Jayantilal Hirabhai Patal, Surat V. ITO (International Taxation), Surat

ITA 771/SRT/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1606 (ITAT-SURAT)
• Duration Of Justice: 3 year(s) 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 29-09-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 12-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Assessment record; Condonation of delay; Reason to believe; Reassessment proceedings; Set aside
• Section: 147; 69; 148; 144; 22; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH (SMC), SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 771/Srt/2018 (Assessment Year: 2010-11) (Physical hearing) Dipikaben J. Patel, (Legal heir of Late Mr. Jayantilal H Patel), 19/B, Suryadarshan Society-2, Pragati Villa, Segvi Road, Valsad-396001. PAN No. ARYPP 2776 P Vs. I.T.O.(International Taxation), Surat. Appellant/ assessee Respondent/ revenue Assessee represented by Shri Suresh K Kabra, CA Department represented by Shri Vinod Kumar, Sr.DR Date of hearing 30/09/2022 Date of pronouncement 30/09/2022 Order under Section 254(1) of Income Tax Act PER: PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the legal heirs of assessee namely Late Jayantilal H Patel (hereinafter referred as the appellant) is filed against the order of learned Commissioner of Income Tax (Appeals)-13, Ahmedabad dated 21/09/2018. The appellant has raised following grounds of appeal: “1. The ld. CIT(A) has erred in law and in facts in dismissing the appeal on the basis of judicial pronouncement for non-persuasion of appeals. 2. The ld. CIT(A) has erred in law and facts not deciding the validity of reassessment proceedings in view of service of notice on dead person as well absence of “Reason to believe” that income has escaped assessment. 3. The ld. CIT(A) has erred in law and facts in confirming addition of Rs. 12,00,000/- without anything contrary found. ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 2 4. The ld. CIT(A) has erred in law and facts in confirming addition of Rs. 8,23,747/- without anything contrary found. 5. The appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal.” 2. Brief facts of the case are that the case of assessee for the Assessment years (A.Y.) 2010-11 was reopened under Section 147 of the Income Tax Act, 1961 (in short, the Act). Notice under Section 148 was issued on 26/03/2017 by the ITO, Ward-2, Navsari. The Assessing Officer recorded that no return of income, in response to notice under Section 148 was filed by the assessee. The Assessing Officer issued various notices as recorded in the assessment order, but not compliance was made by assessee. The case of the assessee was reopened on the basis of information with the Assessing Officer that the assessee purchased unit of mutual fund of Rs. 12.00 lacs on 21/01/2010 from HDFC Mutual fund which remained unexplained. As the assessee neither filed return of income nor responded to various notices, the Assessing Officer took his view that the assessee has nothing to say, accordingly, due to non- compliance, the investment in mutual fund of Rs. 12.00 lacs, was treated as unexplained investment under Section 69 of the Act. The Assessing Officer further noted that the assessee made deposit in Bank of Baroda on various dates from May, 2009 to November, 2009 aggregating of Rs. 8,23,747/-. The assessee despite giving various show cause notice, has not explained the source of credit, therefore, the total credit of Rs. 8,23,747/- in savings bank account with Bank of Baroda was also treated ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 3 as unexplained investment under Section 69 of the Act. The Assessing Officer completed the assessment under Section 144 r.w.s. 147 of the Act on 26/12/2017. 3. On coming to know about the additions in the assessment order against the assessee, the legal heirs of assessee/appellant filed appeal before the ld. CIT(A). Before the ld. CIT(A), in the statement of fact [as recorded in para 4 of ld. CIT(A)’s order], the appellant stated that the case of her husband was reopened under Section 147 on the basis of information with Assessing Officer that the appellant made investment of Rs. 12.00 lacs in HDFC Mutual fund. Subsequently, notice under Section 148 was issued. The assessee was an Non Resident Indian (NRI) from many years and used to visit India occasionally for few days to stay with appellant (Dipikaben J Patel). The assessee expired on 12/05/2013. The residence at Navsari was closed as wife of deceased Jayantilal H Patel was staying at Valsad, so she has no knowledge about the assessment proceedings. Due to non-receipt of notice, appellant ( Dipikaben J Patel) neither could provide detail nor filed return of income in response to notice under Section 148 of the Act. The assessment was completed under Section 144 r.w.s. 147 of the Act. On merit, the legal heirs/appellant stated that the deceased made investment in mutual fund out of his savings and redemption proceed of other investments. The appellant does not have any taxable income and hence she never fled return of income. The ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 4 Assessing Officer made addition without appreciating of fact. The appellant vide her submission sent through e-mail on 21/3/2018, further submitted that the appellant and her husband was residing in United State of America (USA) since 2007 and were visiting India, occasionally. Her husband expired on 12/5/2013 and she allegedly enclosed death certificate of her husband. 4. The ld. CIT(A) after considering the submission of appellant has noted that there was delay of 85 days in filing of appeal before him 5. . The delay was condoned by the ld. CIT(A) by taking a view that the assessee died and legal heirs of assessee was staying abroad. On merit, the ld. CIT(A) upheld the action of Assessing Officer by taking a view that the assessee has not provided any proof of accumulation of savings and savings of previous year, therefore, the contention that the assessee was planning from several years and made investment in mutual fund in one trench cannot be believed. No document to support the source of credit entries in the bank is furnished. In absence of details, submission of appellant cannot be accepted. Aggrieved by the order of ld. CIT(A), the appellant/legal heirs of the assessee filed the present appeal before this Tribunal. 6. I have heard the submission of learned Authorised Representative (ld. AR) of the assessee and the learned Senior Departmental Representative (ld. Sr. DR) for the revenue and have gone through the orders of the ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 5 lower authorities carefully. The ld. AR of the appellant submits that the notice under Section 148 was not served upon the appellant. No other notice issued by the Assessing Officer was served upon the appellant so there was no occasion for making any compliance. The appellant has no notice or knowledge about the reassessment proceedings, thus the assessment was completed under Section 144 r.w.s. 147 of the Act. On coming to know about the additions in the assessment order, the appellant immediately filed appeal before the ld. CIT(A). In the statement of fact before the ld. CIT(A), the appellant categorically stated that her husband has died on 12/5/2013. The death certificate of her husband was also attached with the submissions filed for seeking condonation of delay in filing appeal before ld CIT(A). Such fact is duly recorded by the ld. CIT(A) in para 4 of his order. The ld. CIT(A) despite recording the fact that husband of appellant has died has not given any finding on such legal issue. Thus, the initiation of reopening against a dead person is void ab initio. Since the assessee has died, thus, there is no occasion for revenue to serve notice on the appellant. The ld. AR submits that even otherwise, notice under Section 148 was not served upon the legal heir of assessee. The legal heir/appellant was not residing at the address mentioned in the assessment order. The ld. AR for the assessee submits that the reopening against a dead person is nullity, therefore, subsequent action initiated in consequence upon reopening is also invalid. At the time ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 6 of hearing the ld AR for the assessee filed the death certificate of the assessee. To support his submission, the ld. AR of assessee has relied upon the following case laws:  Bhupendra Bhikhalal Desai Vs ITO (2021) 130 taxmann.com 196 (Gujarat),  Krishnaawtar Kabra Vs ITO (2022) 140 taxmann.com 423 (Gujarat),  Bharti Harendra Modi vs. ITO (2019) 109 taxmann.com 389 (Gujarat),  CIT Vs M. Hemanathan (2016) 68 taxmann.com 22 (Madras) and  Rajender Kumar Shehgal Vs ITO (2019) 101 taxmann.com 233 (Delhi). 7. On the other hand, the ld. Sr. DR for the revenue submits that the appellant/legal heir of assessee never informed the Assessing Officer about the death of assessee. Before the ld. CIT(A), the assessee has not filed death certificate of assessee. On confronting the fact recorded by the ld. CIT(A) about the death of assessee, the ld. Sr. DR for the revenue submits that the facts remained same that the appellant/legal heir could not file death certificate of assessee on record. The ld. Sr. DR for revenue submits that he has seen the record of ld. CIT(A), wherein the assessee has not filed death certificate of assessee. 8. In the rejoinder submission, the ld. AR of the appellant submits that in para 6 of his order, the ld. CIT(A) recorded the submission of assessee on condonation of delay in filing appeal before him and duly recorded the contention of appellant that her husband expired on 12/05/2013 and the death certificate of deceased is hereby attached. The ld. AR submits that without admitting the fact that if it is presumed that death certificate was ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 7 not attached with her application for condonation of delay, it was the duty of ld. CIT(A) to call the death certificate or seek the remand report from the Assessing Officer. 9. I have considered the submissions of both the parties and have gone through the orders of lower authorities carefully. I have already called the record of assessment as well as record of first appellate authority/ld. CIT(A) to ascertain whether notice under Section 148 or other notice during assessment proceedings was served or not. Perusal of assessment order shows that neither the notice under Section 148 dated 26/3/2017 was served on the appellant/legal heir of assessee nor any other notice sent at the address of the assessee, was served. All the notices sent at the address “511/512, Sagar Darshan Apartment, Vakharia Bunder Road, Billimora- 396321” was not served. I find that all the registered return envelops/speed post envelop, through which notice under section 148, are available in the assessment record. On perusal of record of ld. CIT(A), I find that before the ld. CIT(A), the appellant has filed her affidavit stating therein that the address at which notices were issued at “511/512, Sagar Darshan Apartment, Vakharia Bunder Road, Billimora- 396321” was closed and she was residing at Valsad and she has no information about any of the notices issued by assessing officer. I find that copy of condonation of delay dated 16/3/2018 is also available in the record of ld CIT(A), wherein the appellant specially stated that she along with her ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 8 husband were residing in USA since 2007 and were visiting India occasionally for few days. Her husband died on 12/5/2013 and the copy of death certificate is attached. Before the ld. CIT(A), the appellant in Form No. 35 [Appeal form before ld CIT(A)], has given her address at Valsad. 10. Before me, the ld. AR of the assessee vehemently submitted that the initiation of reassessment by issuing notice under Section 148, against a dead person is not valid and the proceedings initiated thereon is void ab initio and consequential order passed thereafter are without jurisdiction and is liable to be quashed/set aside. I find that the Hon’ble Gujarat High Court in the case of Bhupendra Bhikhalal Desai Vs ITO (supra) held that notice issued under section 153C against dead person is unenforceable in law; in such case revenue cannot contend that as they have no knowledge about death of assessee, they are entitled to plead that notice is not defective. In the Krishnaawtar Kabra Vs ITO (supra), the Hon’ble Gujarat High Court has also held that reopening notice under section 148 issued upon deceased assessee was void an initio and therefore, consequential proceedings and orders passed thereon were without any jurisdiction and were to be quashed and set aside. Further in case of Bharti Harendra Modi Vs ITO (supra), the Hon’ble Jurisdictional High Court has held that reopening notice issued in the name of dead person would not be a valid notice. In CIT Vs M.Hemanathan (supra), the ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 9 Hon’ble Madras High Court has held that where notice issued in name of deceased-assessee was served upon legal heir, who, then, participated in proceedings, such proceedings was a nullity being initiated against a dead person. 11. Considering the aforesaid factual and legal position and the fact that the assessee died much prior to initiation of reassessment proceedings, therefore, the action initiated by the Assessing Officer is void ab initio. No doubt that the death of assessee has not come in the notice of Assessing Officer, however, it is an admitted fact that the appellant has very well informed the ld. CIT(A) in writing that her husband has died on 12/5/2013. The ld. CIT(A) despite recording such fact has not given any finding nor has directed the Assessing Officer to take remedial action. Thus, I respectfully following the decisions pf Hon’ble High Courts hold that reassessment proceedings initiated against a dead person is void ab initio and consequent action initiated and completed which is affirmed by ld. CIT(A) is set aside and assessment order is quashed. In the result, ground No. 2 of the appeal raised by the appellant is allowed. 12. Considering the fact that I have allowed the appeal of appellant on legal issue, therefore, considering and adjudicating the other grounds on merit have become academic. 13. In the result, this appeal of assessee is allowed. ITA No. 771/Srt/2018 Dipikaben J Patel Vs ITO(IT) 10 Order pronounced in the open court on 30 th September, 2022 and the result was placed on notice Board. Sd/- (PAWAN SINGH) JUDICIAL MEMBER Surat, Dated: 30/09/2022 *Ranjan Copy to: 1. Assessee – 2. Revenue - 3. CIT(A) 4. CIT 5. DR 6. Guard File By order Sr.Private Secretary, ITAT, Surat