ITO, New Delhi V. Smt. Anjali Chauhan, New Delhi

ITA 5321/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0528 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 29-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUSHA KHURANA
• Section: 143(3); 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI A.K. GARODIA ITA NOS. 5321 & 5322/DEL/10 ASSTT. YRS: 2006-07 INCOME-TAX OFFICER, VS. SMT. ANJALI CHAUHAN. WARD 33(2), NEW DELHI. L/H OF LATE SH. CHAMAN LA L CHAUHAN 1633/33, NAIWALA, KAROL BAGH, NEW DELHI. PAN/ GIR NO. AADPC8692B ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : MS. ANUSHA KHURANA SR. DR RESPONDENT BY : NONE O R D E R PER R.P. TOLANI, J.M : THESE ARE TWO REVENUES APPEALS RELATING TO A.Y. 20 06-07. ITA NO. 5321/DEL/10 HAS BEEN FILED AGAINST THE ORDER OF CIT (A) DATED 22-9-2010 QUASHING THE ASSESSMENT ORDER PASSED BY THE AO U/S 144 OF THE ACT. ITA NO. 5322/DEL/10 HAS BEEN FILED AGAINST THE ORDER OF CIT (A) IN CANCELING THE PENALTY OF RS. 4,00,108/- IMPOSED BY THE AO U/S 271 (1)(C) OF THE ACT. BOTH THE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPO SED OF BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. NONE PUT IN APPEARANCE ON BEHALF OF THE ASSESSEE . WE PROCEED TO DISPOSE OF THE APPEALS EX PARTE, QUA THE ASSESSEE, ON MERITS AND IN THAT PROCESS WE HAVE HEARD THE LEARNED DR AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. ITA 5321 & 5322/DEL/1- ANJALI CHAUHAN 2 3. BRIEF FACTS ARE THAT ASSESSEE CHAMAN LAL CHAUHAN EXPIRED ON 16-9- 2006. HOWEVER, A RETURN OF INCOME WAS FILED BY SOME BODY FROM THE SIDE OF ASSESSEE TWO DAYS AFTER THE DEATH I.E. 18-9-2006. T HE FACT ABOUT ASSESSEES DEATH WAS NOT KNOWN TO AO. RETURN WAS PROCESSED IN ORDINARY COURSE U/S 143(1). THEREAFTER THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY ON RANDOM BASIS UNDER CASS. AO ISSUED NOTICE U/S 143(2) AND T HEREAFTER VARIOUS NOTICES WERE ISSUED. NONE APPEARED FOR THE ASSESSEE , THEREFORE, AO FRAMED THE EX PARTE ASSESSMENT U/S 144 ON 16-12-2008, PENA LTY PROCEEDINGS WERE ALSO INITIATED. 3.1. PENALTY PROCEEDINGS ALSO LEAD TO IMPOSITION OF PENALTY U/S 271(1)(C) AS NONE APPEARED FROM ASSESSEES SIDE. 3.2. THEREAFTER, ONE SMT. ANJALI CHAUHAN FILED AN A PPEAL AS LEGAL HEIR AGAINST THESE ORDERS PASSED U/S 144 & 271(1)(C), RA ISING VARIOUS GROUNDS ON 10-3-2010. FROM THE CIT(A)S ORDER IT EMERGES THAT THE LEGAL HEIRS FILED APPEALS BELATEDLY. THE DELAY IN FILING THE APPEAL W AS CONDONED BY THE CIT(A). CIT(A) HELD THE EX PARTE ASSESSMENT TO BE I LLEGAL AND QUASHED ACCORDINGLY BY FOLLOWING OBSERVATIONS: THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. MOTI RAM (DECEASED) (2009) 316 ITR 321 HAS HELD THAT THOUGH THE INCOME TAX RET URN AS SIGNED BY THE ASSESSEE HIMSELF WAS FILED AFTER HIS DEATH AND WAS NOT SIGNED OR VERIFIED BY HIS LEGAL HEIR, IT WAS NU LL AND VOID AND THE ASSESSMENT FRAMED ON THE BASIS OF SUCH RETURN W AS INVALID. THE HONBLE HIGH COURT HELD: IN THE INSTANT CASE, THE RETURN WAS FILED ON 28-11 - 2003. ON THAT DAY, THE ASSESSEE HAD ALREADY EXPIRED. THE RETURN FILED WITH THE SIGNATURES OF T HE ASSESSEE AFTER HIS DEATH CANNOT BE TAKEN AS A VALID RETURN FILED BY THE ASSESSEE HIMSELF. UNDISPUTEDLY ITA 5321 & 5322/DEL/1- ANJALI CHAUHAN 3 THE RETURN WAS NEITHER SIGNED NOR VERIFIED BY THE LEGAL HEIRS OF DECEASED. FURTHER, THIS COURT IN COMMISSIONER OF INCOME TAX V. RAKESH KUMAR, MUKESH KUMAR (IT APPEAL NO. 256 OF 2008, DATED 1.7.2008), HELD THAT THE ISSUANCE OF AUTHORIZATION FOR CONDUCTING SEARCH AND SEARCH WARRANT IN THE NAME OF A DEAD PERSON AND SUBSEQUENTLY, PASSING THE ORDER U/S 158BC/144 OF THE ACT ON SUCH VOID AUTHORIZATION OF CONDUCTING SEARCH IS NULL AND VOID . THEREFORE, THE RETURN FILED IN THIS CASE WAS NULL A ND VOID, BECAUSE THE ASSESSEE WAS NOT ALIVE AT THE TIM E OF FILING THE RETURN. IN OUR OPINION, NO VALID ASSESSMENT COULD HAVE BEEN MADE ON THE BASIS OF AN INVALID AND VOID RETURN. THE FACTS OF THE PRESENT CASE ARE IDENTICAL TO THAT DECIDED BY THE HONBLE PUNJAB & HARYANA HIGH COURT. RESPECTIVELY, FOLLOWING THE ABOVE DECISION, IT IS HELD THAT ALL P ROCEEDINGS TAKEN UP BY THE AO IN PURSUANCE TO THE INVALID RETU RN FILED ON 18.9.06, INCLUDING FRAMING OF THE ORDER U/S 144 ARE VOID AB INITIO. THE ORDER PASSED BY THE AO U/S 144 OF THE I.T. ACT DATED 10.3.10 IS, THEREFORE, QUASHED. 3.2. SIMILARLY, PENALTY ORDER U/S 271(1)(C) WAS ALS O QUASHED AS ASSESSMENT WAS HELD TO BE AB INITIO VOID. AGGRIEVED, REVENUE IS IN APPEALS BEFORE US. 4. LEARNED DR VEHEMENTLY ARGUES THAT THE ASSESSEE E XPIRED ON 16-9- 2006; THAT SOMEBODY FROM THE SIDE OF ASSESSEE, WHIC H MAY INCLUDE CA WITH WHOM THE RETURN MAY BE LYING, FILED THE RETURN OF I NCOME TWO DAYS AFTER THE DEATH OF THE ASSESSEE. THIS ACTION, BY WHOM SO EVER TAKEN FROM THE SIDE OF THE ASSESSEE, WAS ILLEGAL INASMUCH AS THE PERSON KN EW THAT THE ASSESSEE HAS DIED, STILL THE RETURN WAS FILED. AO HAD NO KNOWLED GE ABOUT THE DEATH OF THE ASSESSEE. ALL THE SUBSEQUENT NOTICES WERE SENT IN T HE NAME OF THE DECEASED AT THE ADDRESS GIVEN IN THE ASSESSEES RETURN. IT WAS FOR THE ASSESSEES LEGAL ITA 5321 & 5322/DEL/1- ANJALI CHAUHAN 4 REPRESENTATIVES TO HAVE INTIMATED THE AO ABOUT THE DEATH OF THE ASSESSEE IN WHICH CASE HE WOULD HAVE ISSUED THE DEFECTIVE MEMO ON LEGAL HEIRS TO FILE A PROPER RETURN BY BRINGING THEM ON RECORD. IN THE AB SENCE OF ANY KNOWLEDGE OR INTIMATION AND THE PECULIAR FACTS THAT ASSESSEE S SIDE FILES A RETURN OF INCOME PURPORTING THAT THE ASSESSEE WAS ALIVE, ACTI ON OF AO CANNOT BE HELD TO BE A DELIBERATE ATTEMPT TO FRAME AN ILLEGAL ASSE SSMENT ON A DEAD PERSON. 4.1. AO THROUGHOUT THE PROCEEDINGS HAD NO KNOWLEDGE AND NOTHING WAS INTIMATED BY LEGAL HEIRS DESPITE TAXABLE INCOME ABO UT DEATH OF THE ASSESSEE. THE RIGHT COURSE OF ACTION FOR THE CIT(A) WAS TO AP PRECIATE THIS SITUATION AND ASK THE LEGAL HEIRS, CURE THE DEFECT IN RETURN BY F ILING A FRESH RETURN ON BEHALF OF THE DECEASED ASSESSEE AND TO MAKE A PROPER ASSES SMENT. INSTEAD OF TAKING THIS PROPER COURSE, THE ENTIRE ASSESSMENT HAS BEEN HELD TO BE BAD IN LAW AS IF THE AO HAS DELIBERATELY ACCEPTED THE RETURN OF DEAD ASSESSEE AND FRAMED AN EX PARTE ASSESSMENT ON A DEAD PERSON. IT IS PLEADED THAT ASSESSEES SIDE ITSELF FILED A RETURN DECLARING INCOME OF RS. 3,57,100/- AS A LIVING ASSESSEE. THE REVENUE HAS A STATUTORY RIGHT TO COLLECT TAX ON TAX ABLE INCOME. THE PROCESS OF PROPER ASSESSMENT CANNOT BE DEFEATED IF THE ASSESS EES SIDE CHOOSES TO FILE HIS RETURN OF INCOME IN AN IMPROPER MANNER TWO DAYS AFTER HIS DEATH CLAIMING ASSESSEE TO BE ALIVE. THE ASSESSMENT IS TE CHNICALLY BAD, BECAUSE OF A DELIBERATELY DEFECTIVE RETURN FILED BY THE ASSESS EE. LAPSES HAVE BEEN OCCASIONED BY THE ASSESSEES SIDE BY NOT INTIMATING THE AO EITHER IN THE RETURN OR DURING THE COURSE OF ASSESSMENT ABOUT HIS DEATH. THEREFORE, ASSESSEES SIDE CANNOT CAPITALIZE THIS SITUATION AN D GET AWAY FROM ASSESSMENT OF TAXABLE INCOME. 5. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. WE HAVE NO DISPUTE OVER THE HONBLE PUNJAB & HARYANA HIGH COURT JUDGMENT IN THE CASE OF MOTI RAM (SUPRA), RELIED ON BY THE CIT(A). THE ITA 5321 & 5322/DEL/1- ANJALI CHAUHAN 5 DEFECTIVE RETURN WAS FILED BY THE ASSESSEES SIDE D ECLARING TAXABLE INCOME OF THE ASSESSEE AS A LIVING PERSON. ONE FACT REMAINS C LEAR THAT ASSESSEE HAD TAXABLE INCOME AND THE FACT ABOUT HIS DEATH WAS NOT COMMUNICATED TO THE AO, WHICH WAS A LEGAL OBLIGATION ON THE PART OF LEG AL HEIRS/ SUCCESSORS. WE FIND MERIT IN THE ARGUMENT OF LEARNED DR THAT HAVIN G TAXABLE INCOME, ASSESSEES LEGAL HEIRS OUGHT TO HAVE FILED A VALID AND NOT DEFECTIVE RETURN, WHICH MAY BE DUE TO INADVERTENCE ALSO. WITH A TAXAB LE RETURN ON RECORD, DEPARTMENT HAS STATUTORY RIGHT TO CALL FOR A PROPER RETURN AND FRAME ASSESSMENT ON THE DECEASED ASSESSEE AFTER BRING LEG AL HEIRS ON RECORDS. UNDER THESE CIRCUMSTANCES, THERE ARE TWO COURSES LE FT: (I) SET ASIDE THE ASSESSMENT U/S 143(3) AS THE RETURN F ILED FROM ASSESSEES SIDE WITH SIGNATURES OF THE DECEASED AS SESSEE AS A LIVING PERSON, IS A DEFECTIVE RETURN. IT IS THE DUTY OF TH E LEGAL HEIRS TO FILE A PROPER RETURN, THEREFORE, THE PROCEEDINGS REVERT BA CK TO THE STAGE OF FILING DEFECTIVE RETURN. UNDER THESE CIRCUMSTANCES, WE SET ASIDE THE ASSESSMENT BACK TO THE FILE OF AO TO ISSUE DEFECT M EMO ON THE LEGAL HEIRS TO FILE A VALID RETURN OF THE DECEASED AND THEN TO PROCEED WITH A PROPER ASSESSMENT. WE MAY CLARIFY THAT THE Q UESTION OF TIME LIMIT, IF ANY, WILL NOT APPLY TO SUCH PROCEEDINGS BY PROVISIONS OF SEC. 153(3); OR (II) THE AO OTHERWISE MAY ISSUE A NOTICE U/S 148 INASMUC H AS THE INCOME OF THE DECEASED IS TAXABLE AND MATERIAL FACT S ABOUT HIS DEATH WERE NOT DISCLOSED IN THE RETURN OF INCOME. T HEREFORE, TIME LIMIT OF SIX YEARS PRESCRIBED U/S 149 WILL BE APP LICABLE. 5.1. WE MAY EMPHASIZE THAT THE DECEASED ASSESSEE HAVING TAXABLE INCOME, INCOME-TAX DEPARTMENT HAS STATUTORY RIGHT T O FRAME A PROPER ITA 5321 & 5322/DEL/1- ANJALI CHAUHAN 6 ASSESSMENT WHICH CANNOT BE GIVEN UP BY CIT(A) MEREL Y RELYING ON THE JUDGMENT OF MOTI RAM (SUPRA). PROPER ALTERNATIVES F OR FRAMING A PROPER ASSESSMENT IN THESE CIRCUMSTANCES EXISTS ON THE STA TUTE BOOK WHICH OUGHT TO BE IMPLEMENTED. 5.2. ACCORDINGLY, WE SET ASIDE THE MATTER BACK TO T HE FILE OF AO TO TAKE APPROPRIATE ACTION IN THE LIGHT OF ABOVE OBSERVATIO NS AND TO FRAME A PROPER ASSESSMENT IN ACCORDANCE WITH LAW. 6. IN THE RESULT ITA NO. 5321/DEL/10 IS ALLOWED FOR STATISTICAL PURPOSES. 7. SINCE IN QUANTUM WE HAVE SET ASIDE THE MATTER BA CK TO THE FILE OF AO FOR FRAMING ASSESSMENT DE NOVO, THE IMPUGNED PENALT Y APPEAL BEING ITA NO. 5322/DEL/ 10 FILED BY THE REVENUE HAS BECOME INFRUC TUOUS AND STANDS DISMISSED ACCORDINGLY. ORDER PRONOUNCED IN OPEN COURT ON 01-02-2011. SD/- SD/- ( A.K. GARODIA ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 01-02-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 5321 & 5322/DEL/1- ANJALI CHAUHAN 7