Sh. Punjab Singh through, UDHAMPUR V. The Income tax Officer, UDHAMPUR

ITA 552/ASR/2013

• Counselvise Citation: 55220914 RSA 2013
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 11-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 26-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K R JAIN
• Keywords: Principle of natural justice; Reassessment proceedings
• Section: 234B; 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. B.P. JAIN, ACCOUNTANT MEMBER I.T.A. NOS. 551 & 552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 PAN: BJUPS3310R SH. PUNJAB SINGH THROUGH LEGAL HEIR SMT. KALAWANTI W. NO. 11, HOUSE NO.213, SHIV NAGAR, UDHAMPUR VS. THE INCOME TAX OFFICER, UDHAMPUR (APPELLANT) (RESPONDENT) APPELLANT BY: SH. K.R. JAIN, ADV. RESPONDENT BY: SMT. NIRAJ, DR DATE OF HEARING: 11.02.2015 DATE OF PRONOUNCEMENT: 13.02.2015 ORDER PER A.D. JAIN, J.M. 1. THESE ARE ASSESSEES APPEAL FOR A.Y.2005-06 & 200 6-07 AGAINST THE SEPARATE ORDERS DATED 19.06.2013, PASSED BY THE LD. CIT(A), JALANDHAR, FOR THESE TWO YEARS. 2. THE IDENTICAL GROUNDS TAKEN BY THE ASSESSEE READ AS FOLLOWS: I. THAT, THE ORDER OF THE LEARNED INCOME TAX OFFICER, UDHAMPUR IS WRONG ILLEGAL AND AGAINST FACTS. LIKEWI SE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JAMMU IS NOT JUSTIFIED WHILE CONFIRMING THE SAME. 2 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 II. THAT INITIATION OF PROCEEDINGS U/S 148 ARE WRONG, ILLEGAL AND WITHOUT JUSTIFICATION. III. THAT THE INITIATION AND COMPLETION OF PROCEEDINGS A RE BAD IN LAW AS ALL THE LEGAL HEIRS HAVE NOT BEEN SER VED WITH RELEVANT NOTICES. IV. THAT THE LD. INCOME TAX OFFICER HAS ERRED IN LAW AN D ON FACTS WHILE MAKING AN ADDITION OF RS.6,60,000/- ON ACCOUNT OF TRANSPORT BUSINESS WITHOUT APPRECIATING THE EXPLANATION OFFERED AND AFFIDAVITS FILED. LIKEWISE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JAMMU IS NOT JUSTIFIED WHILE CONFIRMING THE SAME. V. THAT THE LD. INCOME TAX OFFICER HAS ERRED IN LAW AN D ON FACTS WHILE ESTIMATING THE INCOME FROM TIPPER AN D TRUCK WITHOUT ANY BASIS AND IGNORING THE FACTS ON RECORD. IN ANY CASE ESTIMATE IS ARBITRARY AND EXCESSIVE. LIKEWISE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JAMMU IS NOT JUSTIFIED LEGALLY AND O N FACTS WHILE CONFIRMING THE SAME. VI. THAT THE LD. INCOME TAX OFFICER HAS ERRED IN LAW AN D ON FACTS WHILE MAKING AN ADDITION OF RS.1,80,922/- (FOR A.Y.2005-06) & RS.8,30,340/- (FOR A.Y.2006-07) WITHOUT APPRECIATING THE EXPLANATION OFFERED AND FA CTS OF THE CASE. LIKEWISE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), JAMMU IS NOT JUSTIFIED LEGALL Y AND ON FACTS WHILE CONFIRMING THE SAME. VII. THAT CHARGING OF INTEREST UNDER SECTION 234A, 234B & 234C IS WRONG, ILLEGAL AND IN ANY CASE IS EXCESSIVE . 