LATE DURGALAL KOTIA, MUMBAI V. ACIT 21(1), MUMBAI

ITA 3602/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48960 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR B SPENTHILKUMAR
• Assessee Lawyers: K GOPAL
• Keywords: Validity of assessment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D, MUMBAI BEFORE SHRI P.M.JAGTAP, ACCOUNTANT MEMBER & SMT. ASHA VIJAYRAGHAVAN, JUDICIAL MEMBER. I.T.A. NO. 3602/MUM/2010. ASSESS MENT YEAR : 2006-07. LATE DURGALAL KOTIA, ASSTT. COMMISSIONER OF INCOME-TAX, 14, KOTIA NIWAS, BAJAJ ROAD, VS. 21(2), MUMBAI. VILE PARLE (W), MUMBAI-400 056. PAN AABBPK4764A APPELLANT. RESPONDENT. APPELLANT BY : SHR I K. GOPAL. RESPONDENT BY : SHRI DR. B. SPENTHILKUMAR O R D E R PER P.M. JAGTAP, A.M. : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LEARNED CIT(APPEALS)-32, MUMBAI DATED 17-03-2010 WHEREBY HE CONFIRMED THE ADDITION OF RS.13,99,300/- MADE BY THE AO TO THE TOTAL INCOM E OF THE ASSESSEE ON ACCOUNT OF LONG TERM CAPITAL GAINS. 2. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL FOR THE ASSESSEE HAS RAISED A PRELIMINARY ISSUE CHALLENGING THE VALIDITY OF ASSESSMENT MADE BY THE AO U/S 143(3) ON THE GROUND THAT THE SAME WAS MADE IN THE NAME OF A DECEASED PERSON. HE SUBMITTED THAT THE ASSESSEE HAD EXPIRED WAY BACK ON 23-10-2005 AND HIS RETURN OF INCOME FOR THE YEAR CONSIDERATION WAS FILED BY H IS LEGAL HEIRS ON 23-05-2007. HE SUBMITTED THAT A LETTER DATED 16-12-2008 WAS ALSO F ILED DURING THE COURSE OF 2 ITA NO. 3602/MUM/2010 ASSTT. YEAR : 2006-07. ASSESSMENT PROCEEDINGS BEFORE THE AO SPECIFICALLY BRINGING IT OUT ON RECORD THAT THE ASSESSEE HAD EXPIRED ON 23-10-2005. HE CONTENDE D THAT THE AO THUS WAS WELL INFORMED ABOUT THE DEATH OF THE ASSESSEE AND STILL HE PROCEEDED TO COMPLETE THE ASSESSMENT U/S 143(3) ON 21-12-2008 IN THE NAME OF A DECEASED PERSON. RELYING ON THE DECISIONS OF HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. DALUMAL SHYAMUMAL 276 ITR 62, HONBLE MADRAS HIGH C OURT IN THE CASE OF CWT VS. V.S. MEENAKSHI ACHI 205 ITR 260 AND THAT OF THE CHENNAI BENCH OF ITAT IN THE CASE OF LATE A.Y. PRABHAKAR (INDL) VS. ACIT 105 TTJ 391, HE CONTENDED THAT THE ASSESSMENT MADE BY THE AO ON THE DECEASED PERSON IS VOID AB INITIO AND THE SAME IS LIABLE TO BE QUASHED. 3. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE L EARNED COUNSEL FOR THE ASSESSEE ON THIS PRELIMINARY ISSUE AND HAVE GONE TH ROUGH CAREFULLY THE JUDICIAL PRONOUNCEMENTS RELIED UPON BY HIM IN SUPPORT. IT IS OBSERVED THAT IN THE CASE OF CWT VS. V.S. MEENAKSHI ACHI (SUPRA) THE ASSESSMENT WAS MADE BY THE AO IN THE NAME OF ESTATE OF DECEASED REPRESENTED BY EXECUTOR AND EVEN THE ORDER OF THE FIRST APPELLATE AUTHORITY WAS PASSED IN THAT NAME. IN APP EAL BEFORE THE TRIBUNAL AS WELL AS IN THE REFERENCE APPLICATION FILED BEFORE THE HO NBLE HIGH COURT, THE DECEASED ASSESSEE, HOWEVER, WAS SHOWN AS RESPONDENT AND THE QUESTION THAT AROSE FOR THE CONSIDERATION OF HONBLE MADRAS HIGH COURT WAS WHET HER THE SAID APPLICATION WAS MAINTAINABLE. THE CONTENTION OF THE REVENUE WAS THA T IT WAS ONLY A TYPOGRAPHICAL ERROR WHICH COULD BE RECTIFIED. THE HONBLE MADRAS HIGH COURT, HOWEVER, DID NOT FIND ANY SUBSTANCE IN THIS CONTENTION OF THE REVENU E ON THE GROUND THAT THE REVENUE HAD FULL KNOWLEDGE AS TO WHO WAS REAL ASSES SEE AND THE REFERENCE APPLICATION FILED BY THE REVENUE, THEREFORE, WAS HE LD TO BE NOT MAINTAINABLE. THE ISSUE BEFORE THE HONBLE MADRAS HIGH COURT THUS WAS RELATING TO MAINTAINABILITY OF THE REFERENCE APPLICATION AND NOT IN THE CONTEXT OF VALIDITY OF ASSESSMENT AND IN THE 3 ITA NO. 3602/MUM/2010 ASSTT. YEAR : 2006-07. FACTS AND CIRCUMSTANCES INVOLVED IN THAT CASE WHICH ARE DIFFERENT FROM THE FACTS INVOLVED IN THE PRESENT CASE, THE REFERENCE APPLICA TION WAS HELD TO BE NOT MAINTAINABLE BY THEIR LORDSHIPS. IN THE CASE LATE A .Y. PRABHAKAR (INDL) VS. ACIT (SUPRA), ASSESSMENT WAS MADE IN THE NAME OF A PERSO N WHO HAD DIED BEFORE COMPLETION OF ASSESSMENT AND AFTER TAKING INTO CONS IDERATION THE VARIOUS JUDICIAL PRONOUNCEMENTS AS WELL AS THE PROVISIONS OF SECTION 159(2), THE TRIBUNAL HELD THAT THE AO WAS REQUIRED TO BRING ON RECORD ALL THE LEGA L REPRESENTATIVES TO PROCEED FROM THE STAGE AT WHICH IT STOOD ON THE DATE OF DEA TH OF THE DECEASED. SINCE THIS REQUIREMENT WAS NOT COMPLIED WITH BY THE AO, THE A SSESSMENT MADE ON DECEASED PERSON WAS HELD TO BE VOID AB INITIO BY THE TRIBUNA L. IN THE CASE OF DALUMAL SHYAMUMAL (SUPRA) THE ASSESSMENT ORDER PASSED BY TH E AO AGAINST THE DEAD PERSON WAS SIMILARLY HELD TO BE A NULLITY BY THE TRIBUNAL AND WHEN THE MATTER REACHED TO THE HONBLE MADHYA PRADESH HIGH COURT, THE DECISION OF THE TRIBUNAL HOLDING THE ASSESSMENT MADE BY THE AO TO BE NULLITY WAS UPHELD BY THEIR LORDSHIPS. IT WAS, HOWEVER, HELD BY THE HONBLE MADHYA PRADESH HIGH CO URT THAT THE TRIBUNAL SHOULD HAVE REMANDED THE CASE TO THE AO FOR ENSURIN G COMPLIANCE OF SECTION 159 AND FOR PASSING APPROPRIATE ORDERS OF ASSESSMENT AF TER DUE NOTICE TO LEGAL REPRESENTATIVE OF DECEASED ASSESSEE. IT WAS HELD TH AT ONCE THE ASSESSMENT ORDER IS HELD TO BE A NULLITY THEN IN SUCH EVENTS CONSEQUENT IAL DIRECTIONS AS CONTEMPLATED U/S 159 OF THE ACT SHOULD HAVE BEEN GIVEN TO THE AO SO THAT PROPER ASSESSMENT COULD BE PASSED. RESPECTFULLY FOLLOWING THE DECISIO N OF THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF DALUMAL SHYAMUMAL (SUPRA), WE CANCEL THE ASSESSMENT MADE BY THE AO U/S 143(3) ON THE DECEASE D ASSESSEE HOLDING THE SAME TO BE A NULLITY AND REMAND THE MATTER TO THE AO WIT H A DIRECTION TO PASS APPROPRIATE ORDER OF ASSESSMENT AFTER COMPLYING WITH THE REQUIR EMENTS OF SECTION 159(2). 4 ITA NO. 3602/MUM/2010 ASSTT. YEAR : 2006-07. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 27 TH DAY OF MAY, 2011. SD/- SD/- (ASHA VIJAYRAGHAVAN) (P.M. JA GTAP) JUDICIAL MEMBER ACCO UNTANT MEMBER MUMBAI, DATED: 27 TH MAY, 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, D-BENCH. (TRUE COPY) BY ORD ER ASSTT. R EGISTRAR, ITAT, MUMBAI BEN CHES, MUMBA I.