Late Harish Bahadur Khare through Mrs. Kamlesh Khare, One of Legal Heir, Barabanki V. Income Tax Officer-4(5), Lucknow

ITA 720/LKW/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9477 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Cost of acquisition; Reassessment proceedings; Set aside
• Section: 142(1); 292BB; 143(2); 147; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC LUCKNOW [THROUGH VIRTUAL HEARING] BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.720/LKW/2019 A.Y. 2008-09 INCOME TAX OFFICER, WARD 4(5), BARABANKI. VS. LATE HARISH BAHADUR KHARE, THROUGH MRS. KAMLESH KHARE, NEAR PIONEER INTER COLLEGE, ADARSH NAGAR, LAKHPERABAGH, LUCKNOW. PAN: AXVPK1192K (RESPONDENT) (APPELLANT) SHRI DHARMENDRA KUMAR, CA APPELLANT BY SHRI AJAY KUMAR, DR RESPONDENT BY 27/07/2021 DATE OF HEARING 30/07/2021 DATE OF PRONOUNCEMENT O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), BARABANKI DATED 02.09.2019. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT ASSESSMENT ORDER IS ILLEGAL AND VOID AB INITIO. 2. THAT NOTICE U/S 148 OF INCOME TAX ACT, 1961 WERE NEVER SERVED ON APPELLANT, ACCORDINGLY, ASSESSMENT MADE BY LD. AO IS ILLEGAL AND VOID AB INITIO. 3. THAT REASSESSMENT PROCEEDING WAS INITIATED WITHOUT SERVING NOTICE U/S 148 ON ALL LEGAL REPRESENTATIVES OF DECEASED ASSESSEE, HENCE ASSESSMENT MADE BY LD. AO WAS BAD IN LAW AND BEING VOID AB INITIO. 4. THAT SINCE, NOTICE U/S 148 OF THE ACT WAS ISSUED ON A DEAD PERSON; HENCE SAME IS INVALID AND UNENFORCEABLE IN LAW. 2 5. THAT SINCE NOTICE U/S 143(2) OF THE ACT NEVER SERVED ON APPELLANT, HENCE ASSESSMENT MADE BY LD.AO IS VOID AB INITIO AND WITHOUT JURISDICTION. 6. THAT LD.AO TAILED TO DEDUCT COST OF ACQUISITION FOR ARRIVING AT CAPITAL GAIN ON SALE OF PROPERTY; HENCE ADDITION MADE IN ASSESSMENT TOWARDS INCOME FROM CAPITAL GAIN IS ILLEGAL AND AGAINST THE PROVISIONS OF THE ACT. 7. THAT APPELLANT, BEING ONE OF LEGAL HEIR OUT OF TOTAL SIX LEGAL HEIRS OF DECEASED, HENCE LIABILITY OF APPELLANT IS RESTRICTED TO PROPERTY INHERITED BY HER FROM THE DECEASED, WHICH IS RS.2,110,.25 ONLY. 8. THAT THE APPELLANT SEEKS PERMISSION TO MODIFY AND/OR ADD ANY OTHER GROUND OR GROUNDS OF APPEAL AS THE CIRCUMSTANCES OF THE CASE MIGHT REQUIRE OR JUSTIFY. 9. THAT THE ASSESSMENT, MADE BY THE LEARNED ASSESSING OFFICER ARE ARBITRARY, BAD IN LAW AND AGAINST EQUITY, JUSTICE AND GOOD CONSCIOUS AND DESERVE TO BE CANCELLED. 2. THE LD. AR, AT THE OUTSET SUBMITTED THAT THE CASE OF THE ASSESSEE WAS REOPENED U/S. 148 OF THE ACT AND NOTICE WAS ISSUED ON 26.03.2015 AND WHICH WAS SERVED THROUGH AFFIXTURE BY INCOME TAX INSPECTOR ON 31.03.2015. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER WAS INFORMED THAT THE ASSESSEE HAD ALREADY DIED ON 01.07.2012 AND THEREAFTER ASSESSING OFFICER INSTEAD OF ISSUING AGAIN NOTICE U/S. 148 OF THE ACT TO LEGAL HEIRS OF THE ASSESSEE STATE FORWARD ISSUED NOTICE U/S. 142(1) OF THE ACT TO LEGAL HEIR FOR COMPLIANCE. THE COMPLIANCE OF WHICH COULD NOT BE MADE AND THE ASSESSING OFFICER MADE THE ADDITION AFTER PASSING ORDER U/S. 144 OF THE ACT. THE LD. AR SUBMITTED THAT IT IS AN ADMITTED FACT THAT NOTICE U/S. 148 OF THE ACT WAS ISSUED ONLY IN THE NAME OF A PERSON WHO HAD ALREADY DIED AND NO FURTHER NOTICE U/S. 148 WAS ISSUED IN THE NAME OF LEGAL HEIR AND THEREFORE THE NOTICE ISSUED BY THE ASSESSING OFFICER ON THE DEAD PERSON IS NOT A VALID NOTICE AND THEREORE ANY CONSEQUENTIAL ASSESSMENT ORDER IS NULL AND VOID AND NEEDS TO BE QUASHED. THE RELIANCE IN THIS RESPECT WAS PLACED ON A JUDGMENT OF ITAT, CHANDIGARH BENCH IN THE CASE OF SHRI BALBIR SINGH VS. ITO, IN ITA NO. 3 567/CHD/2016 WHEREIN THE TRIBUNAL VIDE ORDER DATED 13.05.2019 ALLOWED THE APPEAL OF THE ASSESSEE UNDER SIMILAR FACTS AND CIRCUMSTANCES. THE LD. AR FURTHER SUBMITTED THAT THE ISSUE IS FURTHER COVERED BY THE JUDGMENT IN THE FOLLOWING CASES:- 1. SUMIT BALKRISHNA GUPTA VS. ACIT, MUMBAI, [2019] 103 TAXMANN.COM 188 (BOM). 2. RAJENDRA KUMAR SEHGAL VS. ITO, NEW DELHI, [2019] 101 TAXMANN.COM 233 (DELHI). 3. ALAMELU VEERAPPAN VS. ITO, CHENNAI [2018] 95 TAXMANN.COM 155 (MADRAS). 2.1 IT WAS FURTHER SUBMITTED THAT BY LATEST JUDGMENT OF THE HON'BLE GUJARAT HIGH IN THE CASE OF RAMBHAI MAFATLAL PATEL VS. ITO, [2021] 128 TAXMANN.COM 141 (GUJ) THE ISSUE IS AGAIN COVERED IN FAVOUR OF THE ASSESSEE AND IN THIS RESPECT FILE A COPY OF THE JUDGMENT. 3. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT WHEN THE ISSUE OF DEATH OF THE ASSESSEE WAS BROUGHT TO THE NOTICE OF ASSESSING OFFICER HE IMMEDIATELY BROUGHT THE LEGAL HEIRS ON RECORD AND ASSESSMENT HAS ALSO BEEN MADE ON THE LEGAL HEIRS OF THE ASSESSEE. THE LD. DR FURTHER SUBMITTED THAT SINCE THE NOTICE U/S. 148 OF THE ACT WAS ALREADY ISSUED AND ON THE DEATH OF THE ASSESSEE THE PROCEEDINGS WILL BE DEEMED TO BE CONTINUANCE OF EARLIER PROCEEDINGS INITIATED THROUGH NOTICE U/S. 148 OF THE ACT. 4. I HAVE HEARD THE RIVAL PARTIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. I FIND THAT IT IS UNDISPUTED FACT THAT ASSESSEE HAD DIED ON 01.07.2012 WHICH FACT IS NOTED BY THE ASSESSING OFFICER HIMSELF AT PAGE 2 IN PARA 2 OF HIS ORDER. THE NOTICE WAS ISSUED ON 26.03.2015 AND WHICH WAS SERVED BY AFFIXTURE ON 31.03.2015. THEREFORE, WHEN THE NOTICE WAS ISSUED, THE ASSESSEE WAS NOT IN EXISTENCE AND WAS ALREADY DEAD AND THEREFORE SUCH NOTICE CANNOT BE SAID TO BE A LEGAL AND VALID NOTICE. 4 THE REVENUE WAS ALSO NOT ABLE TO DEMONSTRATE THAT FRESH NOTICE WAS SERVED U/S. 148 OF THE ACT TO THE LEGAL HEIR OF THE ASSESSEE AND NEITHER THIS FACT OF ISSUING FRESH NOTICE U/S. 148 OF THE ACT IS COMING OUT FROM THE MATERIAL ON RECORD. THE COORDINATE BENCH OF CHANDIGARH IN THE CASE OF SHRI BALBIR SINGH VS. ITO (SUPRA) VIDE ORDER DATED 13.05.2019 HAS DECIDED SIMILAR ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER: 4. THE FACTS OF THE CASE IN BRIEF ARE THAT IN THIS CASE THE ASSESSMENT WAS REOPENED U/S 147 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT') BY WAY OF ISSUANCE OF NOTICE DATED 26. 