3. FOR CONVENIENCE, BOTH THESE APPEALS ARE BEING DECI DED BY THIS COMMON ORDER. 4. GROUND NOS. 1 & 2 ARE GENERAL. 3 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 5. AS PER GROUND NO. 3, INITIATION AND COMPLETION OF P ROCEEDINGS U/S 148 OF THE IT ACT ARE BAD IN LAW, AS ALL THE LEGAL REPR ESENTATIVES OF THE DECEASED ASSESSEE HAVE NOT BEEN SERVED WITH THE REA SSESSMENT NOTICES. 6. THE FACTS ARE THAT NOTICE U/S 148 OF THE IT ACT W AS ISSUED BY THE AO TO ONLY ONE OF SEVERAL LEGAL REPRESENTATIVES OF THE AS SESSEE, I.E., HIS WIDOW. THIS ACTION OF THE ASSESSEE WAS CHALLENGED BEFORE T HE LD. CIT(A), CLAIMING THE INITIATION AND COMPLETION OF PROCEEDIN GS U/S 148 OF THE ACT TO BE BAD IN LAW ON ACCOUNT OF NON-SERVICE OF NOTIC E ON ALL THE LEGAL REPRESENTATIVES OF THE ASSESSEE. THE LD. CIT(A) REJ ECTED THIS CHALLENGE, HOLDING THAT NOTICE WAS NOT REQUIRED TO BE SERVED O N ALL THE LEGAL REPRESENTATIVES AND THAT SINCE THIS OBJECTION WAS N OT TAKEN BEFORE THE AO, IT COULD NOT BE RAISED IN THE APPELLATE PROCEE DINGS. 7. THE LEARNED COUNSEL FOR THE ASSESSEE CONTENDS THAT THE LD.CIT(A) HAS ERRED IN HOLDING THAT SERVICE OF NOTICE ON ONLY ONE LEGAL REPRESENTATIVE WAS SUFFICIENT QUA ALL THE LEGAL REPRESENTATIVES. H E RELIES ON INCOME TAX OFFICER, GUDUR AND ANOR. VS. MARANIREDDY SULOCH AMMA, 79 ITR 1(SC) AND CHOOHARMAL WADHURAM (DECEASED) (BY LEGAL REPRESENTATIVES) VS. COMMISSIONER OF INCOME TAX, GU JRAT-II,80 ITR 360(GUJ.) APROPOS THE CIT(A)S OBSERVATION THAT SIN CE THE OBJECTION 4 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 WAS NOT RAISED BEFORE THE AO, IT COULD NOT BE TAKEN IN THE APPELLATE PROCEEDINGS, THE LEARNED COUNSEL FOR THE ASSESSEE S AYS THAT THIS IS A JURISDICTIONAL OBJECTION, WHICH CAN BE RAISED AT AN Y STAGE. 8. ON THE OTHER HAND, THE LEARNED DR RELIES ON THE ORD ER PASSED BY THE LD. CIT(A). SHE SUBMITS THAT THE QUESTION IS OF REPRESE NTATION OF THE DECEASED ASSESSEE AND SO, THE LD. CIT(A) WAS CORREC T IN HOLDING THAT SERVICE ON ONE LEGAL REPRESENTATIVE WAS SUFFICIENT. SHE FURTHER CONTENDS THAT THE LEGAL REPRESENTATIVES OF THE ASSESSEE DID NOT RAISE THIS OBJECTION AT THE FIRST AVAILABLE OPPORTUNITY, I.E., BEFORE TH E AO IN THE REASSESSMENT PROCEEDINGS, FOR WHICH REASON, THEY WERE PRECLUDED FROM RAISING IT IN THE APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), AN D THAT SO, THE LD. CIT(A) CANNOT BE FAULTED ON THIS SCORE. 9. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. 10. THE LD. CIT(A), WHILE REJECTING THIS OBJECTION, HEL D THAT THE AO HAS SERVED NOTICE ON LEGAL HEIRS OF SH. PUNJAB SINGH WH ICH INCLUDES ONE AND ALL AND NOTICE ARE NOT REQUIRED TO BE SERVED ON ALL LEGAL HEIRS INDIVIDUALLY. MOREOVER, THIS OBJECTION WAS NOT TAKE N BEFORE THE AO AT THE TIME OF ASSESSMENT, HENCE, IT CANNOT BE AGITATE D NOW. 5 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 11. THE ISSUE IS AS TO WHETHER OR NOT NON-SERVICE OF NOTICE U/S 148 OF THE ACT ON ALL THE LEGAL REPRESENTATIVES OF A DECEASED ASSESSEE RENDERS THE INITIATION AND COMPLETION OF THE REASSESSMENT PROCE EDINGS BAD IN LAW. 12. SECTION 2(29) OF THE INCOME TAX ACT DEFINES LEGAL REPRESENTATIVES AS FOLLOWS: SECTION 2(29) LEGAL REPRESENTATIVE HAS THE MEANI NG ASSIGNED TO IT IN CLAUSE (11) OF SECTION 2 OF THE C ODE OF CIVIL PROCEDURE, 1908 (5 OF 1908) 13. SECTION 2(11), CPC READS AS UNDER: 2(11) LEGAL REPRESENTATIVES MEANS A PERSON WHO I N LAW REPRESENTS THE ESTATE OF A DECEASED PERSON AND INCL UDES ANY PERSON WHO INTERMEDDLES WITH THE ESTATE OF THE DECE ASED AND WHERE A PARTY SUES OR IS SUED IN REPRESENTATIVE CHA RACTER THE PERSON ON WHOM THE ESTATE DEVOLVES ON THE DEATH OF THE PARTY SO SUING OR SUED. 14. SECTION 159 (1) TO (3) OF THE INCOME TAX ACT PROVI DES THUS: SECTION159. (1) WHERE A PERSON DIES, HIS LEGAL REP RESENTATIVE 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 TO THE SAME EXTENT AS THE DECEASED. (2) FOR THE PURPOSE OF MAKING AN ASSESSMENT (INCLUD ING AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SEC TION 147) 6 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 OF THE INCOME OF THE DECEASED AND FOR THE PURPOSE O F 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 BEFO RE HIS DEATH SHALL BE DEEMED TO HAVE BEEN TAKEN AGAINST TH E LEGAL REPRESENTATIVE AND MAY BE CONTINUED AGAINST THE LEG AL REPRESENTATIVE FROM THE STAGE AT WHICH IT STOOD ON THE DATE OF THE DEATH OF THE DECEASED; (B) ANY PROCEEDING WHICH COULD HAVE BEEN TAKEN AGAI NST THE DECEASED IF HE HAD SURVIVED, MAY BE TAKEN AGAINST T HE LEGAL REPRESENTATIVE; AND (C) 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. 15. IN FIRST ADDITIONAL ITO VS. MS. SUSEELA SADANANDA N, 57 ITR 168(SC), IT HAS BEEN HELD THAT U/S 13(2) OF THE GEN ERAL CLAUSES ACT, WORDS USED IN SINGULAR WILL INCLUDE THEIR PLURAL AL SO, AND THEREFORE, THE EXPRESSION LEGAL REPRESENTATIVES IN SECTION 159 O F THE INCOME TAX ACT TAKES IN THE PLURAL OF LEGAL REPRESENTATIVES. 16. IN CHOOHARMAL WADHURAM (SUPRA), IT WAS HELD, INT ER ALIA, THAT WHERE A PERSON DIES LEAVING MORE THAN ONE LEGAL REPRESENT ATIVES, THE AO MUST PROCEED TO ASSESSES THE TOTAL INCOME OF THE ASSESSE E BY SERVING NOTICE 7 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 ON ALL THE LEGAL REPRESENTATIVES AND THAT IF THE NO TICE IS SERVED ON ONLY ONE LEGAL REPRESENTATIVE, THERE WOULD BE NO COMPLET E REPRESENTATION OF THE ESTATE AND THE PROCEEDINGS WILL BE WHOLLY INVAL ID. THIS DECISION WAS CITED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT( A), VIDE WRITTEN SUBMISSIONS, AS REPRODUCED IN THE ORDER UNDER APPEA L. HOWEVER, IT HAS NOT BEEN CONSIDERED BY THE LD. CIT(A) WHILE REJECTI NG THE OBJECTION RAISED. THE LD. DR HAS ALSO NOT BROUGHT ANY CASE LA W TO THE CONTRARY BEFORE US. 17. IN MARGHABHAI BABARBHAI PATEL VS. R.M. PARIKH, I NCOME TAX OFFICER, WARD-B, PETLAD AND ANOTHER , 78 ITR 418 (GUJ.), IT HAS BEEN HELD, INTER ALIA, THAT A NOTICE FOR MAKING REASSESSMENT O F INCOME IS NOT MERELY A PROCEDURAL REQUIREMENT, BUT IT IS THE FOUNDATION OF JURISDICTION OF THE AO. NOTHING HAS EITHER BEEN RELIED UPON BY THE LD. CIT(A) IN THE IMPUGNED ORDER, OR CITED BEFORE US BY THE DEPARTMEN T, AGAINST THIS SETTLED LEGAL POSITION. 18. IN JAI PRAKASH SINGH VS. CIT, ASSAM, 111 ITR 50 7 (GUJ.), IT HAS BEEN HELD THAT VIOLATION OF THE PRINCIPLES OF NATUR AL JUSTICE AND MORE PARTICULARLY, VIOLATION OF STATUTORY PRINCIPLES OF NATURAL JUSTICE, TAKES AWAY THE JURISDICTION OF THE AUTHORITY CONCERNED TO PROCEED WITH THE 8 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 PROCEEDINGS AND MAKE THE ASSESSMENT ORDER AND NECES SARILY INVALIDATES THE PROCEEDINGS AND THE ORDERS PASSED THEREIN; THAT IF THE ESTATE OF THE DECEASED ASSESSEE IS NEEDED TO BE ASSESSED, THE EST ATE MUST BE FULLY REPRESENTED BY IMPLEADING ALL THE LEGAL REPRESENTAT IVES AND SERVING NOTICES ON ALL OF THEM WHO REPRESENTS THE ENTIRE ES TATE; THAT IF THIS IS NOT DONE, THE ASSESSMENT PROCEEDINGS AND THE ASSESSMENT ORDERS PASSED THEREIN WILL CEASE TO BE VALID PROCEEDINGS AND VALI D ORDERS IN THE EYE OF LAW; AND THAT IN SUCH A CASE, IT IS THE LEGAL DUTY OF THE APPELLATE AUTHORITY TO ANNUL THE ASSESSMENT. THIS SETTLED POS ITION, IN OUR CONSIDERED OPINION, IS APPLICABLE SQUARELY IN THE C ASE OF REASSESSMENT OF THE INCOME OF A DECEASED ASSESSEE. NOTHING OPPOSITE HAS BEEN PLACED BEFORE US. 19. IN E. ALFRED VS. FIRST ADDITIONAL INCOME TAX OFFI CER, 32 ITR 401 (MAD), IT WAS HELD THAT IT CANNOT BE DOUBTED THAT T HE LIABILITY IMPOSED BY SECTION 24B(2) OF THE INCOME TAX ACT 1922 ON THE LEGAL REPRESENTATIVE OF A DECEASED APPLIES TO ALL THE LEG AL REPRESENTATIVES OF THE DECEASED ON WHOM NOTICES ARE SERVED; THAT IT SH OULD ALSO BE CLEAR THAT ALL SUCH REPRESENTATIVES ARE LIABLE TO BE SERV ED WITH NOTICES U/S 24B(2); AND THAT SECTION 13(2) OF THE GENERAL CLAUS ES ACT DIRECTS THAT 9 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 WORDS IN SINGULAR SHALL INCLUDE THE PLURAL. THAT TH E ABOVE POSITION APPLIES TO REASSESSMENT PROCEEDINGS UNDER THE PROVI SIONS OF SECTION 148 OF THE INCOME TAX ACT, 1961 REMAINS UNDISPUTED. NOT HING HAS BEEN PLACED BEFORE US TO PERSUADE US TO HOLD OTHERWISE. 20. IN VIEW OF THE ABOVE, WE HOLD THAT THE LD. CIT(A) CLEARLY ERRED IN OBSERVING THAT SERVICE OF THE REASSESSMENT NOTICE O N ONLY ONE OF THE LEGAL REPRESENTATIVES OF THE DECEASED ASSESSEE WAS SUFFICIENT, AS IT INCLUDES ONE AND ALL AND THAT NOTICES ARE NOT REQ UIRED TO BE SERVED ON ALL LEGAL HEIRS INDIVIDUALLY. INFRACTION OF THE STA TUTORY PRINCIPLES OF NATURAL JUSTICE, AS SEEN ABOVE, HAS THE EFFECT OF W ITHDRAWING THE JURISDICTION CONFERRED BY THE STATUTE. IF THE ESTAT E OF A DECEASED ASSESSEE IS TO BE ASSESSED TO INCOME TAX, OR IF THE ASSESSED INCOME IS TO BE REASSESSED, THE ESTATE MUST BE FULLY REPRESENTED BY SERVING REASSESSMENT NOTICES ON ALL THE LEGAL REPRESENTATIVES OF THE DEC EASED ASSESSEE. ELSE, THE VERY INITIATION OF THE REASSESSMENT PROCEEDINGS AND ALL THE PROCEEDINGS PURSUANT TO SUCH INITIATION WOULD CEASE TO BE VALID PROCEEDINGS AND THE REASSESSMENT ORDER PASSED IN SU CH A CASE WOULD NOT REMAIN A VALID ORDER IN THE EYE OF LAW. SUCH INVALI D REASSESSMENT 10 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 PROCEEDINGS AND ORDERS ARE VOID AB INITIO AND ARE REQUIRED TO BE ANNULLED. 21. THE LD. CIT(A), WE FIND, IS ALSO INCORRECT IN MAK ING THE OBSERVATION THAT SINCE THIS OBJECTION WAS NOT TAKEN BEFORE THE AO AT THE TIME OF ASSESSMENT, IT CANNOT BE RAISED IN APPELLATE PROCEE DINGS. THE ISSUE OF VALIDITY OF THE JURISDICTION OF AN AUTHORITY IS A F UNDAMENTAL ISSUE AS WHICH GOES TO THE ROOT OF THE MATTER. AS SUCH, IT I S A LEGAL ISSUE AND UNDENIABLY, LEGAL ISSUES CAN BE RAISED AT ANY STAGE . 22. FOR THE FOREGOING DISCUSSION, THE ISSUE SOUGHT TO BE RAISED BY WAY OF GROUND NO.3 OF THE APPEALS IS FOUND TO BE JUSTIFIED AND FORCEFUL. AS SUCH, GROUND NO.3 IS ACCEPTED. THE INITIATION AND COMPLETION OF THE PROCEEDINGS U/S 148 OF THE ACT, CULMINATING IN THE IMPUGNED ORDERS ARE, THEREFORE, HEREBY ANNULLED AND CANCELLED. 23. THE REMAINING GROUNDS I.E., GROUND NOS. 4 TO 7 PE RTAIN TO THE ADDITIONS MADE AND THE LEVY OF INTEREST. WHILE DEC IDING GROUND NO. 3, WE HAVE ANNULLED THE PROCEEDINGS U/S 148 OF THE ACT , THE REASSESSMENT ORDERS AS WELL AS THE ORDERS UNDER APPEAL. THEREFOR E, NOTHING ELSE REMAINS TO BE ADJUDICATED UPON. 11 I.T.A. NOS. 551&552 (ASR)/2013 ASSESSMENT YEARS: 2005-06 & 2006-07 24. GROUND NOS. 4 TO 7 HAVING THUS BEING RENDERED INFR UCTUOUS, ARE REJECTED AS SUCH. 25. IN THE RESULT, BOTH THE APPEALS FILED BY THE ASS ESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH FEBRUARY, 2015. SD/- SD/- (B.P. JAIN) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13.02. 2015 /PK/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. PUNJAB SINGH THROUGH LEGAL HEIR S MT. KALAWANTI W.NO.11, HOUSE NO.213, SHIV NAGAR, UDHAMPUR. 2. THE INCOME TAX OFFICER, UDHAMAPUR. 3. THE CIT(A), 4. THE CIT, 5. THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.