B.G. SHARMA (DECEASED) ( BY L/H SHRI MUKESH B SHARMA), MUMBAI V. ITO 14(3)(1), MUMBAI

ITA 387/MUM/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0884 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 17-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Procedural lapse; Revised return; Reassessment proceedings
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B, MU MBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 387//MUM/2012 (ASSESSMENT YEAR-2008-09) B. G. SHARMA (DECEASED) (BY HIS L/H SHRI MUKESH B. SHARMA), C/O. SHARMA PICTURE PUBLICATION, VALLABHDAS KANJI BLDG., 175 PRINCESS STREET, MUMBAI-400002. PAN: ADUPS8279E VS. ITO 14(3)(1), MUMBAI. (APPELLANT) (RESPONDENT) ITA NO. 1536//MUM/2013 (ASSESSMENT YEAR-2007-08) B. G. SHARMA (DECEASED) (BY HIS L/H SHRI MUKESH B. SHARMA), C/O. SHARMA PICTURE PUBLICATION, VALLABHDAS KANJI BLDG., 175 PRINCESS STREET, MUMBAI-400002. PAN: ADUPS8279E VS. ITO 14(3)(1), MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJIV KHANDELWAL (AR) REVENUE BY : SHRI T.A. KHAN (DR) DATE OF HEARING : 11.12.2017 DATE OF PRONOUNCEMENT : 25.01.2018 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THESE TWO APPEALS UNDER SECTION 253 OF THE INCOME-T AX ACT (THE ACT) ARE DIRECTED AGAINST THE ORDER LD. CIT(A)-25, MUMBA I FOR ASSESSMENT ITA NO. 387/M/12 & 1536/M/13- B.G. SHARMA (DECEASED) 2 YEAR (AY) 2007-08 AND 2007-08. THE FACTS OF BOTH T HE APPEALS ARE INTERCONNECTED; HENCE, BOTH THE APPEALS WERE CLUBBE D TOGETHER AND ARE DECODED BY COMMON ORDER. THE ASSESSMENT ORDER FOR A Y 2007-08 WAS RE-OPENED BY ASSESSING OFFICER DURING THE ASSESSMEN T PROCEEDINGS FOR AY2008-09. ITA NO. 387/MUM/2012 FOR AY 2008-09 2. BRIEF FACTS OF THE CASE ARE THAT RETURN FOR THE YEA R UNDER CONSIDERATION WAS FILED ON 30 MARCH 2010 DECLARING TOTAL INCOME OF RS . 49,380/-. SINCE THE ASSESSEE HAD EXPIRED ON 14 TH NOVEMBER 2007, THE RETURN OF INCOME WAS SIGNED BY SON OF ASSESSEE SH. M.B. SHARMA IN THE CA PACITY OF LEGAL HEIR. THE ASSESSMENT WAS COMPLETED ON 30 DECEMBER 2010 UN DER SECTION 143(3). THE ASSESSMENT ORDER WAS PASSED IN THE NAME OF THE DECEASED BHAWARILAL GIRDHARILAL SHARMA. DURING THE ASSESSMEN T PROCEEDING THE ASSESSING OFFICER ON THE BASIS OF AIR INFORMATION THAT THE ASSESSEE HAD SOLD PROPERTY DURING THE YEAR OF WHICH VALUE WAS CO NSIDERED AT RS.31,91,500/- BY STAMP VALUATION AUTHORITY. THE AS SESSING OFFICER FURTHER OBSERVED THAT IN THE RETURN OF INCOME FOR A SSESSMENT YEAR 2007-08 FILED ON 31 MARCH 2008, WHEN THE SALE AGREEMENT WAS SHOWN TO HAVE MADE ON 4 JULY 2007 WHICH WAS REGISTERED ON 10 SEPT EMBER 2007. THUS, THE ASSESSING OFFICER TOOK THE VIEW THAT THE TRANSF ER OF CAPITAL ASSET WAS COMPLETED IN EARLIER ASSESSMENT YEAR I.E. IN ASSESS MENT YEAR 2007-08, THE ASSESSEE HAD NOT OFFERED ANY CAPITAL GAIN IN THE RE TURN OF INCOME FOR ITA NO. 387/M/12 & 1536/M/13- B.G. SHARMA (DECEASED) 3 ASSESSMENT YEAR 2008-09. THE ASSESSING OFFICER WHI LE PASSING ASSESSMENT ORDER MADE ADDITION ON ACCOUNT OF CAPITA L GAIN OF RS.24,20,100 /- ON PROTECTIVE BASIS. ON APPEAL BEFO RE COMMISSIONER (APPEALS) THE ACTION OF ASSESSING OFFICER WAS CONFI RMED. THUS, AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. ITA NO. 1536/MUM/2013 FOR AY 2007-08 3. ON THE BASIS OF OBSERVATION OF ASSESSING OFFICER WH ILE PASSING ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008-09, THE ASSESSMENT F OR ASSESSMENT YEAR 2007-08 WAS REOPENED UNDER SECTION 147. NOTICE UNDE R SECTION 148 DATED 12 NOVEMBER 2010 WAS SERVED, TO FILE THE RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR. THE LEGAL HEIR OF THE ASSESSEE FIL ED RETURN OF INCOME ON 26 NOVEMBER 2010. THE LEGAL HEIRS DEMANDED THE REAS ONS RECORDED. THE LEGAL HEIRS OF THE ASSESSEE FILED OBJECTION VIDE OB JECTION DATED 18 DECEMBER 2010, AGAINST REOPENING OF THE ASSESSMENT. THE ASSESSING OFFICER PROCEEDED TO COMPLETE THE RE-ASSESSMENT. TH E ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) RWS 147 ON 02.01.201 2. AGAIN, THE RE- ASSESSMENT WAS PASSED AGAINST THE DECEASED PERSON. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER ADDED THE CA PITAL GAIN OF RS. 24,64,900/- ON TRANSFER OF ASSET. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE ACTION OF ASSESSING OFFICER WAS CONFI RMED. THE LEARNED COMMISSIONER (APPEALS) DISMISSED THE APPEAL HOLDING THAT APPEAL FOR ITA NO. 387/M/12 & 1536/M/13- B.G. SHARMA (DECEASED) 4 ASSESSMENT YEAR 2008 -09 HAS BEEN DISMISSED, WHEREI N THE PROTECTIVE ADDITION WAS MADE IN THAT ASSESSMENT YEAR. THUS, FU RTHER AGGRIEVED THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE US. 4. WE HAVE HEARD LD. AR OF THE ASSESSEE AND THE LD. DR FOR REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. A R OF THE ASSESSEE ARGUED THAT ASSESSMENT ORDER PASSED IN BOTH THE ASS ESSMENT YEARS IS BAD IN LAW. THE ASSESSEE EXPIRED ON 14 TH NOVEMBER 2007, INTIMATION TO THIS EFFECT WAS GIVEN TO THE ASSESSING OFFICER V IDE LETTER DATED 7 DECEMBER 2007, COPY OF WHICH IS PLACED ON RECORD (P AGE NO.62 PAPER BOOK). THE ASSESSING OFFICER, THEREAFTER, ISSUED NO TICE UNDER SECTION 143(2) ON 19 TH DECEMBER 2007 ADDRESSED TO ASSESSEE FOR ASSESSMENT YEAR 2008-09, DESPITE THE FACT THAT INFORMATION OF DEATH WAS DULY COMMUNICATED TO HIM. THE ASSESSMENT ORDER PASSED AG AINST THE DEAD PERSON IS NULLITY. THE ASSESSING OFFICER REOPENED T HE ASSESSMENT FOR ASSESSMENT YEAR 2007-08 ON THE BASIS OF HIS OBSERVA TION WHILE PASSING ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008-09. THE A SSESSING OFFICER ALSO PASSED THE ASSESSMENT ORDER FOR 2007-08 UNDER SECTION 143 (3)RWS147 ON 02.01.2012, WHICH IS ALSO VIOD AB INITIO . THE LANDED AR OF THE ASSESSEE IN SUPPORT OF HIS SUBMISSION RELIED UPON THE DECISION OF COORDINATE BENCH IN CASE OF LATE MR. CHANDRAVADAN J DALAL VS ITO ITA NO. 7131/M/2008 DATED 19.03.2010. ON THE OTHER HAND THE LEARNED AND AR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES ITA NO. 387/M/12 & 1536/M/13- B.G. SHARMA (DECEASED) 5 BELOW. IT WAS ARGUED THAT THE LEGAL HEIRS OF THE A SSESSEE WAS GIVEN SUFFICIENT OPPORTUNITY BEFORE PASSING THE ASSESSMEN T ORDER FOR BOTH THE ASSESSMENT YEARS. THE LEGAL HEIRS OF THE ASSESSEE P ARTICIPATED IN THE PROCEEDINGS. THE ASSESSEE HAS NOT TAKEN SPECIFIC GR OUNDS OF APPEAL REGARDING THE INVALIDITY OF THE ASSESSMENT ORDER PA SSED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW THE LD. AR FOR THE ASSESSEE HAS RAISED PURELY LEGAL ISSUE, WHICH R EQUIRES CONSIDERATION. WE HAVE NOTED THAT THE RETURN OF INC OME FOR ASSESSMENT YEAR 2008-09 WAS SIGNED BY LEGAL HEIR OF ASSESSEE. THE LEGAL HEIR OF THE ASSESSEE VIDE HIS LETTER DATED 6 DECEMBER 2007 INTIMATED ASSESSING OFFICER ABOUT THE DEATH OF ASSESSEE. THE LETTER OF THE LEGAL HIGHER OF ASSESSEE IS DULY ACKNOWLEDGED BY ASSESSING OFFICER. DESPITE, THE INFORMATION OF DEATH OF ASSESSEE THE ASSESSING OFFI CER ISSUED NOTICE UNDER SECTION 143(2) DATED 19.08.2010 IN THE NAME O F THE DECEASED ASSESSEE. THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2008-09 WAS ALSO PASSED AGAINST THE DEAD PERSON. AGAIN, THE ASSESSME NT FOR ASSESSMENT YEAR 2007-08 IN THE REOPENING ASSESSMENT PROCEEDING ALSO COMPLETED AGAINST THE DEAD PERSON. WE HAVE NOTED THAT THE ASS ESSING OFFICER WAS AWARE ABOUT THE EXPIRY OF ASSESSEE; ESTATE ASSESSIN G OFFICER PROCEEDED TO COMPLETE THE ASSESSMENT AGAINST THE DEAD PERSON. IT IS SETTLED LAW ITA NO. 387/M/12 & 1536/M/13- B.G. SHARMA (DECEASED) 6 THAT ASSESSMENT ORDER PASSED AGAINST THE DECEASED P ERSON IS NOT VALID IN THE EYES OF LAW. 6. THE HONBLE GUJARAT HIGH COURT IN RASID LALA VS INCOME-TAX OFFICER, [2017] 77 TAXMANN.COM 39 (GUJARAT) HELD THAT WHER E ORIGINAL ASSESSEE, NAMELY, 'B' DIED ON 2-12-2009 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 POI NTING OUT BY HEIR OF 'B' THAT 'B' HAD EXPIRED LONG BACK, HE RELYING UPON SECTION 159 CONTINUED WITH REASSESSMENT PROCEEDINGS AGAINST 'B', SECTION 159 WOULD NOT APPLICABLE TO INSTANT CASE AND, THEREFORE IMPUGNED NOTICE WAS LIABLE TO BE SET ASIDE. THE HONBLE PUNJAB & HARYANA HIGH COURT IN CIT VS ASHA RANI [1997] 95 TAXMAN 535 (PUNJ. & HAR) HELD THAT W HEN THE ASSESSEE (SINCE DECEASED) HAD FILED A RETURN, WHICH WAS LATER REVISED BY HIS LEGAL HEIR WITH A SLIGHTLY ENHANCED INCOME. THE ASSESSING OFFICER COMPLETED THE ASSESSMENT AT A MUCH HIGHER FIGURE TH AN WHAT WAS SHOWN IN THE REVISED RETURN. ON APPEAL, THE LEGAL HEIR CO NTENDED THAT THE ASSESSMENT HAD BEEN FRAMED AGAINST A DEAD PERSON AN D WAS, THEREFORE, VOID AB INITIO. THE COMMISSIONER (APPEALS) HELD THAT WHILE THE NOTI CE HAD BEEN INITIALLY ISSUED TO THE ASSESSEE, THE SAME HAD ALSO BEEN ISSUED THEREAFTER TO THE LEGAL HEIRS OF THE DECEASED ASSES SEE, AND, THEREFORE, THOUGH THE ASSESSMENT HAD BEEN FRAMED IN THE NAME O F THE DECEASED ASSESSEE, THAT WAS A MISTAKE WHICH COULD NOT BE SAI D TO BE FATAL AND SO ITA NO. 387/M/12 & 1536/M/13- B.G. SHARMA (DECEASED) 7 WAS RECTIFIABLE AS AN IRREGULARITY. ON SECOND APPEA L, THE TRIBUNAL ANNULLED THE ASSESSMENT ON GROUND OF HAVING BEEN FR AMED AGAINST THE DECEASED, AND ALSO DECLINED TO MAKE REFERENCE UNDER SECTION 256(1). 7. FURTHER, THE HONBLE KARNATAKA HIGH COURT IN CIT VS INTEL TECHNOLOGY (2015) 57 TAXMAN.COM 159 HELD ASSESSMENT IN NAME OF COMPANY WHICH HAD BEEN AMALGAMATED WITH OTHER COMPA NY WOULD BE NULL AND VOID. FRAMING OF ASSESSMENT IN NAME OF NON-EXISTENT ENTITY IS NOT A PROCEDURAL IRREGULARITY WHICH CAN B E CURED UNDER SECTION 292B. SIMILAR VIEW WAS TAKEN BY COORDINATE BENCH IN LATE MR. CHANDRAVADAN J DALAL VS ITO (SUPRA). CONSIDERIN G THE FACTS THAT THE ASSESSING OFFICER PASSED THE ASSESSMENT ORDER I N BOTH THE ASSESSMENT YEAR, AGAINST THE DEAD PERSON (DECEASED ASSESSEE) WHICH IS VOID AB INITIO. HENCE, WE ACCEPTED THE CONTENTIO N OF THE LD. AR FOR THE ASSESSEE THAT BOTH THE ASSESSMENT ORDERS ARE IN VALID. AS WE HAVE ACCEPTED THE LEGAL CONTENTION OF THE LD. AR FOR THE ASSESSEE AND ALLOWED BOTH THE APPEALS OF THE ASSESSEE, HENCE, TH E DISCUSSION ON MERITS OF THE APPEALS HAVE BECOMES ACADEMIC. 8. IN THE RESULT BOTH THE APPEAL OF THE ASSESSEE ARE A LLOWED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 ST DAY OF JANUARY, 2018. SD/- SD/-/- (SHAMIM YAHYA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 25/01/2018 ITA NO. 387/M/12 & 1536/M/13- B.G. SHARMA (DECEASED) 8 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/