ACIT 24(1), MUMBAI V. LATE DAYARAM DHARMASHI MADAN, MUMBAI

ITA 5576/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8113 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 11-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 04-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Section: 142(1); 144

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./I.T.A. NO.5576 & 5577/MUM/2012 ( / ASSESSMENT YEARS :2006-07 & 2007-08) ASSTT. COMMISSIONER OF INCOME TAX,24(1), C-13, ROOM NO.503, PRATYAKSHAKAR BHAVAN, BANDRA-KURLA COMPLEX, BANDRA (E), MUMBAI-400051 / VS. LATE DAYARAM DHARMASHI MADAN THROUGH L/H A).SHRI KANTILAL NARSHIBHAI MANDAN AND B).SHRI HARISHCHANDRA NARSHIBHAI MANDAN, C/O SHRI SANJIV PREMJI HARIA 12,1 ST FLOOR, B-WING,WEST VIEW, 88, L N ROAD,DADAR (E), MUMBAI-400014. ( / APPELLANT) .. ( !' / RESPONDENT) ./ $% ./ PAN/GIRNO.:AGZPM7952N & / APPELLANT BY : SHRI PITAMBER DAS !' ' & /RESPONDENT BY : SHRI SANJAY R PAREKH ( ) ' * + / DATE OF HEARING : 12.9.2014 ,- ' * + /DATE OF PRONOUNCEMENT : 17.10.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: BOTH THE APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS DATED 28.6.2012 PASSED BY LD CIT(A) AND THEY RELATE TO THE ASSESSMENT YEARS 2006-07 AND 2007-08. 2. AT THE TIME OF HEARING, THE LD COUNSEL APPEARI NG FOR THE ASSESSEE QUESTIONED THE VALIDITY OF THE ASSESSMENT ORDERS OF BOTH THE YEARS ON THE FOLLOWING GROUNDS THAT : (A) THE ASSESSING OFFICER HAS ISSUED NOTICES U/S 14 3(2) OF THE ACT ON A DEAD PERSON. (B) THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORDER ON A DEAD PERSON. I.T.A. NO.5576 & 5577/MUM/2012 2 (C) APART FROM THE ABOVE, THERE IS NO VALID SERVIC E OF NOTICE U/S 143(2) OF THE ACT. 3. WE PREFER TO ADJUDICATE THE ABOVE SAID ISSUES FI RST. THE FACTS RELATING TO THE ABOVE SAID ISSUES ARE STATED IN BRIEF. THE RET URN OF INCOME FOR ASSESSMENT YEARS 2006-07 AND 2007-08 WERE FILED ON 06.11.2006 AND 31.07.2007 RESPECTIVELY. THEREAFTER, THE ASSESSEE EXPIRED ON 20-08-2007. THE ASSESSING OFFICER ISSUED NOTICE U/S 143(2) OF THE ACT FOR AY 2006-07 ON 24.10.2007, BUT IT WAS SERVED BY AFFIXTURE ON 30.10.2007. SIMILARLY, THE NOTICE U/S 143(2) OF THE ACT FOR ASST.YEAR 2007-08 WAS ISSUED ON 08-09-08, BUT I T WAS SERVED BY AFFIXTURE ON 30-09-2008. SUBSEQUENTLY, THE AO COMPLETED THE ASSE SSMENT OF BOTH THE YEARS TO THE BEST OF HIS JUDGMENT U/S 144 OF THE ACT IN T HE NAME OF LATE SHRI DAYARAM DHARMASHI MANDAN THROUGH LEGAL HEIR. THE ASSESSM ENTS WERE COMPLETED ON 28.11.2008 AND 26.10.2009 RESPECTIVELY FOR AY 2006 -07 AND 2007-08. 4. IT IS PERTINENT TO NOTE THAT THE ASSESSING OF FICER, VIDE HIS LETTER DATED 13.10.2008 WRITTEN TO THE COMMISSIONER OF INCOME TA X-24, MUMBAI, HAS SOUGHT PERMISSION FOR PROVISIONAL ATTACHMENT OF PROPERTIES U/S 281B(1) OF THE ACT. IN THE SAID LETTER, THE ASSESSING OFFICER HAS STATED AS UN DER:- . UNDER THESE CIRCUMSTANCES, IT IS NOT CURRENTLY ASCERTAINABLE AS TO WHO IS/ARE LEGAL HEIRS, BENEFICIARY OF THE ASSETS OF TH E ASSESSEE AS THE SPOUSE HAS EXPIRED EARLIER TO THE ASSESSEES DEATH AND THE ASSESSEE HAD NO CHILDREN. ALSO, AS THE CASE IS UNDER SCRUTINY FOR A.YS 2006-07 AND 2007- 08 AND NO PERSON HAS VOLUNTARILY COME FORWARD TO AT TEND THE ASSESSMENT PROCEEDINGS, IT IS NOT ASCERTAINABLE AS TO WHO SHOU LD BE TREATED AS THE REPRESENTATIVE ASSESSEE.. WE FURTHER NOTICE THAT THE LD CIT, VIDE HIS LETTER DATED 21.10.2008, HAS REJECTED THE PROPOSAL FOR PROVISIONAL ATTACHMENT WITH THE FO LLOWING OBSERVATIONS:- ASK THE A.O TO ASCERTAIN THE NAMES AND ADDRESSES O F THE LEGAL HEIRS OF THE ASSESSEE. ANY ORDER U/S 281B HAS TO BE SERVED ON THE LEGAL HEIRS. IN ABSENCE OF SUCH DETAILS, A.O S PROPOSAL CANNOT BE CONSIDERED. EVEN AFTER RECEIVING THE ABOVE SAID REPLY, THE AO C HOSE TO ISSUE A NOTICE U/S 142(1) OF THE ACT ON 20-01-2009 FOR AY 2007-08 IN T HE NAME OF LATE SHRI DAYARAM D MANDAN, MEANING THAT THE AO DID NOT ASCE RTAIN THE DETAILS OF LEGAL HEIRS BY THAT TIME ALSO. NOTHING WAS BROUGHT ON RE CORD TO SHOW THAT THE ASSESSING OFFICER DID ASCERTAIN THE DETAILS OF LEGA L HEIRS. HOWEVER, AS STATED EARLIER, THE ASSESSING OFFICER CHOSE TO PASS THE AS SESSMENT ORDERS IN THE NAME OF I.T.A. NO.5576 & 5577/MUM/2012 3 LATE SHRI DAYARAM DHARMASHI MANDAN THROUGH LEGAL H EIR, MEANING THEREBY, THE ASSESSING OFFICER HAS PASSED THE ASSESSMENT ORD ERS ON A DEAD PERSON, SINCE THE DETAILS OF LEGAL HEIRS WERE NOT KNOWN TO HIM BY THE TIME THE ASSESSMENT ORDERS WERE PASSED. AS PER THE PROVISIONS OF SEC. 159 OF THE ACT, THE AO SHOULD IMPLEAD THE LEGAL HEIRS FOR INITIATING OR CONTINUIN G ANY PROCEEDING. 5. THE LD A.R SUBMITTED THAT THE ASSESSMENT ORDE R PASSED IN THE NAME OF A DEAD PERSON IS A NULLITY IN THE EYES OF LAW. IN TH IS REGARD, HE PLACED RELIANCE ON THE DECISION RENDERED BY THE COCHIN BENCH OF TRIBUN AL IN THE CASE OF ROSAMMA SEBASTIAN (LATE) VS. ACIT (2013)(37 CCH 112)(COCHIN TRIB). WE HAVE GONE THROUGH THE SAID DECISION. FOLLOWING OBSERVATIONS MADE BY THE TRIBUNAL ARE RELEVANT HERE:- 4.1 SECTION 159(2) OF THE IT ACT PROVIDES FOR CON TINUATION OF LEGAL PROCEEDINGS AGAINST THE LEGAL REPRESENTATIVE FROM T HE STAGE AT WHICH IT STOOD ON THE DATE OF THE DEATH OF THE DECEASED. TH EREFORE, IT IS UP TO THE AO TO PROCEED FURTHER AFTER IMPLEADING THE LEGAL RE PRESENTATIVE OF THE DECEASED ASSESSEE IN THE ASSESSMENT PROCEEDINGS. W ITHOUT IMPLEADING THE LEGAL REPRESENTATIVE; THE AO CANNOT PASS ANY OR DER AGAINST A DECEASED PERSON. IN THE INSTANT CASE, IT WAS NOT SHOWN TO US THAT TH E ASSESSING OFFICER DID IMPLEAD THE LEGAL REPRESENTATIVES BEFORE PASSING THE IMPUGN ED ASSESSMENT ORDERS. 6. THE LD A.R ALSO PLACED RELIANCE ON THE DECISIO N RENDERED BY AHEMADABAD BENCH OF TRIBUNAL IN THE CASE OF INCOME TAX OFFICER VS. AKHTER NOORUDDINAHMED SAIYED (2014)(40 CCH 271)(AHD TRIB). IN THE ABOVE SAID CASE, THE ASSESSMENT ORDER WAS PASSED IN THE HANDS OF THE ASSESSEE ON 21.11.2011, WHEREAS THE ASSESSEE HAD EXPIRED EARLIER ON 29.12.2 009, I.E., PRIOR TO THE DATE OF PASSING OF THE ASSESSMENT ORDER. THE TRIBUNAL, AFT ER CONSIDERING THE PROVISIONS OF SEC. 159 OF THE ACT AND ALSO AFTER PLACING RELIA NCE ON THE FOLLOWING CASE LAW, HELD THAT AN ASSESSMENT MADE ON A DEAD PERSON WOULD , ON THE FACT OF IT, BE A NULLITY IN LAW:- (A) CIT VS. AMARCHAND N SHROFF (1963)(48 ITR 59)( SC) (B) FIRST ADDL. ITO VS. MRS. SUSEELA SADANANDAN ( 1965)(57 ITR 168) (C) CIT VS. SHANTILAL C MEHTA (1978)(113 ITR 79)( CAL) (D) CIT VS. C.V.RAGHAVA REDDY (1984)(148 ITR 385) (AP) IT IS PERTINENT TO NOTE THAT THE REVENUE, IN THE AB OVE SAID CASE ALSO, COULD NOT BRING ANY MATERIAL BEFORE THE TRIBUNAL TO SHOW THAT THE ASSESSMENT ORDER WAS PASSED AFTER ISSUING ANY NOTICE TO THE LEGAL REPRES ENTATIVE OF DECEASED INDIVIDUAL. I.T.A. NO.5576 & 5577/MUM/2012 4 7. THE LD D.R, ON THE CONTRARY, PLACED RELIANCE ON CERTAIN CASE LAWS TO CONTEND THAT THE IMPUGNED ASSESSMENT ORDERS CANNOT BE CALLED TO BE A NULLITY IN THE EYES OF LAW. THE LD D.R PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF SMT. KAUSH ALYABAI VS. CIT (238 ITR 1088). THE FACTS PREVAILING IN THE ABOVE SAID CASE ARE THAT THE NOTICE WAS ISSUED ON A DEAD PERSON, BUT THE WIFE OF THE ASSESSEE PART ICIPATED IN THE ASSESSMENT PROCEEDINGS. UNDER THESE SET OF FACTS, THE HONBLE HIGH COURT HELD THAT THE REGULARITY, IF ANY, WOULD STAND CURED, SINCE THE LE GAL HEIR HAS PARTICIPATED IN THE PROCEEDINGS. HOWEVER, THE FACTS PREVAILING IN THE INSTANT CASE ARE DIFFERENT. THE AO COULD NOT IDENTIFY THE LEGAL HEIRS OF THE ASSESS EE HEREIN AND HENCE THE ASSESSMENTS WERE FRAMED U/S 144 OF THE ACT. 8. IN THE CASE OF SWARAN KANTA VS. CIT (176 ITR 291)(P & H) RELIED UPON BY LD D.R, THE LEGAL HEIRS WERE IMPLEADED IN ACCORDANC E WITH SEC. 159 OF THE ACT, BUT THE ASSESSMENT ORDER WAS PASSED IN THE NAME OF THE DECEASED ASSESSEE. UNDER THESE SET OF FACTS, THE HONBLE PUNJAB AND HA RYANA HIGH COURT HELD THAT THE OMISSION TO MENTION THE NAME OF THE LEGAL HEIRS WAS A CLERICAL MISTAKE. IN OUR VIEW, THIS DECISION WILL ALSO NOT SUPPORT THE C ASE OF REVENUE. 9. THE LD D.R SUBMITTED THAT THE RELIANCE PLACED B Y HIM ON THE ABOVE SAID CASE LAWS WAS ONLY TO SHOW THAT THE ASSESSMENT ORD ER PASSED ON THE DEAD PERSON CANNOT BECOME VOID IN ALL CIRCUMSTANCES. WE AGREE WITH THE SAID SUBMISSION. BUT THE INCOME TAX ACT HAS PRESCRIBED THE PROCEDURE TO BE FOLLOWED FOR CONTINUING THE PROCEEDINGS ON THE LEGAL HEIRS I N SEC. 159 OF THE ACT. IN THE INSTANT CASE, IT WAS NOT SHOWN TO US THAT THE ASSES SING OFFICER DID FOLLOW THE SAID PROCEDURES. THE FOREGOING DISCUSSIONS MADE BY US W OULD SHOW THAT THE ASSESSING OFFICER, IN FACT, DID NOT HAVE DETAILS OF LEGAL HEIRS. UNDER THESE SET OF FACTS, WE HAVE TO HOLD THAT THE ASSESSING OFFICER H AS PASSED THE IMPUGNED ASSESSMENT ORDERS ON A DEAD PERSON AND HENCE BOTH T HE ASSESSMENT ORDERS HAVE TO BE HELD TO BE NULLITY IN THE EYES OF LAW. 10. WE FURTHER NOTICE THAT THE ASSESSING OFFICER HAS ISSUED THE 143(2) NOTICE DATED 08-09-2008 RELATING TO AY 2007-08 ALSO IN THE NAME OF THE DECEASED ASSESSEE, MEANING THEREBY THE ASSESSING OFFICER HAS INITIATED THE ASSESSMENT PROCEEDINGS ITSELF ON THE DECEASED ASSESSEE. FURTH ER, WE NOTICE THAT THE NOTICES I.T.A. NO.5576 & 5577/MUM/2012 5 ISSUED U/S 143(2) OF THE ACT FOR BOTH THE YEARS HAV E BEEN SERVED BY AFFIXTURE. THE REPORT GIVEN BY THE INSPECTOR WHO SERVED THE NO TICE FOR AY 2006-07 SHOWS THAT THE SAME WAS SERVED IN THE PRESENCE OF ANOTHER INSPECTOR AND NOT IN THE PRESENCE OF ANY OTHER INDEPENDENT WITNESS WHO ASSOC IATED HIMSELF TO IDENTIFY THE HOUSE OF THE ASSESSEE. IN THE ABSENCE OF ANY EVIDE NCE THAT ANY INDEPENDENT PERSON WAS ASSOCIATED WITH THE IDENTIFICATION OF AS SESSEES PLACE OF BUSINESS AT THE TIME OF SERVICE U/S 143(2) BY AFFIXTURE OR TH AT THE INSPECTORS OF IT HAD PERSONAL KNOWLEDGE OF SUCH PLACE OF BUSINESS SERVIC E OF NOTICE BY AFFIXTURE CANNOT BE TREATED AS VALID SERVICE. THE QUESTION WHETHER THE NOTICE CAN BE SERVED BY AFFIXTURE WITHOUT THE PRESENCE OF INDEPEN DENT WITNESS WAS EXAMINED BY LUCKNOW BENCH OF TRIBUNAL CONSISTING OF ONE OF T HE MEMBERS OF THIS BENCH, VIZ., HONBLE PRESIDENT IN THE CASE OF KOHLI BROS. VS. ITO (2010)(132 TTJ (LUCK) 117). THE TRIBUNAL, AFTER CONSIDERING ORDER V RR.1 TO 30 OF THE CPC, 1908 AND ALSO THE FOLLOWING CASE LAW, HELD THAT THE NOTICE S ERVED BY AFFIXTURE WITHOUT PRESENCE OF INDEPENDENT WITNESSES WAS NOT VALID:- (A) ESS AAR EXPORTS VS. ITO (2005)(94 IT D 484)(DELHI TRIB) (B) CIT VS. AVI OIL INDIA (P) LTD (2010)(323 ITR 2 42)(P & H) (C) A.K. KOCHANDI & ORS. VS. AGRL. ITO (110 ITR 40 6)(KER) HENCE, ON THIS REASON ALSO, THE IMPUGNED ASSESSMENT ORDERS ARE LIABLE TO BE QUASHED. 11. IN VIEW OF THE FOREGOING DISCUSSIONS, BOTH TH E IMPUGNED ASSESSMENT ORDERS HAVE TO BE DECLARED AS NULLITY AND HENCE THE Y HAVE TO BE ANNULLED. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDERS PASSE D BY LD CIT(A) AND THE ASSESSMENT ORDERS ALSO. 12. IN THE RESULT, BOTH THE APPEALS FILED BY THE REVENUE ARE DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT O N 17TH OCT, 2014 . ,- ( . /0 1 2 17TH OCT , 2014 - ' 3) 4 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER / ( ) MUMBAI: 17TH OCT,2014. I.T.A. NO.5576 & 5577/MUM/2012 6 . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ( 6* ( ) / THE CIT(A)- CONCERNED 4. ( 6* / CIT CONCERNED 5. 6. 78 3 !*9 , + 9 , / ( ) / DR, ITAT, MUMBAI CONCERNED 3 : ) / GUARD FILE. ; ( / BY ORDER, TRUE COPY < $ (ASSTT. REGISTRAR) + 9 , / ( ) /ITAT, MUMBAI