3. 2013 U/S 148 OF THE ACT IN THE NAME OF DECEASED ASSESSEE SHRI BALBIR SINGH. HOWEVER, ADMITTEDLY THE ASSESSEE HAD ALREADY DIED ON 25. 11. 2012 I. E. MUCH BEFORE THE ISSUANCE OF NOTICE U/S 148 OF THE ACT. EVEN, THE NOTICE U/S 148 OF THE ACT WAS SERVED THROUGH AFFIXATION AND NOT IN A REGULAR MODE OF SERVICE. THE NOTICE WAS ISSUED IN THE NAME OF THE DECEASED ASSESSEE. THE ISSUE, IN OUR VIEW, IS SQUARELY COVERED BY THE VARIOUS DECISIONS OF THE HON'BLE HIGH COURTS INCLUDING THE LATEST DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SUMIT BALKRISHNA GUPTA VS. ACIT IN WRIT PETITION NO. 3569 OF 2018 VIDE ORDER DATED 15. 2. 2019, WHEREIN, THE HON'BLE BOMBAY HIGH COURT HAS HELD THAT THE ISSUE OF A NOTICE UNDER SECTION 148 OF THE ACT IS A FOUNDATION FOR REOPENING OF ASSESSMENT. THE SINE QUA NON FOR ACQUIRING JURISDICTION TO REOPEN AN ASSESSMENT IS THAT SUCH NOTICE SHOULD BE ISSUED IN THE NAME OF THE CORRECT PERSON. THIS REQUIREMENT OF ISSUING NOTICE TO A CORRECT PERSON AND NOT TO A DEAD PERSON IS NOT A MERELY A PROCEDURAL REQUIREMENT BUT IS A CONDITION PRECEDENT TO THE IMPUGNED NOTICE BEING VALID IN LAW. THUS, A NOTICE WHICH HAS BEEN ISSUED IN THE NAME OF THE DEAD PERSON IS ALSO NOT PROTECTED EITHER BY PROVISIONS OF SECTION 292B OR 292BB OF THE ACT. THIS IS SO AS THE REQUIREMENT OF ISSUING A NOTICE IN THE NAME OF CORRECT PERSON IS THE FOUNDATIONAL REQUIREMENT TO ACQUIRE JURISDICTION TO REOPEN THE ASSESSMENT. THE HON' BLE HIGH COURT HAS FURTHER OBSERVED THAT SECTION 148 OF THE ACT REQUIRES THAT BEFORE A PROCEEDING CAN BE TAKEN UP FOR REASSESSMENT, A NOTICE BE SERVED UPON THE ASSESSEE. THE ASSESSEE ON WHOM THE NOTICE MUST BE SENT MUST BE A LIVING PERSON I. E LEGAL HEIR OF THE DECEASED ASSESSEE, FOR THE SAME TO BE RESPONDED. THAT THIS IN FACT IS THE INTENT AND PURPOSE OF THE ACT. THEREFORE, SECTION 292B OF THE ACT CANNOT BE INVOKED TO CORRECT A FOUNDATIONAL / SUBSTANTIAL ERROR AS IT IS MEANT SO 5 AS TO MEET THE JURISDICTIONAL REQUIREMENT. THEREFORE, BOTH THE IMPUGNED NOTICES AND THE IMPUGNED ASSESSMENT ORDER REQUIRED TO BE QUASHED AND SET ASIDE. SIMILARLY, THE HON' BLE DELHI HIGH COURT IN THE CASE OF RAJENDER KUMAR SEHGAL VS. ITO [2019] 101 TAXMANN. COM 233 (DELHI) HELD THAT WHERE THE NOTICE SEEKING TO REOPEN ASSESSMENT WAS ISSUED IN THE NAME OF DECEASED ASSESSEE, SINCE SHE COULD NOT HAVE BEEN PARTICIPATED IN REASSESSMENT PROCEEDINGS, PROVISIONS OF SECTION 292BB WERE NOT APPLICABLE TO THE ASSESSEES CASE AND AS A CONSEQUENCE, REASSESSMENT PROCEEDINGS DESERVED TO BE QUASHED. 5. AT THIS STAGE, THE LD. DR HAS POINTED OUT THAT THE LR OF THE ASSESSEE SHOULD HAVE PROMPTLY COME FORWARD TO APPRISE THE ASSESSING OFFICER THAT THE ASSESSEE HAD DIED SO THAT NOTICE COULD HAVE BEEN ISSUED IN THE NAME OF LEGAL REPRESENTATIVE OF THE ASSESSEE. WE DO NOT FIND ANY FORCE IN THE ABOVE CONTENTION OF THE LD. DR. AS NOTICED ABOVE, THE NOTICE WAS NOT SERVED THROUGH REGISTERED POST / OR BY REGULAR MODE OF SERVICE. THE NOTICE IN THIS CASE WAS ALLEGEDLY SERVED THROUGH SUBSTITUTED MODE OF THE SERVICE I.E. BY AFFIXATION OF THE SAME AT THE DOOR OF THE HOUSE OF THE ASSESSEE. FURTHER, THE REPORT OF SERVICE THROUGH AFFIXATION HAVE NOT BEEN WITNESSED BY ANY PERSON. HAD THE INCOME-TAX OFFICIALS ACTUALLY GONE TO THE HOUSE OF THE DECEASED ASSESSEE AND ENQUIRED FROM THE VILLAGERS ABOUT THE WHEREABOUTS OF THE ASSESSEE FOR THE PURPOSE OF SERVICE OF THE NOTICE, THEY COULD HAVE EASILY COME TO KNOW ABOUT THE DEATH OF THE ORIGINAL ASSESSEE AND WOULD HAVE ACCORDINGLY APPRISED THE ASSESSING OFFICER. 6. IT IS NOT BELIEVABLE THAT THE REVENUE OFFICIALS HAD VISITED THE HOUSE OF THE ASSESSEE AND THEY COULD NOT GET THE INFORMATION ABOUT THE DEATH OF THE ASSESSEE DESPITE AFFIXATION OF THE NOTICE WHICH IS ALSO REQUIRED TO BE WITNESSED BY SOME INDEPENDENT / RESPECTABLE OF THE VILLAGE. 7. THE LD. COUNSEL HAS FURTHER INVITED OUR ATTENTION TO THE RECEIPT WHICH HAS BEEN PRINTED ON THE BACK OF THE STAMP PAPERS UPON WHICH THE ALLEGED AGREEMENT TO SELL HAS BEEN EXECUTED, WHEREIN, THE NAME AND ADDRESS OF THE SELLER I. E. SHRI BALBIR SINGH HAS BEEN MENTIONED AS SHRI BALBIR SINGH S/O SHRI DHARAM SINGH 1535/34-D, CHANDIGARH. HOWEVER, THE ALLEGED NOTICE WAS NEVER SERVED BY THE ASSESSING OFFICER ON THE SAID ADDRESS DESPITE THE ADDRESS OF THE ASSESSEE DULY MENTIONED ON THE RECEIPT WHICH WAS THE PART AND PARCEL OF THE 6 ALLEGED AGREEMENT TO SELL ON THE BASIS OF WHICH REOPENING OF THE ASSESSMENT HAS BEEN MADE. THIS OTHERWISE SHOW THAT EVEN OTHERWISE THE NOTICE IS NEVER SERVED ON THE ADDRESS AT WHICH THE ASSESSEE ACTUALLY WAS RESIDING BEFORE HIS DEATH. 8. IN VIEW OF THIS, THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SUMIT BALKRISHNA GUPTA VS. ACIT (SUPRA) AND OF THE HON BLE DELHI HIGH COURT IN RAJENDER KUMAR SEHGAL VS. ITO (SUPRA). THE IMPUGNED NOTICE ISSUE U/S 148 OF THE ACT, THEREFORE, IS HELD AS INVALID AND THE CONSEQUENT ASSESSMENT PROCEEDINGS, ARE, THEREFORE, LIABLE TO BE QUASHED. WE ORDER ACCORDINGLY. IN THE RESULT, THE APPEAL OF THE APPELLANT IS HEREBY ALLOWED. 5. THE OTHER CASE LAWS RELIED ON BY THE LD. AR ALSO SUPPORTS THE ARGUMENT OF THE ASSESSEE THAT ANY NOTICE ISSUED IN THE NAME OF DEAD PERSON CANNOT EMPOWER THE ASSESSING OFFICER TO PASS A VALID ASSESSMENT ORDER. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, GROUNDS NO. 1 TO 4 OF THE APPEAL ARE ALLOWED AND REST OF THE GROUNDS WERE NOT ARGUED AND HENCE THEY ARE DISMISSED AS NOT PRESSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 30/07/2021) SD/- (T.S. KAPOOR) ACCOUNTANT MEMBER AKS DTD. 30/07/2021 COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR