SAMADHAN KRISHNA KATEKAR, RAIGAD V. ITO WD 3 PANVEL, NAVI MUMBAI

ITA 3112/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1746 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2008-2009
• Appeal Filed On: 28-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH RAJORE
• Keywords: Invalid notice; Search and seizure; Opportunity of being heard; Question of law; Cost of acquisition; Validity of assessment; Assessment record; Reason to believe; Reassessment proceedings; Set aside
• Section: 143(3); 133A; 147; 148; 56; 263; 132

Judgement Text

IN THE INCOMETAX APPELLATETRIBUNAL G BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 3112/MUM/2017 (ASSESSMENT YEAR 2008-09 ) MR. SAMADHAN KRISHNA KATEKAR, L/H OF LATE KRISHNA KATHARI KATEKAR, AT DHUTUM, TALUKA- URAN, DISTRICT-RAIGAD. PAN: AZRPK4713E VS. ITO. WARD-3, PANVEL RANGE, TRIFED TOWER, OPP. KHANDA COLONY, NAVI MUMBAI-410206. APPELLANT RESPONDE NT APPELLANT BY : MR. PRAKASH PANDIT (ADVOCATE) RESPONDENT BY : SHRI SATISH RAJORE (SR. DR) DATE OF HEARING : 10.06.2019 DATE OF PRONOUNCEMEN T :12.06.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL UNDER SECTION 253 OF INCOME TAX ACT (AC T) IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER (APPEALS), 2, AUR ANGABAD, IN THE MATTER OF ASSESSMENT COMPLETED UNDER SECTION 143(3) READ W ITH SECTION 147 OF THE INCOME TAX ACT DATED 28 TH OF MARCH 2014 FOR ASSESSMENT YEAR 2008- 09. THE APPELLANT/ LEGAL HEIRS OF ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: (1) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW REASSESSMENT PROCEEDING INITIATED UNDER SECTION 147 READ WITH SECTION 148 A RE VOID AND NULLITY. (2) IN THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LA W NOTICE UNDER SECTION 148 OF THE ACT IS INVALID AND THEREFORE REASSESSMENT OR DER IS VOID AND NULLITY. (3) IN THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LA W COMMISSIONER (APPEALS) ERRED IN CONFIRMING ASSESSING OFFICER ACTION IN TA XING RS. 2.94 CRORE AS SHORT- TERM CAPITAL GAIN WHEN NO TRANSFER OF THE PLOT HAS TAKEN PLACE AS ALLEGED BY ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 2 ASSESSING OFFICER WITHIN THE MEANING OF SECTION 2(4 7) OF ACT DURING ASSESSMENT YEAR 2008-09. (4) REASONS GIVEN BY COMMISSIONER (APPEALS) FOR CONFIRM ING ASSESSING OFFICER ACTION IN TAXING RS.2.94 CRORE AS SHORT-TERM CAPITA L GAIN FOR ASSESSMENT YEAR 2008-09 ARE WRONG INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD AS NO TRANSFER OF THE PLOT TAKEN PLACE AS AL LEGED BY ASSESSING OFFICER WITHIN MEANING OF SECTION 2(47) OF THE ACT DURING A SSESSMENT YEAR 2008-09. IN THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LA W, LEARNED COMMISSIONER APPEAL ERRED IN CONFIRMING ASSESSING OFFICER SECTIO N IN TAXING RS. 8 552000/- AS CASH MONEY RECEIVED ON THE BASIS OF THIRD-PARTY EVIDENCE. (5) IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, COMMISSIONER APPEAL ERRED IN CONFIRMING ASSESSING OFFICER SECTION IN TA XING SUM OF RS. 8 552000/-AS A CASH MONEY RECEIVED ON THE BASIS OF THIRD-PARTY E VIDENCE ARE WRONG INSUFFICIENT AND CONTRARY TO THE FACTS AND EVIDENCE ON RECORD. 2. THE APPELLANT/ LRS OF ASSESSEE VIDE HIS APPLICATIO N DATED 22 ND OCTOBER 2018 FILED ON THE 12 TH NOVEMBER 2018, RAISED FOLLOWING ADDITIONAL GROUNDS OF APPEAL: (1) WITHOUT PREJUDICE TO GROUND 1&2 IN THE MAIN GROUNDS OF APPEAL, IN THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, RE OPENING OF ASSESSMENT UNDER SECTION 147 READ WITH SECTION 148 IS VOID AB INITIO IN ABSENCE OF REASONS RECORDED. (2) WITHOUT PREJUDICE TO THE GROUNDS NO. 1&2 IN THE MAI N GROUNDS OF APPEAL, IN THE FACT AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSMENT ORDER DATED 28MARCH 2014 UNDER SECTION 143(3) READ WITH SECTION 147 OF THE ACT IS VOID AB INITIO IN ABSENCE OF NOTICE UNDER SECTION 143 (2 ) OF THE INCOME TAX ACT. (3) WITHOUT PREJUDICE TO GROUND NO.3 &4 IN THE MAIN GR OUNDS OF APPEAL, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED ASSESSING OFFICER ERRED IN TREATING RUPEES TO .94 CRORE AS SHORT-TERM CAPITAL GAIN ON SALE OF WRITE IN THE LEASE HOLD PLOT, AS CAPITAL GAIN, IF ANY, IS A LONG-TERM CAPITAL GAIN. (4) WITHOUT PREJUDICE TO THE GROUND NUMBER THREE AND FO UR IN THE MAIN GROUNDS OF APPEAL, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 3 OFFICER ERRED IN TREATING COST OF ACQUISITION AND S NAIL, WITH WHILE CALCULATING CAPITAL GAIN ON SALE OF RIGHT IN THE LEASE HOLD PLO T. (5) THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MO DIFY OR PERMIT ANY OF THE AFORESAID GROUNDS OF APPEAL IS OCCASION MAY ARISE O F DEMAND. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A NON- FILER OF RETURN. IN THIS CASE, JOINT COMMISSIONER OF INCOME TAX (JCIT) (OSD), CENT RAL CIRCLE, 39, MUMBAI MADE CERTAIN INVESTIGATION ON THE BASIS OF D OCUMENTS AND OTHER INCRIMINATING MATERIALS SEIZED DURING THE COURSE OF SEARCH AND SEIZURE ACTION IN CASE OF MADAN KOLAMBEKAR AND M/S JAI CORP GROUP OF CASES. THE SAID SEARCH AND SEIZURE ACTION WAS CARRIED UNDER SE CTION 132 ON 22.01.2009 WHEREIN VARIOUS INCRIMINATING EVIDENCE WERE GATHERE D. ON THE BASIS OF SUCH INCREMENTING MATERIAL, THE INVESTIGATION PARTY TOOK A VIEW THAT THE INCRIMINATING EVIDENCE CLEARLY SHOWS THAT JAI CORP GROUP ENTITY PURCHASED PLOT NO. 132, SECTOR- 56 ADMEASURING 2450 IN NAVI M UMBAI. THE SAID PLOT OF LAND WAS DEVELOPED AND ALLOTTED BY CIDCO. ON FUR THER ENQUIRIES FROM CIDCO IT WAS TRANSPIRED THAT THE SAID PLOT WAS ALLO TTED TO THE KRISHNA KATEKAR BY CIDCO IN ADDITION TO THE COMPENSATION PA ID BY THE STATE GOVERNMENT ON ACQUISITION OF LAND. THE INVESTIGATIO N PARTY ALSO GATHERED INFORMATION AND EVIDENCES THAT THE SAID PLOT WAS NE GOTIATED THROUGH MADAN KOLAMBEKAR AND THE ASSESSEE HAD RECEIVED RS. 85,52, 000/- AS ADVANCE IN CASH ON 02.02.2008. ON 22 JANUARY 2009, A SURVEY UN DER SECTION 133A WAS CONDUCTED IN ONE OF THE OFFICE OF JAI CORP GROUP AT THEIR OFFICE AT EMBASSY CENTRE, NARIMAN POINT, MUMBAI. DURING THE COURSE OF SURVEY OPERATION, ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 4 VARIOUS OTHER INCRIMINATING DOCUMENTS /EVIDENCES W AS RECOVERED, WHICH FURTHER CORROBORATES THE FACTS OF ON MONEY PAYMEN TS WAS PAID FOR PURCHASE OF SAID PLOT. SUBSEQUENTLY, SOME OTHER INC RIMINATING DOCUMENTS WERE ALSO UNEARTHED DURING THE COURSE OF SEARCH ACT ION IN CASE OF JAI CORP GROUP ON 5 MARCH 2009. ALL THESE INFORMATION WAS PA SSED TO THE INCOME TAX OFFICER PANVEL, DISTRICT RAIGARH (ASSESSING OFF ICER). 4. THE ASSESSING OFFICER ON THE BASIS OF ABOVE REFERRE D INFORMATION WAS HAVING REASON TO BELIEVE THAT INCOME OF THE ASSESSE E HAD ESCAPE ASSESSMENT; THEREFORE NOTICE UNDER SECTION 148 IN T HE NAME OF KRISHNA KATHARI KATEKAR WAS ISSUED ON 13 TH MARCH 2013. THE ASSESSING OFFICER NOTED THAT THERE WAS NO RESPONSE TO THE NOTICE DATE D 13 TH MARCH 2013. THEREFORE, ON 21 ST NOVEMBER 2013 OTHER NOTICE WAS ISSUED TO THE ASSES SEE DIRECTING THE ASSESSEE TO FILE RETURN OF INCOME WIT HIN SEVEN DAYS OF RECEIPT OF THE SAID NOTICE. THE ASSESSING OFFICER ALSO RECO RDED THAT NOTICE UNDER SECTION 143 (2) AND 142 (1) WAS ISSUED AND SERVED U PON THE LEGAL HEIRS OF KRISHNA KATHARI KATEKAR (ASSESSEE). THE LEGAL HEIRS OF KRISHNA KATHARI KATEKAR (PRESENT APPELLANT) FILED RETURN OF INCOME ON 14 TH MARCH 2014.THE RETURN OF INCOME FILED ON 14 TH MARCH WAS TREATED AS TIME BARRED RETURN. THE ASSESSING OFFICER RECORDED THAT THE REASONS REC ORDED WAS SOUGHT BY THE REPRESENTATIVES OF THE ASSESSEE AND THAT IT WAS SHO WN TO THEM. IT WAS FURTHER RECORDED BY THE ASSESSING OFFICER THAT IT W AS EXPLAINED TO HIM THAT DURING THE YEAR UNDER CONSIDERATION KRISHNA KATHARI KATEKAR HAS ENTERED IN ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 5 TO THE AGREEMENT FOR SALE OF PLOT OF LAND ALLOTTED FROM CIDCO TO M/S MADAN KOLAMBEKAR FOR RS. 2.94 CRORE AND AGAINST THE SAID LAND TRANSACTION HE HAS RECEIVED RS.1.50 CRORE ONLY. THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE AS TO WHY THE SALE CONSIDE RATION OUT OF WHICH THE SUBSTANTIAL PART IS RECEIVED BE NOT TAXED AS SHORT TERM CAPITAL GAIN (STCG). AND SIMILARLY THE RECEIPT OF CASH OF RS. 85,52,000/ - BE NOT TAXED TO THE TOTAL INCOME OF THE ASSESSEE. 5. THE SHOW CAUSE NOTICE WAS REPLIED ON BEHALF OF THE ASSESSEE VIDE REPLY DATED 18.03.2014 (WRONGLY NOTED AS 18.03.2004). IN THE REPLY THE BACKGROUND OF ALLOTMENT OF PLOT ADMEASURING 2450 WA S EXPLAINED. IT WAS EXPLAINED THAT THE ASSESSEE ENTERED IN TO AGREEMENT TO SALE OF THE SAID PLOT TO MADAN KOLAMBEKAR FOR A TOTAL SALE CONSIDERATION OF RS. 2.94 CRORE. IT WAS STATED THAT HALF OF THE CONSIDERATION WAS PAYAB LE ON THE EXECUTION OF AGREEMENT OF LEASE BY CIDCO AND REMAINING ON THE EX ECUTION OF TRIPARTITE AGREEMENT BY PURCHASER. IT WAS FURTHER STATED THAT OUT OF THE TOTAL SALE PROCEED THE ASSESSEE HAS RECEIVED ONLY RS. 1.50 CRO RE ON VARIOUS DATES. THE PURCHASER FAILED TO EXECUTE THE AGREEMENT AND T O MAKE REMAINING PAYMENT WITHIN THE AGREED PERIOD. IN THE MEANTIME T HE RELATIVES OF THE ASSESSEE ALSO FILED THE SUIT FOR CLAIMING RIGHTS IN THE SAID PLOT OF LAND. IT WAS FURTHER EXPLAINED THAT THE SALE WAS NOT COMPLET E AND THAT THE ASSET WAS NOT TRANSFERRED WITHIN THE MEANING OF SECTION 2(47) OF THE ACT. THE EXPLANATION FURNISHED ON BEHALF OF THE ASSESSEE WAS NO ACCEPTED BY THE ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 6 ASSESSING OFFICER. THE ASSESSING OFFICE CONCLUDED T HAT THE ASSESSEE WAS IN RECEIPT OF UNACCOUNTED CASH MONEY OF RS. 85,52,000/ - ON 02.02.2008 FROM JAI CORP ENTITY/ MADAN KOLAMBEKAR IN RESPECT OF DEA L OF PLOT. THE RETURN OF INCOME WAS FILED ONLY ON ISSUANCE OF NOTICE UNDE R SECTION 148 AND FAILED TO DECLARE THE INCOME OF RS.2.94 CRORE OF ST CG. THUS, THE ASSESSING OFFICER MADE ADDITION OF STCG OF RS. 2.94 CRORE AND UNACCOUNTED CASH OF RS. 85.52 LAKHS WHILE PASSING ASSESSMENT ORDER ON 28 TH MARCH 2014 UNDER SECTION 143 (3) READ WITH SECTION 147. 6. AGGRIEVED BY THE ADDITIONS MADE BY ASSESSING OFFICE R, THE APPLICANT/LRS OF ASSESSEE FILED APPEAL BEFORE COMMISSIONER (APPEALS) . PERUSAL OF FIRST APPELLATE AUTHORITY ORDER REVEALS THAT INITIALLY, T HE ASSESSEE CHALLENGED ONLY THE ADDITIONS IN THE QUANTUM ASSESSMENT; HOWEVER DU RING THE PENDENCY OF APPEAL THE VALIDITY OF NOTICE UNDER SECTION 148 AS WELL AS VALIDITY OF ASSESSMENT ORDER WAS ALSO CHALLENGED. THE LEARNED F IRST APPELLATE AUTHORITY UPHELD THE VALIDITY OF NOTICE UNDER SECTION 148 AS WELL AS THE ADDITIONS IN THE ASSESSMENT ORDER. THEREFORE, FURTHER AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE ASSESSEE HAS FILED PRESE NT APPEAL BEFORE US. 7. PERUSAL OF RECORD REVEALS THAT ON THE 09.04.2019, T HE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE (SR. DR) WAS DIRECTED T O ALLOW THE INSPECTION OF ASSESSMENT RECORD TO THE APPELLANT AND ALSO PROV IDE THE COPY OF REASONS RECORDED. ON 10.06.2019 (ON THE DAY OF FINAL HEARIN G), THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE SUBMITS THAT HE HAS BRO UGHT THE ORIGINAL ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 7 ASSESSMENT RECORD. IT WAS DISCLOSED BY LD. DR THAT THE ORIGINAL ASSESSMENT RECORD DOES NOT CONTAIN THE REASONS RECORDED. ON OU R FURTHER QUARRY IT WAS COMMUNICATED TO US THAT THERE IS NO EVIDENCE AVAILA BLE ON RECORD TO SHOW THAT THE REASONS RECORDED WERE EVER SUPPLIED TO THE REPRESENTATIVE OF ASSESSEE OR TO THE LEGAL HAS OF ASSESSEE. WITH THE ASSISTANCE OF THE LD. REPRESENTATIVES, WE HAVE GONE THROUGH THE ORIGINAL ASSESSMENT RECORD ALONG WITH THE ORDER SHEET NOTING OF ASSESSING OFFICER. T HE ASSESSING OFFICER STARTED RECORDING HIS ORDER SHEET ONLY FROM 21 ST NOVEMBER 2013; HOWEVER THE NOTICE UNDER SECTION 148 WAS ISSUED ON 13 MARCH 2013. WE FURTHER NOTED THAT THERE IS EVIDENCE IN THE ASSESSMENT RECO RD, IF NOTICE UNDER SECTION 143(2) WAS ISSUED OR SENT BY ASSESSING OFFI CER. ON THESE OBSERVATIONS, WE HEARD THE SUBMISSION OF LEARNED RE PRESENTATIVE OF THE PARTIES. 8. WE HAVE HEARD THE SUBMISSION OF LEARNED AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIV E (DR) FOR THE REVENUE AND PERUSED THE MATERIAL OF AVAILABLE ON RECORD. WE HAVE ALSO DELIBERATED ON VARIOUS CASE LAWS RELIED BY LEARNED REPRESENTATI VE OF THE PARTIES AS WELL AS BY THE LOWER AUTHORITIES. THE LEARNED AR OF THE ASSESSEE MADE EXHAUSTIVE SUBMISSIONS ON VALIDITY OF NOTICE UNDER SECTION 148 AS WELL AS THE VALIDITY OF ASSESSMENT ORDER PASSED AGAINST THE DECEASED ASSESSEE. THE LEARNED AR SUBMITS THAT THE NOTICE UNDER SECTION 14 8, DATED 13 TH OF MARCH 2013 WAS ISSUED IN THE NAME OF SHRI KRISHNA KATHARI KATEKAR. THE SAID ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 8 NOTICE WAS RECEIVED BY SAMADHAN KRISHNA KATEKAR, TH E SON OF DECEASED ON 14 TH MARCH 2013. THE SON OF DECEASED ASSESSEE, WHILE RE CEIVING THE NOTICE UNDER SECTION 148, CLEARLY ENDORSED ON THE SAID NOT ICE THAT ASSESSEE HAS EXPIRED ON 30 TH OF DECEMBER 2009 AND THAT HE IS HIS SON . THE LEARNED AR FURTHER SUBMITS THAT HE HAS RECEIVED THE COPY OF SA ID NOTICE FROM THE ASSESSMENT RECORD UNDER THE PROVISIONS OF RIGHT TO INFORMATION ACT, AND THE COPY OF WHICH IS PLACED ON RECORD. THE LEARNED AR FOR THE ASSESSEE FURTHER SUBMITS THAT DESPITE INFORMING THE ASSESSIN G OFFICER ABOUT THE DEATH OF ASSESSEE, THE ASSESSING OFFICER CONCLUDED WITH T HE ASSESSMENT PROCEEDING. NO FRESH NOTICE UNDER SECTION 148 WAS SERVED UPON THE LEGAL HAIRS OF THE ASSESSEE, AS MANDATED UNDER THE PROVIS IONS OF CODE OF CIVIL PROCEDURE, AS WELL AS UNDER THE PROVISIONS OF SECTI ON 159 OF INCOME-TAX ACT. THE ASSESSING OFFICER HAD ENOUGH TIME TO CARRY OUT THE FORMALITIES FOR BRINGING LEGAL HAIRS ON RECORD AND ISSUING FRESH NO TICE UNDER SECTION 148. THE NOTICE UNDER SECTION 148, ISSUED IN THE NAME OF DECEASED IS INVALID NOTICE AND THE PROCEEDINGS INITIATED IN PURSUANCE O F THE SAID NOTICE INVALID AND THE SUBSEQUENT ACTION OF ASSESSING OFFICER IS VOID AB INITIO . THEREFORE, THE ENTIRE ASSESSMENT IS VOID AB INITIO AS NOTICE UNDER SECTION 148 IS IN THE NAME OF DECEASED PERSON IS INVALID. 9. THE LEARNED AR FOR THE ASSESSEE FURTHER EXPLAINED T HAT AS PER SUB SECTION (1) OF SECTION 59 OF INCOME TAX ACT, WHERE PERSON D IES, HIS LEGAL REPRESENTATIVE SHALL BE LIABLE TO PAY SUM WHICH THE ASSESSES WOULD HAVE ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 9 BEEN LIABLE TO PAY IF HE HAD NOT DIED, IN THE LIKE MANNER AND TO THE SAME EXTENT AS THE DECEASED IF HE HAD SURVIVED. SIMILAR LY SECTION 159 (2) ALSO EMPOWER THE ASSESSING OFFICER TO TAKE THE PROCEEDIN G AGAINST THE LEGAL REPRESENTATIVE WHICH HE SHOULD HAVE TAKEN AGAINST T HE DECEASED, IF HE HAD SURVIVED. SUB SECTION (2) OF SECTION 159 NOWHERE AU THORISE THE ASSESSING OFFICER TO TAKE THE PROCEEDING AGAINST THE INDIVIDU AL WHO HAS ALREADY EXPIRED, THAT IS WHY THE LEGAL REPRESENTATIVE UNDER SECTION 2 (7) ARE REGARDED TO BE ASSESSEE. THE NOTICE UNDER SECTION 1 48 HAS TO BE ISSUED ON THE ASSESSEE I.E. INDIVIDUAL (HUMAN BEING). A PERSO N WHO HAS ALREADY EXPIRED CANNOT BE REGARDED AS HUMAN BEING AS ON THE DATE WHEN THE NOTICE WAS ISSUED IN THIS CASE. ONLY THE LEGAL HEIR CAN BE REGARDED TO BE INDIVIDUAL. THEREFORE, IN VIEW OF THE CLEAR MANDATE S OF SECTION 2(7) AND SUB SECTIONS (1), (2) AND (3) OF SECTION 159, IT WAS SU BMITTED THAT IN ABSENCE OF ISSUANCE OF VALID NOTICE, THE PROCEEDING INITIATED UNDER SECTION 147 CANNOT BE SAID TO BE A VALID ONE. SINCE, THE NOTICE UNDER SECTION 148 IS ITSELF INVALID, THEREFORE THE ASSESSING OFFICER HAS NO JUR ISDICTION TO MAKE THE ASSESSMENT. THE DEFECT OF NOTICE WHICH GOES TO ROOT OF THE MATTER CANNOT BE CURED UNDER SECTION 292B OR 292 BB. IT WAS SUBMITTE D THAT THE LEARNED COMMISSIONER (APPEALS) RELIED UPON THE DECISION OF MADHYA PRADESH HIGH COURT IN CASE OF SMT. KAUSHALYABAI VS CIT (23 8 ITR 1008), ON THE GROUND THAT AS LEGAL HEIRS PARTICIPATED IN THE ASSE SSMENT PROCEEDING, THE NOTICE ISSUED UNDER SECTION 148 IS VALID (CURED). T HE LEARNED ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 10 COMMISSIONER (APPEALS) IGNORED BINDING DECISION OF THIRD MEMBER OF AGRA TRIBUNAL IN CASE OF ITO VS SIKANDAR LAL JAIN ( 45 SOT 119) AND THE DECISION OF HONBLE MADRAS HIGH COURT IN CASE OF CI T VS M HEMANATHAN (384 ITR 177 MAD), WHEREBY THE HONBLE MADRAS HIGH COURT HELD THAT PRINCIPLE OF LAW WHICH IS MENTIONED BY MADHYA PRADE SH HIGH COURT IN SMT. KAUSHALYABAI VS CIT(SUPRA) DOES NOT APPEARS TO BE CORRECT. THUS, IT WAS ARGUED THAT THE LAW EXPLAINED BY HONBLE MADRAS HIGH COURT IS THE CORRECT EXPLANATION OF LAW. 10. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASS ESSES RELIED UPON THE DECISION OF HONBLE MADRAS HIGH COURT IN CIT VS. M. HEMANATHAN (384 ITR 177 (MADRAS), HONBLE BOMBAY HIGH COURT IN RUPA SHYAMSUNDAR DHUMATKAR VS. ACIT (W.P.NO. 404 OF 2019) DATED 05.0 4.2019, ITO VS. SIKANDAR LAL JAIN (2011) 45 SOT 113(TM), MRS. JERBA NOO N. WADIA VS. ACIT (39 TTJ (BOM) 138, RASHID LALA VS. ITO (77 TAX MAN.COM 39 (GUJ.), CIT VS. RAKESH KUMAR, MUKESH KUMAR (313 ITR 305 (P&H), CIT VS. SURESH CHANDRA JAISWAL (325 ITR 563) AND ITO VS . GANGA PRASAD JAISWAL (39 ITD 444 (ALL.). 11. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FURTHER SUBMITS THAT THE AP PELLANT/LRS OF ASSESSEE HAVE NOT OBJECTED ABOUT THE ISSUANCE OF NOTICE IN T HE NAME OF DEAD PERSON. THE LRS OF THE ASSESSEE FULLY PARTICIPATED IN THE ASSESSMENT PROCEEDING. REASONS OF RE-OPENING WAS NEVER ASKED FOR DURING TH E ASSESSMENT ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 11 PROCEEDING. THE APPELLANT HAS NOT SHOWN ANY PREJUDI CE CAUSED TO THEM. NOW THE APPELLANT /LRS OF THE ASSESSEE ARE PRECLUD ED FROM RAISING THE OBJECTION ABOUT THE ISSUANCE OF NOTICE UNDER SECTIO N 147/148 IN THE NAME OF DEAD PERSON. THE LD DR FOR THE REVENUE FULLY S UPPORTED THE ORDER OF LD COMMISSIONER (APPEALS) AND ALSO RELIED ON THE DECIS ION OF MP HIGH COURT IN SMT. KAUSHALYABAI VS CIT (SUPRA). 12. WE HAVE CONSIDERED THE SUBMISSION OF BOTH THE PARTI ES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW CAREFULLY. AS NOTED EARLIER THAT THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS OF APPEAL. PERUSAL OF THE ADDITIONAL GROUNDS OF APPEALS REVEALS THAT IN SUM AND SUBSTANCE THE AD DITIONAL GROUNDS ARE REFRAMED AND NO FRESH MATERIAL IS REQUIRED TO BE BR OUGHT ON RECORD FOR ADJUDICATION OF ADDITIONAL GROUNDS. THEREFORE, THE ADDITIONAL GROUNDS OF APPEALS ARE ADMITTED FOR ADJUDICATION. THERE IS NO DISPUTE THAT THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 ON 13.03.20 13. THE SAID NOTICE WAS RECEIVED BY THE SON OF THE ASSESSEE ON 14.03.2013. WHILE RECEIVING THE NOTICE THE SON OF THE ASSESSEE CLEARLY MADE ENDORSE MENT ON THE NOTICE ITSELF THAT THE ASSESSEE EXPIRED ON 30TH DECEMBER 2009. TH IS FACT OF ENDORSEMENTS ON THE NOTICE UNDER SECTION 148, ABOUT THE DEATH OF ASSESSEE ON 30 TH DECEMBER 2009, WAS VERIFIED FROM THE ASSESSMENT RE CORD BROUGHT IN THE COURT. ADMITTEDLY, NO FRESH NOTICE UNDER SE CTION 148 ON THE LEGAL HEIRS OF THE ASSESSEE WAS SERVED. THE LEGAL HEIRS O F THE ASSESSEE FILED RETURN OF INCOME ON 14 .03.2014. THE SAID RETURN OF INCOME WAS TREATED AS TIME ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 12 BARRED RETURN. THE ASSESSMENT WAS COMPLETED ON 28.0 3.2014 UNDER SECTION 143(3) RWS 147. THE ASSESSMENT WAS PASSED IN THE NA ME OF SAMADHAN KRISHNA KATEKAR. NO NOTICE UNDER SECTION 148 WAS SE RVED ON SAMADHAN KRISHNA KATEKAR (THE LEGAL HEIR OF THE ASSESSEE). THERE IS NO DISPUTE THAT THE LEGAL HEIR OF THE ASSESSEE PARTICIPATED IN THE ASSESSMENT PROCEEDINGS. THE PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT TH E ASSESSING OFFICER MADE ADDITIONS OF THE BASIS OF THE INFORMATION PASSED BY INVESTIGATION TEAM WHO HAD CONDUCTED THE SEARCH AND SURVEY ACTION ON JAI C ORP GROUP. THE ASSESSING OFFICER BRUSHED ASIDE THE EXPLANATION FUR NISHED BEFORE HIM THAT ONLY A SUM OF RS. 1.50 CRORE WAS RECEIVED BY THE AS SESSEE AND THAT THE ASSET I.E. THE PLOT ALLOTTED FROM THE CIDCO WAS NOT TRANSFERRED NOR THE AGREED SALE PROCEEDS WAS RECEIVED. 13. WE HAVE NOTED THAT THE ASSESSEE HAS RAISED SPECIFIC ADDITIONAL GROUND OF APPEAL BEFORE LD. COMMISSIONER (APPEALS) THAT THE N OTICE ISSUED UNDER SECTION 148 IS INVALID AND THEREFORE, THE ASSESSMEN T ORDER IN VOID AB INITIO. THE ADDITIONAL GROUND OF APPEAL RAISED BY LEGAL HEI RS WAS REJECTED BY LD COMMISSIONER (APPEALS) HOLDING THAT THE LEGAL HEIRS OF THE ASSESSEE PARTICIPATED IN THE ASSESSMENT AND FURNISHED THEIR REPLY DATED 18.03.2014. THE LD. COMMISSIONER (APPEALS) RELY ON THE DECISION OF MP HIGH COURT IN SMT. KAUSHALYABAI ( SUPRA), WHEREIN IT WAS HELD THA T THE ISSUANCE OF NOTICE ON THE DEAD PERSON SHOULD BE TREATED A PROCEDURAL I RREGULARITY UNDER ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 13 SECTION 292B OF THE ACT AND DUE TO PARTICIPATION IN THE PROCEEDINGS IT IS CURED AUTOMATICALLY. 14. THE LD. AR FOR THE ASSESSEE VEHEMENTLY ARGUED THAT THE DECISION IN SMT. KAUSHALYABAI (SUPRA) IS NOT GOOD LAW AS HAS BEEN HE LD BY HONBLE MADRAS HIGH COURT IN CIT VS HEMANATHAN (SUPRA). 15. THE HONBLE MADRAS HIGH COURT IN CIT VS. M. HEMANAT HAN (SUPRA) WHILE CONSIDERING THE QUESTION OF LAW WHETHER ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL WAS RIGHT I N LAW IN QUASHING THE ORDER OF THE COMMISSIONER OF INCOME TAX PASSED UNDE R SECTION 263 OF THE INCOME TAX ACT ON A DEAD PERSON WITHOUT NOTING THAT THE COMMISSIONER OF INCOME TAX HAS IMPLEADED THE LEGAL HEIRS OF THE ASSESSEE AND WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRI BUNAL WAS RIGHT IN NOT CONSIDERING THE CRUCIAL FACT THAT THE NOTICE UNDER SECTION 263 OF THE INCOME TAX ACT WAS SERVED ON THE LEGAL REPRESENTATI VE AND THE OPPORTUNITY OF BEING HEARD WAS GIVEN TO THE LEGAL R EPRESENTATIVE AND HIS AUTHORISED REPRESENTATIVE APPEARED AND ATTENDED THE HEARINGS BEFORE THE COMMISSIONER OF INCOME TAX DURING THE PROCEEDINGS U NDER SECTION 263 OF THE INCOME TAX ACT. THE HONBLE HIGH COURT HELD THAT NOTICE ISSUED IN NAME OF DECEASED-ASSESSEE WAS SERVED UPON LEGAL HEIR, WHO, THEN, PARTICIPATED IN PROCEEDINGS, SUCH PROCEEDINGS WAS A NULLITY BEING INITIATED AGAINST A DEAD PERSON. IT WAS FURTHER HELD THAT WHE RE NOTICE ISSUED IN NAME OF DECEASED-ASSESSEE WAS SERVED UPON LEGAL HEI R, WHO, THEN, ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 14 PARTICIPATED IN PROCEEDINGS, SAID LEGAL HEIR COULD NOT BE DEPRIVED OF RIGHT TO CHALLENGE SERVICE OF NOTICE. FOR BETTER APPRECIA TION OF FACTS OF THE SAID CASE AND FOR COMPARING THE FACTS OF THE PRESENT CAS E THE RELEVANT PART OF THE DECISION IS EXTRACTED BELOW: 10. WE HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIONS . 11. THE FIRST CONTENTION OF THE LEARNED STANDING COUNSE L FOR THE DEPARTMENT IS THAT THE NOTICE, DESPITE HAVING BEEN ISSUED AGAINST THE DEAD PERSON, WAS SERVED ON THE LEGAL HEIR AND THE LEGAL HEIR ALSO PARTICIPATED IN THE PROCEEDINGS. THEREFORE, IT IS HIS CONTENTION THAT IT IS NOT OPEN TO THE LEG AL HEIR NOW TO TAKE A POSITION THAT THE ENTIRE PROCEEDINGS ARE A NULLITY. 12. BUT UNFORTUNATELY, THE SAID CONTENTION LOSES SIGHT OF THE SETTLED POSITION THAT ANY PROCEEDING INITIATED AGAINST A DEAD PERSON IS A NUL LITY. THE CONTENTION OF THE LEARNED STANDING COUNSEL FOR THE DEPARTMENT LOSES S IGHT OF ONE IMPORTANT DISTINCTION BETWEEN A CASE WHERE THE PROCEEDINGS AR E INITIATED AGAINST A PERSON, WHO IS ALIVE, BUT CONTINUED AFTER HIS DEATH AND A C ASE OF PROCEEDINGS INITIATED AGAINST A DEAD PERSON HIMSELF. IF THE PROCEEDINGS H AD BEEN INITIATED AGAINST A PERSON, WHO WAS ALIVE, AND THEY WERE CONTINUED AFTE R HIS DEATH AFTER PUTTING HIS LEGAL HEIRS ON NOTICE, THOSE PROCEEDINGS, UNDER CER TAIN CIRCUMSTANCES, MAY BE SAVED. SUCH A SITUATION IS ALSO CONTEMPLATED IN CIV IL PROCEEDINGS AND A PROVISION IS MADE IN THE CIVIL PROCEDURE CODE ITSELF UNDER OR DER XXII RULE 4. THEREFORE, THE CASES WHERE THE VERY PROCEEDINGS ARE INITIATED AGAINST A DEAD PERSON STAND APART FROM THOSE PROCEEDINGS WHERE THEY ARE INITIAT ED AGAINST A LIVE PERSON, BUT CONTINUED AFTER HIS DEATH AGAINST THE LEGAL HEIRS. HENCE, THE FIRST CONTENTION IS REJECTED. 13. THE SECOND CONTENTION REVOLVES AROUND SECTION 292B B OF THE ACT, WHICH READS AS FOLLOWS : '292BB. NOTICE DEEMED TO BE VALID IN CERTAIN C IRCUMSTANCES. WHERE AN ASSESSEE HAS APPEARED IN ANY PROCEEDI NG OR CO- OPERATED IN ANY INQUIRY RELATING TO AN ASSESSMENT OR REASSESSMENT, IT SHALL BE DEEMED THAT ANY NOTICE UNDER ANY PROVISION OF THIS ACT, WHICH IS RE QUIRED TO BE SERVED UPON HIM, HAS BEEN DULY SERVED UPON HIM IN TIME IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT AND SUCH ASSESSEE SHALL BE PRECLUDED FROM TAKIN G ANY OBJECTION IN ANY PROCEEDING OR INQUIRY UNDER THIS ACT THAT THE NOTIC E WAS-- ( A ) NOT SERVED UPON HIM; OR ( B ) NOT SERVED UPON HIM IN TIME; OR ( C ) SERVED UPON HIM IN AN IMPROPER MANNER: PROVIDED THAT NOTHING CONTAINED IN THIS SECTIO N SHALL APPLY WHERE THE ASSESSEE HAS RAISED SUCH OBJECTION BEFORE THE COMPLETION OF SUCH ASSESSMENT OR REASSESSMENT.' ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 15 14. A CURSORY LOOK AT SECTION 292BB WOULD SHOW THAT TH E SAME WOULD APPLY ONLY TO TWO TYPES OF PROCEEDINGS NAMELY (I) PROCEEDINGS, IN WHICH, THE ASSESSEE HAD APPEARED AND (II) ANY INQUIRY, IN WHICH, THE ASSESS EE HAD COOPERATED. 15. IN THE CASE ON HAND, THE ASSESSEE WAS DEAD. IT WAS THE ASSESSEE'S SON, WHO APPEARED AND PERHAPS COOPERATED. THEREFORE, THE PRI MARY CONDITION FOR THE INVOCATION OF SECTION 292BB IS ABSENT IN THE CASE O N HAND. 16. SECTION 292BB IS IN PLACE TO TAKE CARE OF CONTINGE NCIES WHERE AN ASSESSEE IS PUT ON NOTICE OF THE INITIATION OF PROCEEDINGS, BUT WHO TAKES ADVANTAGE OF DEFECTIVE NOTICES OR DEFECTIVE SERVICE OF NOTICE ON HIM. IT I S TRITE TO POINT OUT THAT THE PURPOSE OF ISSUE OF NOTICE IS TO MAKE THE NOTICEE A WARE OF THE NATURE OF THE PROCEEDINGS. ONCE THE NATURE OF THE PROCEEDINGS IS MADE KNOWN AND UNDERSTOOD BY THE ASSESSEE, HE SHOULD NOT BE ALLOWED TO TAKE A DVANTAGE OF CERTAIN PROCEDURAL DEFECTS. THAT WAS THE PURPOSE BEHIND THE ENACTMENT OF SECTION 292BB. IN CANNOT BE INVOKED IN CASES WHERE THE VERY INITIATION OF PROCEEDINGS IS AGAINST A DEAD PERSON. HENCE, THE SECOND CONTENT ION CANNOT ALSO BE UPHELD. 17. THE THIRD CONTENTION REVOLVES AROUND SECTION 159(2 ). IT WILL BE USEFUL TO EXTRACT SECTION 159 IN ENTIRETY. IT READS AS FOLLOWS : '159. LEGAL REPRESENTATIVES .(1) WHERE A PERSON DIES, HIS LEGAL REPRESENTATIVE SHALL BE LIABLE TO PAY ANY SUM WHICH THE DECEASED W OULD HAVE BEEN LIABLE TO PAY IF HE HAD NOT DIED, IN THE LIKE MANNER AND T O THE SAME EXTENT AS THE DECEASED. (2) FOR THE PURPOSE OF MAKING AN ASSESSMENT (INCLUD ING AN ASSESSMENT, REASSESSMENT OR RE-COMPUTATION UNDER SECTION 147) O F 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), ANY PROCEEDING TAKEN AGAINST THE DECEASED BEFORE HI S DEATH SHALL BE DEEMED TO HAVE BEEN TAKEN AGAINST THE LEGAL REPRESE NTATIVE AND MAY BE CONTINUED AGAINST THE LEGAL REPRESENTATIVE FROM THE STAGE AT WHICH IT STOOD ON THE DATE OF THE DEATH OF THE DECEASED ; ANY PROCEEDING WHICH COULD HAVE BEEN TAKEN AGAINST THE DECEASED IF HE HAD SURVIVED, MAY BE TAKEN AGAINST THE LEGAL REPRES ENTATIVE; AND ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCO RDINGLY (3) THE LEGAL REPRESENTATIVE OF THE DECEASED SHALL, FOR THE PURPOSES OF THIS ACT, BE DEEMED TO BE AN ASSESSEE. (4) EVERY LEGAL REPRESENTATIVE SHALL BE PERSONALLY LIABLE FOR ANY TAX PAYABLE BY HIM IN HIS CAPACITY AS LEGAL REPRESENTATIVE IF, WHI LE HIS LIABILITY FOR TAX REMAINS UNDISCHARGED, HE CREATES A CHARGE ON OR DIS POSES OF OR PARTS WITH ANY ASSETS 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 PARTED WITH. (5) THE PROVISIONS OF SUB-SECTION (2) OF SECTION 16 1, SECTION 162 AND SECTION 167, SHALL, SO FAR AS MAY BE, AND TO THE EXTENT TO WHICH THEY ARE NOT ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 16 INCONSISTENT WITH THE PROVISIONS OF THIS SECTION, A PPLY IN RELATION TO A LEGAL REPRESENTATIVE. (6) THE LIABILITY OF A LEGAL REPRESENTATIVE UNDER T HIS SECTION SHALL, SUBJECT TO THE PROVISIONS OF SUB-SECTION (4) AND SUB-SECTION (5), BE LIMITED TO THE EXTENT TO WHICH THE ESTATE IS CAPABLE OF MEETING THE LIABILIT Y.' 18. SUB-SECTION (1) OF SECTION 159 WOULD APPLY TO A CA SE WHERE A LIABILITY HAS ALREADY CRYSTALLISED. THE DEATH OF AN ASSESSEE WOUL D NOT ABSOLVE THE LEGAL HEIRS OF THE ASSESSEE OF ANY LIABILITY THAT THE ASSESSEE HAD INCURRED DURING HIS LIFE TIME. IN THE CASE ON HAND, THE LIABILITY, IF ANY, W OULD HAVE ARISEN ONLY AFTER AN ORDER IS PASSED UNDER SECTION 263. THEREFORE, SUB-S ECTION (1) OF SECTION 159 WILL NOT APPLY TO THE CASE ON HAND. SUB-SECTION (2) OF S ECTION 159 DEALS PRIMARILY WITH TWO CONTINGENCIES. THE FIRST IS DEALT WITH IN CLAUSE (A) OF SUB-SECTION (2) OF SECTION 159. THIS CLAUSE (A) CONTEMPLATES THE CONTI NGENCY OF A PROCEEDING TAKEN AGAINST THE DECEASED BEFORE HIS DEATH. 19. IN THIS CASE, THE VERY INITIATION OF PROCEEDINGS U NDER SECTION 263 WAS DONE AFTER THE DEATH. CLAUSE (A) OF SUB-SECTION (2) USES THE E XPRESSION 'BEFORE HIS DEATH'. THEREFORE, CLAUSE (A) WOULD NOT APPLY TO THE CASE O N HAND. 20. CLAUSE (B) IS PROBABLY MORE ADVANTAGEOUS TO THE RE VENUE, IF AT ALL IT COULD BE TAKEN ADVANTAGE BY THE REVENUE. CLAUSE (B) ATTEMPTS TO SAVE THE SITUATION WHERE THE RIGHT OF THE REVENUE TO PROCEED AGAINST THE ASS ESSEE WAS AVAILABLE AT THE TIME WHEN THE ASSESSEE HAD PASSED AWAY. TAKE FOR IN STANCE CASES WHERE THE APPELLATE AUTHORITY HAS DECIDED AN ISSUE IN FAVOUR OF THE ASSESSEE AND BEFORE THE TIME LIMIT AVAILABLE FOR THE DEPARTMENT TO FILE A FURTHER APPEAL, THE ASSESSEE HAD DIED. IN SUCH SITUATION, THE RIGHT TO FILE FURT HER APPEAL IS A RIGHT TO TAKE ANY PROCEEDING THAT WAS AVAILABLE TO THE DEPARTMENT AS IF THE DECEASED ASSESSEE HAD SURVIVED. THEREFORE, IT IS ONLY THOSE CIRCUMSTANCES THAT CAN BE SAID TO BE TAKEN CARE OF UNDER CLAUSE (B). 21. IN ANY CASE, IN THE CASE ON HAND, THE DEPARTMENT W AS MADE AWARE OF THE FACT THAT THE ASSESSEE WAS DEAD. THE INCOME TAX OFFICER' S LETTER DATED 23.9.2013 INFORMING HIS SUPERIOR THAT THE NOTICE UNDER SECTIO N 263 RETURNED WITH THE ENDORSEMENT OF THE POSTAL DEPARTMENT TO THE EFFECT THAT THE ADDRESSEE WAS DEAD, CLINCHES THE FACT. DESPITE BEING PUT ON NOTICE THAT THE NOTICEE WAS DEAD, THE DEPARTMENT CHOSE TO PURSUE THE VERY SAME NOTICE. IN SUCH CIRCUMSTANCES, CLAUSE (B) OF SUB-SECTION (2) OF SECTION 159 CANNOT BE TAKEN ADVANTAGE OF BY THE DEPARTMENT. 22. SUB-SECTION (3) OF SECTION 159 CONTAINS A DEEMING FICTION. IT STATES THAT THE LEGAL REPRESENTATIVE OF THE DECEASED SHALL, FOR THE PURPO SES OF THIS ACT, BE DEEMED TO BE AN ASSESSEE. THEREFORE, IT IS CONTENDED BY MR.M. SWAMINATHAN, LEARNED STANDING COUNSEL FOR THE DEPARTMENT THAT THE RESPON DENT SHOULD BE DEEMED TO BE AN ASSESSEE AND THE SERVICE OF NOTICE ON HIM SHO ULD BE DEEMED TO BE SUFFICIENT SERVICE. 23. IN OTHER WORDS, THE CONTENTION OF THE LEARNED STAN DING COUNSEL IS THAT THE RESPONDENT HEREIN AUTOMATICALLY BECOMES A DEEMED AS SESSEE IN TERMS OF SUB- SECTION (3) AND HENCE, HIS PARTICIPATION WOULD PRE- EMPT HIM FROM TAKING OBJECTION TO THE FACT THAT THE NOTICE WAS ADDRESSED TO A DEAD PERSON. ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 17 24. THOUGH AT FIRST BLUSH, THE CONTENTION APPEARS TO B E WELL FOUNDED, WE DO NOT THINK THAT THE DEPARTMENT CAN RAISE IT IN THIS CASE . AS WE HAVE POINTED OUT EARLIER, THE ORIGINAL ORDER OF ASSESSMENT WAS A SCR UTINY ASSESSMENT PASSED UNDER SECTION 143(3) ON 23.6.2011. AFTER TWO YEARS, THE C OMMISSIONER SOUGHT TO INVOKE SECTION 263. THE ASSESSEE HAD DIED IN THE ME ANTIME ON 13.6.2013. THE SHOW CAUSE NOTICE UNDER SECTION 263 WAS ISSUED ON 6 .9.2013. 25. WE CAN GIVE THE BENEFIT TO THE DEPARTMENT THAT THE Y WERE NOT AWARE OF THE DEATH OF THE ASSESSEE ON THAT DATE. BUT, THIS NOTICE DATE D 6.9.2013, SENT BY POST, RETURNED WITH THE ENDORSEMENT THAT THE ADDRESSEE WA S DEAD. THEREAFTER, THE DEPARTMENT SERVED THE VERY SAME NOTICE ON THE LEGAL HEIR THROUGH A MESSENGER. THEREFORE, THE DEPARTMENT CANNOT NOW TAKE ADVANTAGE OF SUB-SECTION (3) OF SECTION 159. IF THE DEPARTMENT HAD ISSUED THE NOTIC E ADDRESSED TO THE LEGAL HEIR HIMSELF, BY TAKING RECOURSE TO SECTION 159(3), THE DEEMING FICTION COULD HAVE BEEN TAKEN ADVANTAGE OF BY THE DEPARTMENT. IT IS TO O LATE IN THE DAY FOR THE DEPARTMENT TO TAKE ADVANTAGE OF THE SAME. 26. MR.M.SWAMINTHAN, LEARNED STANDING COUNSEL DREW OUR ATTENTION TO THE DECISION OF THE MADHYA PRADESH HIGH COURT IN SMT.KAUSHALYABAI V. CIT [1999] 238 ITR 1008 AND CONTENDED THAT ONCE THE LEGAL HEIR OF THE DECE ASED ASSESSEE HAD PARTICIPATED IN THE PROCEEDINGS, THE DEFECT IN THE NOTICE STOOD AUTOMATICALLY CURED. 27. WE HAVE GONE THROUGH THE DECISION OF THE MADHYA PR ADESH HIGH COURT. AS SEEN FROM THE FACTS, OUT OF WHICH, THE SAID CASE AROSE, THE PROCEEDINGS FOR ASSESSMENT FOR THE YEARS 1975-76 TO 1980-81 WERE COMPLETED BY THE DEPARTMENT. THEREAFTER, THE DEPARTMENT NOTICED THAT THE SHARE I NCOME OF THE WIFE OF THE ASSESSEE, WHICH SHOULD HAVE BEEN INCLUDED IN THE AS SESSEE'S HANDS UNDER SECTION 64, HAD ESCAPED ASSESSMENT. THEREFORE, THE PROCEEDI NGS WERE INITIATED UNDER SECTION 147. IN THE MEANTIME, THE ASSESSEE EXPIRED ON 12.1.1981. NOTICES WERE ISSUED ON 3.3.1981 AND THEY WERE RECEIVED BY THE LE GAL HEIRS. IN RESPONSE TO THE NOTICES, THE LEGAL HEIRS ACTUALLY FILED RETURNS FOR ALL THESE YEARS UNDER PROTEST. 28. THEREFORE, THERE ARE TWO REASONS AS TO WHY WE CANN OT GO BY THE RATIO DECIDENDI IN KAUSHALYABAI ( SUPRA ). THE FIRST IS THAT IN RESPONSE TO THE NOTICES, TH E ASSESSEE'S LEGAL HEIRS FILED RETURNS OF INCOME. IN OTHER WORDS, THEY SUBMITTED TO THE JURISDICTION. MOREOVER, WHAT WAS SOUGHT TO BE D ONE WAS ACTUALLY TO INCLUDE THE INCOME OF THE WIFE UNDER SECTION 64. 29. THE SECOND REASON IS THAT WITH GREAT RESPECT TO TH E MADHYA PRADESH HIGH COURT, THE PRINCIPLE OF LAW THAT THEY HAD MENTIONED THEREI N DOES NOT APPEAR TO BE CORRECT. A NOTICE SENT TO A DEAD PERSON IS ACTUALLY A NULLITY. THERE IS ONLY ONE EXCEPTION IN SO FAR AS CIVIL PROCEEDINGS ARE CONCER NED, WHICH COULD BE TRACED TO ORDER XXII RULE 4. SECTION 159 OF THE INCOME TAX AC T ALSO CARVES OUT AN EXCEPTION. SINCE SERVICE OF NOTICE ON THE LEGAL HEI R OF A DEAD PERSON FALLS UNDER THE CATEGORY OF AN EXCEPTION TO THE GENERAL RULE, T HE SAME CANNOT OVERTAKE THE RULE IN THE ABSENCE OF A SPECIFIC PROVISION. 30. A BENCH OF THIS COURT, TO WHICH, ONE OF US (VRSJ) WAS A PARTY, HAD POINTED OUT IN GOPALAKRISHNAN G.S . V. STATE OF TAMIL NADU [2006 (4) CTC 757], THAT A DISTINCTION HAS ALWAYS TO BE MAINTAINED BETWEEN JUD ICIAL/ QUASI-JUDICIAL PROCEEDINGS AND OTHER PROCEEDINGS. IN SAVITHRIAMMAL V. STATE OF TAMIL NADU [2006 (3) MLJ 389], A DIVISION BENCH OF THIS COURT HAD CATEGORICALLY POINTED ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 18 OUT THAT THE NOTIFICATION ISSUED IN THE NAME OF A D EAD PERSON IS A NULLITY. IN SMT. LILA VATI BAI V. STATE OF BOMBAY AIR 1957 SC 521, THE CONSTITUTION BENCH OF THE SUPREME COURT HAD CARVED OUT AN EXCEPTION. 31. THE CASE ON HAND WILL NOT FALL UNDER THE SAID EXCE PTION. THEREFORE, THE VERY INITIATION OF THE PROCEEDINGS AGAINST THE DEAD PERS ON AND THE CONTINUATION OF THE SAME DESPITE HAVING NOTICED THE FACTUM OF DEATH OF THE ASSESSEE CANNOT BE APPROVED. 32. HENCE, THE TAX CASE APPEAL IS DISMISSED AND THE QU ESTIONS OF LAW ARE ANSWERED AGAINST THE DEPARTMENT. 16. THE HONBLE BOMBAY HIGH COURT IN RUPA SHYAMSUNDAR D HUMATKAR (SUPRA) HELD THAT IT IS SETTLED LAW; NOTICE FOR REO PENING OF ASSESSMENT AGAINST A DEAD PERSON IS INVALID. THE FACT THAT THE ASSESSING OFFICER WAS NOT INFORMED OF THE DEATH BEFORE ISSUE OF NOTICE IS IRR ELEVANT . 17. FURTHER, HONBLE GUJARAT HIGH COURT IN RASHID LALA VS ITO (SUPRA) HELD THAT WHERE ORIGINAL ASSESSEE, DIED ON 2-12-200 9 AND AFTER A PERIOD OF SIX YEARS ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 148 IN HER NAME TO REOPEN ASSESSMENT FOR ASSESSMENT YEAR 2009- 10 AND FURTHER DESPITE POINTING OUT BY HEIR OF ASSESSEE THAT ASSE SSEE HAD EXPIRED LONG BACK, HE RELYING UPON SECTION 159 CONTINUED WITH RE ASSESSMENT PROCEEDINGS AGAINST ASSESSEE, SECTION 159 WOULD NO T APPLICABLE TO INSTANT CASE AND, THEREFORE IMPUGNED NOTICE WAS LIA BLE TO BE SET ASIDE. 18. SIMILARLY, DELHI HIGH COURT IN RAJINDER KUMAR SEHGA L VS ITO [2019] 101 TAXMANN.COM 233 (DELHI) ALSO TOOK THE VIEW THAT WHERE NOTICE SEEKING TO REOPEN ASSESSMENT WAS ISSUED IN NAME OF DECEASED ASSESSEE, SINCE SHE COULD NOT HAVE PARTICIPATED IN REASSESSME NT PROCEEDINGS, PROVISIONS OF SECTION 292BB WERE NOT APPLICABLE TO ASSESSEE'S CASE AND ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 19 AS A CONSEQUENCE, IMPUGNED REASSESSMENT PROCEEDINGS DESERVED TO BE QUASHED. 19. THE CASE LAW RELIED BY LD COMMISSIONER (APPEALS) IN SMT. KAUSHALYABAI ( SUPRA) IS NOT HELPFUL TO THE REVENUE AS THE SAME HAS ALREADY BEEN DISTINGUISHED BY MADRAS HIGH IN CIT VS . M. HEMANATHAN (SUPRA) AS WELL AS BY DELHI HIGH COURT IN RAJINDER KUMAR SEHGAL VS ITO (SUPRA). 20. IN VIEW OF THE FOREGOING FACTUAL AND LEGAL DISCUSSI ONS AND RESPECTFULLY FOLLOWING THE DECISIONS OF VARIOUS HIGH COURTS, THE IMPUGNED REASSESSMENT NOTICE ISSUED UNDER SECTION 148 ON 13. 03.2013 IN INVALID AND THEREFORE, ALL CONSEQUENT PROCEEDINGS INCLUDING THE REASSESSMENT ORDER- HAVE TO BE AND IS, HEREBY QUASHED. IN THE RESULT TH E GROUND NO. 1&2 OF THE APPEAL RAISED BY THE ASSESSEE ARE ALLOWED. AS WE HA VE ALLOWED THE LEGAL ISSUES RAISED BY THE ASSESSEE AND QUASHED THE REASS ESSMENT, THEREFORE, DISCUSSIONS ON THE MERITS OF THE CASE HAVE BECOME A CADEMIC. 21. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 12/06/2019. SD/- SD/- M. BALAGANESH, PAWAN SINGH ACCOUNTANT MEMBER JUD ICIAL MEMBER MUMBAI, DATE: 12.06.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) ITA NO . 3112/MUM/2017- 3112 MUM 2017 SAMADHAN KRISHNA KAT EKAR 20 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI