTRADICT ABOVE FINDINGS FOR 5 PROVING THAT ASSESSEE HAS FURNISHED INACCURATE PART ICULARS OF INCOME . 7. THE REVENUE IS IN APPEAL AGAINST BOTH THE FINDIN GS OF THE CIT(A) AND HAS RAISED GROUND NOS. 1 & 2 AGAINST THE SAME. 8. THE LD. DR FOR THE REVENUE STRESSED THAT NON SER VICE OF NOTICE TO ALL LEGAL HEIRS WAS A CURABLE DEFECT AS HELD BY THE HON'BLE S UPREME COURT IN THE CASE OF CIT V JAI PRAKASH SINGH 219 ITR 737 (SC). THE LD. A R PLACED RELIANCE ON THE ORDER OF CIT(A) AND STRESSED THAT NO NOTICE WAS ISS UED TO ANY OF THE LEGAL HEIRS AND ONLY IN THE ORDER THE NAME OF ONE OF THE LEGAL HEIR WAS MENTIONED. RELIANCE WAS PLACED ON SERIES OF DECISION IN THIS REGARD BY THE LD. AR FOR THE ASSESSEE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE PRESENT APPEAL IS AGAINST THE ORDER LEVYING PENALTY U/S 271 (1) (C) OF THE ACT DATED 29.6.2009. THE ASSESSMENT WAS COMPLETED IN THE HAN DS OF THE ASSESSEE ON PROTECTIVE BASIS AND SAME ADDITION IN THE HANDS OF THE HUSBAND OF THE ASSESSEE ON SUBSTANTIVE BASIS. HOWEVER, THE TRIBUNAL VIDE O RDER DATED 31.10.2008 IN ITA NO. 159/CHANDI/2006 DISMISSED THE APPEAL OF THE ASS ESSEE AND ADDED SUM OF RS. 10,42,856/- ON SUBSTANTIVE BASIS IN THE HANDS O F THE ASSESSEE. THE ADDITION MADE IN THE HANDS OF THE HUSBAND OF THE ASSESSEE WA S DELETED BY THE TRIBUNAL. PURSUANT TO THE ORDER PASSED BY THE TRIBUNAL, THE A SSESSING OFFICER ISSUED NOTICE U/S 274 READ WITH SECTION 271 OF THE INCOME TAX AC T FIXING THE CASE FOR 9.6.2009. THE COPY OF THE NOTICE IS PLACED AT PAGE 24 OF THE PAPER BOOK. THE ASSESSEE IN THIS CASE HAD EXPIRED ON 25.2.2007 AND THE ASSESSEE VIDE LETTER DATED 19.1.2009 HAD INFORMED THE ASSESSING OFFICER THAT T HE DECEASED ASSESSEE HAD LEFT BEHIND FOUR LEGAL HEIRS. THE COPY OF THE SAID LETTER IS PLACED AT PAGES 25 OF THE PAPER BOOK. FURTHER A LETTER DATED 15.6.2009 W AS FILED IN COMPLIANCE TO THE NOTICE ISSUED DATED 28.5.2009 . IT WAS FURTHER BRO UGHT TO THE NOTICE OF THE 6 ASSESSING OFFICER THAT THE ASSESSEE SMT. URMILA GUP TA HAD EXPIRED ON 25.2.2007 AND THE DETAILS OF LEGAL HEIRS HAD ALREADY BEEN FUR NISHED IN LETTER DATED 19.1.2009, COPY OF WHICH WAS ENCLOSED. THE COPY OF THE SAID LETTER IS PLACED AT PAGE 26 OF THE PAPER BOOK. THE ASSESSING OFFICER DISREGARDING BOTH THE LETTERS COMPLETED PENALTY PROCEEDINGS WITHOUT ISSUANCE OF A NY NOTICE OF HEARING TO THE LEGAL HEARS OF THE ASSESSEE AND EVEN WITHOUT BRINGI NG THE SAID LEGAL HEIRS OF THE ASSESSEE ON RECORD. IN THE ABSENCE OF THE PRELIMIN ARY ASPECT BEING NOT COMPLIED WITH BY THE ASSESSING OFFICER EVEN WHEN HE WAS IN COMPLETE KNOWLEDGE OF THE DEMISE OF THE ASSESSEE, AS IS APPARENT FROM THE NO TICE ISSUED BY THE ASSESSING OFFICER TO LATE SMT. URMILA GUPTA DATED 28.5.2009, THE LAPSE IN NOT BRINGING THE LEGAL HEIRS ON RECORD OR ISSUING THE NOTICE OF HEAR ING IN THE CASE OF PENALTY INITIATED U/S 271(1) (C) OF THE ACT TO ANY ONE OF T HE LEGAL HEIR OF THE ASSESSEE, THE PROCEEDING INITIATED AND COMPLETED IN THE CASE OF THE ASSESSEE ARE WITHOUT THE FORCE OF LAW. RELIANCE PLACED BY LD. DR ON TH E RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN CIT V JAI PARKASH SINGH (S UPRA) IS MISPLACED AS IN THE FACTS BEFORE THE HON'BLE SUPREME COURT THE ISSUE WA S SERVICE OF NOTICE TO ALL LEGAL HEIRS AND THE APEX COURT HELD THE SAME TO BE CURABLE DEFECT. HOWEVER, IN THE FACTS OF THE PRESENT CASE BEFORE US, ADMITTEDLY NO NOTICE WAS ISSUED TO ANY OF THE LEGAL HEIRS OF THE ASSESSEE AND THE SAID DEFECT WAS PURPORTED BY THE ASSESSING OFFICER BY ISSUING EVEN THE NOTICE OF HEA RING TO THE DECEASED ASSESSEE. THE PROCEEDINGS INITIATED AND COMPLETED A GAINST THE DECEASED ASSESSEE WITHOUT ISSUE OF NOTICE TO LEGAL HEIRS ARE NOT MAIN TAINABLE IN LAW. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) IN THIS REGARD. EVEN OTHERWISE, IT IS A SETTLED POSITION OF LAW THAT PENALTY PROCEEDINGS U/S 271(1) (C) OF THE ACT CAN NOT BE COMPLETED AGAINST A DECEASED PERSON. ON THIS ACCOUN T ALSO, THE ASSESSEE SUCCEEDS AND THERE IS NO MERIT IN LEVY OF PENALTY U S/ 271(1) (C) OF THE ACT. FURTHER, IN THE ALTERNATIVE IN RESPECT OF THE MERI T OF LEVY OF PENALTY U/S 271(1) (C) OF THE ACT, WE ARE IN CONFORMITY WITH THE FIND INGS OF THE LD. CIT(A) IN PARA 8.1 WHICH HAVE NOT BEEN CONTROVERTED BY THE LD. DR FOR THE REVENUE AND HENCE 7 THE PENALTY LEVIED U/S 271(1) (C) OF THE ACT IS CAN CELLED. BOTH THE GROUNDS RAISED BY THE REVENUE ARE THUS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF MARCH, 2013. SD/- SD/- (T.R. SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH MARCH, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR