Pitambar Mallick, Bhadrak V. ITO, Bhadrak

ITA 355/CTK/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4056 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 10-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K PRADHAN
• Assessee Lawyers: P K MISHRA
• Keywords: Reasonable cause
• Section: 143(3); 69; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK SMC BENCH, CUTTACK BEFORE SHRI N. S SAINI, ACCOUNTANT MEMBER ITA NO.355 /CTK/2015 ASSESSMENT YEAR : 2007 - 08 PITAMBAR MALLICK, L/H: LATE SMT. SURYAMANI MALLICK, AT/PO: BASUDEVPUR, VIA: MANDARI, DIST: BHADRAK VS. ITO, BHADRAK WARD, BHADRAK PAN/GIR NO. AJFPM 3045 H (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI P.K.MISHRA, AR REVENUE BY : SHRI D.K.PRADHAN , DR DATE OF HEARING : 2 4 /10 / 2016 DATE OF PRONOUNCEMENT : 24 /10 / 2016 O R D E R THIS I S AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - CUTTACK, DATED 30.1.2015 , FOR THE ASSESSMENT YEAR 2007 - 08 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. FOR THAT, THE IMPUGNED ORDERS PASSED BY THE FORUMS BELOW ARE NOT JUST AND PROPER UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND HENCE IS LIABLE TO BE QUASHED IN THE INTEREST OF JUSTICE. 2 ITA NO.355/CTK/2015 ASSESSMENT YEAR :2007 - 08 2.FOR THAT, THE PURCHASE DISCREPANCY DETERMINED BY THE LEARNED A.O AND SUBSEQUENTLY CONFIRMED BY THE LEARNED C.I.T(A) IS WR ONG AND CONTRARY TO THE FACTS ON RECORD AND AS SUCH THE SAME NEEDS TO BE DELETED IN THE INTEREST OF JUSTICE. 3.FOR THAT, THERE BEING NO PURCHASE DISCREPANCY, THE LEARNED A.O. SHOULD NOT HAVE ADDED IT BY APPLYING SECTION 69 OF THE ACT AND THE LEARNED C.I.T (A) SHOULD NOT HAVE CONFIRMED THE SAME IGNORING THE FACTS ON RECORDS. 4.FOR THAT, THE LEARNED A.O. WAS WHOLLY UNJUSTIFIED IN GIVING A CONTRARY FINDING TO THE FACTS AND EVIDENCES ON RECORD WHILE MAKING THE ADDITION U/S.69 OF THE ACT. 5. FOR THAT, SECTIO N 69 OF THE ACT HAS NO APPLICATION UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS SUCH THE ORDER PASSED BY THE LEARNED C.I.T(A) CONFIRMING THE ADDITIONS MADE BY THE LEARNED A.O. IS WRONG AND LIABLE TO BE DELETED IN THE INTEREST OF JUSTICE. `6. FO R THAT, THE APPELLANT CRAVES LEAVE OF THIS HON'BLE TRIBUNAL TO URGE OTHER GROUNDS OF APPEAL, IF ANY AT THE TIME OF HEARING. 3. THE APPEAL FILED BY THE ASSESSEE IS DELAYED BY 10 8 DAYS. THE ASSESSEE HAS FILED A CONDONATION PETITION REQUESTING TO CONDONE THE DELAY. I FIND THAT THE ASSESSEE HAD REASONABLE CAUSE FOR NOT FILING THE APPEAL WITHIN THE STIPULATED TIME. LD D.R. DID NOT HAVE ANY OBJECTION FOR CONDONING THE DELAY. I, THE REFORE, CONDONE THE DELAY OF 10 8 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL AND ADMIT THE APPEAL. 4 . AT THE TIME OF HEARING, LD A.R. OF THE ASSESSEE ADVANCED A PLEA THAT THE LD COMMISSIONER OF INCOME TAX, CUTTACK PASSED AN ORDER U/S.263 ON 3 ITA NO.355/CTK/2015 ASSESSMENT YEAR :2007 - 08 26.3.2012 IN THE NAME OF SMT. SURYAMANI MALLICK, WHO EXPIRED ON 1.2.2012 AND, THEREFORE, THE ORDER PASSED U/S. 263 IS BAD IN LAW AND A NULLITY. HE POINTED OUT FROM PARA 6 OF THE ORDER OF THE LD COMMISSIONER OF INCOME TAX , WHEREIN, THE LD COMMISSIONER OF INCOME TAX HAS STATED THAT SRI BIVASH PANDA, ADVOCATE OF THE ASSESSEE APPEARED AND FILED WRITTEN SUBMISSION STATING THAT THE ASSESSEE IS DEAD AND THAT IT WILL TAKE SOME TIME TO COLLECT HER INCOME TAX DOCUMENTS LYING WITH HER AUTHORISED REPRESENTATIVE. THUS, THE LD COMMISSIONER OF INCOME TAX WAS INFORMED ABOUT THE DEATH OF THE ASSESSEE AND INSPITE OF THAT WITHOUT BRINGING THE LEGAL HEIR ON RECORD, THE LD COMMISSIONER OF INCOME TAX PROCEEDED AND PASS ED ORDER U/S.263 ON A DEAD PERSON. HE, THEREFORE, PRAYED THAT THE ORDER U/S.263 OF THE ACT IS BAD IN LAW AND, THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER DATED 21.12.2012 IN PURSUANCE TO THE ORDER UNDER SECTION 263 BY THE LD COMMISSIONER OF INCOME TAX IS ALSO BAD IN LAW AND HENCE, LIABLE TO BE QUASHED. 5 . LD D.R. COULD NOT CONTROVERT THE SUBMISSIONS OF THE LD A.R. OF THE ASSESSEE. 6 . I HAVE HEARD THE LD REPRESENTATIVES OF THE PARTIES AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIAL AVAILAB LE ON RECORD. I FIND THAT ON SIMILAR FACTS, THE ITAT AHEMEDABAD IN THE CASE OF ITO VS. AKHTER NOORUDDINAHMED SAIYED (2014) 40 CCH 271 (AHD TRIB) HAS HELD AS UNDER 4 ITA NO.355/CTK/2015 ASSESSMENT YEAR :2007 - 08 4. WE FIND THAT IN THE INSTANT CASE, THE ASSESSMENT ORDER WAS PASSED ON LATE SHRI AKHTER N OORUDDINAHMEDSAIYED U/S. 143(3) OF THE ACT ON 21.11.2011, AND THEREAFTER, THE CIT(A) PASSED THE APPELLATE ORDER ON 27.12.2012. ACCORDING TO THE DEATH CERTIFICATE OF SHRI AKHTER NOORUDDINAHMEDSAIYED FILED BEFORE US BY THE DEPARTMENTAL REPRESENTATIVE, THE AS SESSEE HAD EXPIRED ON 29.12.2009 WHICH WAS MUCH BEFORE THE DATE OF PASSING OF THE ASSESSMENT ORDER. 5. IT MAY BE RECALLED THAT IN THE CASE OF ELLIS C. REID V. CIT 5 ITC 100 THE BOMBAY HIGH COURT HAD HELD T HAT 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 THAT IF THE DEATH OCCURRED WHILE ASSESSMENT PROCEEDINGS WERE PENDING, THE PROCEEDI NGS COULD NOT BE CONTINUED AND THE ASSESSMENT COULD NOT BE MADE AFTER THE PERSON'S DEATH: THIS VIEW OF THE BOMBAY HIGH COURT LED THE LEGISLATURE TO INTRODUCE SECTION 24B IN THE1922 ACT IN 1933. SECTION 24B CORRESPONDS TO SECTION 159 OF THE PRESENT ACT. THE RELEVANT PART OF SECTION 159 READS AS UNDER: - 159. (1) WHERE A PERSON DIES, HIS LEGAL REPRESENTATIVE SHALL BE 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 DECEA SED. (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 BEFORE HIS DEATH SHALL BE DEEMED TO HAVE BEEN TAKEN AGAINST 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 DECEASED; (B) ANY PROCEEDING WHICH COULD HAVE BEEN TAKEN AGAINST THE DECEASED IF HE HAD SURVIVED, MAY BE TAKEN AGAINST THE LEGAL REPRESENTATIVE; AND (C) ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACCORDINGLY. (3) THE LEGAL REPRESENTAT IVE OF THE DECEASED SHALL, FOR THE PURPOSES OF THIS ACT, BE DEEMED TO BE AN ASSESSEE. A STUDY OF SUB - SECTION (1) OF SECTION 159 CLEARLY SHOWS THAT IT IS BY A LEGAL FICTION CREATED IN THE PROVISION THAT THE LEGAL REPRESENTATIVE OF A DECEASED PERSON HAD BEEN MADE 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. THE LEGAL REPRESENTATIVE OF THE DECEASED, AS HAS BEEN LAID DOWN IN SUB - SECTION (3) OF SECTION 159 ARE, BY SUCH LEGAL FICTION, 5 ITA NO.355/CTK/2015 ASSESSMENT YEAR :2007 - 08 DEEMED TO BE THE ASSESSEES. SUB - SECTION (2) OF SECTION 159 L AYS DOWN THE CONDITIONS OF APPLICABILITY OF THE PROVISIONS OF SECTION 159. CLAUSE (A) OF SUB - SECTION (2) SAYS THAT ANY PROCEEDINGS TAKEN AGAINST THE DECEASED BEFORE HIS DEATH SHALL BE DEEMED TO HAVE BEEN TAKEN AGAINST THE LEGAL REPRESENTATIVE AND MAY BE CO NTINUED AGAINST THE LEGAL REPRESENTATIVE FROM THE STAGE AT WHICH IT STOOD ON THE DATE OF THE DEATH OF THE DECEASED. FOR THE APPLICABILITY OF THIS CLAUSE THE PROCEEDINGS FOR MAKING AN ASSESSMENT OR FOR THE PURPOSE OF LEVYING ANY SUM SHOULD HAVE BEEN TAKEN A GAINST THE DECEASED IN HIS LIFETIME AND THESE WOULD BE SUCH PROCEEDINGS WHICH MAY BE CONTINUED AGAINST THE LEGAL REPRESENTATIVE FROM THE STAGE AT WHICH SUCH PROCEEDINGS STOOD ON THE DATE OF THE DEATH OF THE DECEASED. CLAUSE (B) OF SUB - SECTION (2) SAYS THAT ANY PROCEEDINGS WHICH COULD HAVE BEEN TAKEN AGAINST THE DECEASED IF HE HAD SURVIVED MAY BE TAKEN AGAINST THE LEGAL REPRESENTATIVE. THIS CLAUSE OBVIOUSLY DEALS WITH THE SITUATION WHERE THE PROCEEDINGS ARE CONTEMPLATED TO BE TAKEN AGAINST THE ESTATE OF THE DECEASED AFTER HIS DEATH. SINCE THE LEGAL REPRESENTATIVE OF THE DECEASED REPRESENTS HIS ESTATE SUCH PROCEEDINGS MAY BE TAKEN AGAINST THEM. THE STUDY OF THESE PROVISIONS CLEARLY BRINGS US TO HOLD THAT ONLY THOSE PROCEEDINGS FOR MAKING ASSESSMENT OR LEVYING ANY SUM MAY BE TAKEN AGAINST THE DECEASED, SO THAT THEY MAY BE CONTINUED AFTER HIS DEATH, WHICH HAVE BEEN TAKEN IN HIS LIFETIME. IN HIS LIFETIME SUCH PROCEEDINGS WOULD NECESSARILY BE TAKEN AGAINST AND IN THE NAME OF THE DECEASED. HOWEVER, IF THE DECEASED H AD DIED BEFORE ANY SUCH PROCEEDINGS COULD HAVE BEEN TAKEN AGAINST HIM, THE PROCEEDINGS MAY BE TAKEN AGAINST THE LEGAL REPRESENTATIVE OF THE DECEASED UNDER THE PROVISIONS OF SUB - CLAUSE (B) OF SUB - SECTION (2) OF SECTION 159. IT IS CLEARLY INFERRED THAT ASSES SMENT UNDER THE ACT CAN ONLY BE MADE AGAINST AN INDIVIDUAL ASSESSEE WHO MUST BE A LIVING PERSON. 6. IN THE CASE OF CIT V. AMARCHAND N. SHROFF [1963] 48 ITR 59 THE SUPREME COURT HELD THAT THE INDIVIDUAL HA S ORDINARILY TO BE A LIVING PERSON AND THERE COULD BE NO ASSESSMENT ON A DEAD PERSON. WITH REGARD TO THE LEGAL FICTION, AS HAS BEEN CREATED UNDER SECTION 159 OF THE ACT, THEIR LORDSHIPS OF THE SUPREME COURT REFERRING TO THEIR EARLIER DECISION IN THE CASE O F BENGAL IMMUNITY CO. LTD. V. STATE OF BIHAR (SIC.) OBSERVED THAT LEGAL FICTIONS ARE ONLY FOR A DEFINITE PURPOSE FOR WHICH THEY ARE CREATED AND SHOULD NOT BE EXTENDED BEYOND THAT LIMITED FIELD. THE SAME PR INCIPLE WAS REITERATED BY THE SUPREME COURT IN THE CASE OF FIRST ADDL. ITO V. MRS. SUSEELASADANANDAN [1965] 57 ITR 168 WHERE IT WAS HELD THAT ON THE DEATH OF A PERSON THE INCOME - TAX OFFICER HAS TO PROCEED AGAINST THE EXECUTOR AND/OR LEGAL REPRESENTATIVE OF THE DECEASED. THE PROPOSITION LAID DOWN BY THE SUPREME COURT IN THE ABOVE CASES WAS FOLLOWED BY THE CALCUTTA HIGH COURT IN THE CASE OF CIT V. SHANTILAL C. MEHTA [1978] 113 ITR 79 WHERE IT WAS HELD THAT ON THE DEATH OF AN ASSESSEE, HIS ESTATE REMAINS LIABLE FOR PAYMENT OF TAXES ACCRUING BOTH BEFORE AND AFTER HIS DEATH. AFTER THE DEATH OF THE ASSESSEE, THE ASSESSMENT PROCEEDINGS CAN ONLY CONTINUE IN THE NAM E OF HIS LEGAL REPRESENTATIVE. THE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT V. C.V. RAGHAVA REDDY [1984] 6 ITA NO.355/CTK/2015 ASSESSMENT YEAR :2007 - 08 148 ITR 385 FOLLOWING THE SAME PRINCIPLE HELD THAT UNDER SECTION 159 A PROCEEDING COULD BE CONT INUED AGAINST THE LEGAL REPRESENTATIVE OF THE DECEASED ASSESSEE ONLY IF IT HAD BEEN INITIATED WHEN THE ASSESSEE WAS ALIVE. IT IS THUS WELL SETTLED THAT AN ASSESSMENT MADE ON A DEAD PERSON WOULD, ON THE FACE OF IT, BE A NULLITY IN LAW. 7 . IN THE ABOVE FACTS AND CIRCUMSTANCES, I FIND THAT IN THE INSTANT CASE, THE LD COMMISSIONER OF INCOME TAX PASSED ORDER U/S.263 ON 26.3.2012 WITHOUT BRINGING THE LEGAL REPRESENTATIVE OF THE DECEASED ASSESSEE ON RECORD, WHO HAD EXPIRED ON 1.2.2012 I.E. PRIOR TO ORDER U/ S.263 , WHICH IS NULLITY IN LAW. HENCE, THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IN PURSUANCE TO ORDER PASSED BY THE LD COMMISSIONER U/S.263 IS ALSO BAD IN LAW. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF ITAT AHMEDABAD BENCH IN THE CA SE OF AKHTER NOORUDDINAHMED SAIYED (SUPRA), I QUASH THE ORDER PASSED BY THE ASSESSING OFFICER U/S.143(3)/147/263 OF THE ACT ON 21.12.2012 . 8 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCE D IN THE OPEN COURT ON 24 /10 /2016 IN THE PRESENCE OF PARTIES. SD/ - ( N. S SAINI ) A CCOUNTANT MEMBER CUTTACK; DATED 24 /10 /2016 B.K.PARIDA, SPS 7 ITA NO.355/CTK/2015 ASSESSMENT YEAR :2007 - 08 COPY OF THE ORDER FORWARDED TO : BY ORDER, ASST.REGISTRAR, ITAT, CUTTACK 1. THE APPELLANT : PITAMBAR MALLICK, L/H: LATE SMT. SURYAMANI MALLICK, AT/PO: BASUDEVPUR, VIA: MANDARI, DIST: BHADRAK 2. THE RESPONDENT. ITO, BHADRAK WARD, BHADRAK 3. THE CIT(A) CUTTACK 4. CIT , CUTTACK 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//