Smt. Rajul Atulkumar Shah L/H. of late Shri Atulkumar Mansukhlal Shah, Ahmedabad V. The Income Tax Officer, Ward-7(2), Ahmedabad

ITA 918/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8116 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-09-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 31-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: KETAN H SHAH
• Section: 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ITA.NO.918 AND 919/AHD/2014 / ASSTT.YEAR : 2009-2010 LATE SHRI ATULKUMAR MANSUKHLAL SHAH L/RS. OF SMT. ATULKUMAR SHAH C/O. KETAN H. SHAH, ADVOCATE 903, SAPPHIRE COMPLEX C.G.ROAD, NAVRANGPURA AHMEDABAD. PAN : ATKPS 9712 Q VS ITO, WARD - 7(2) AHMEDABAD / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI KETAN H. SHAH, AR REVENUE BY : SHRI MUDIT NAGPAL, SR.DR / DATE OF HEARING : 16/11/2017 / DATE OF PRONOUNCEMENT: 16/11/2017 !'/ O R D E R (ORAL) PER RAJPAL YADAV, JUDICIAL MEMBER PRESENT TWO APPEALS ARE DIRECTED AT THE INSTANCE OF ASSESSEE AGAINST SEPARATE ORDERS OF EVEN DATED I.E. 20.2.2014 PASSED BY LD.CIT(A)-XIV, AHMEDABAD FOR THE ASSTT.YEAR 2009-10. 2. ITA NO.919/AHD/2014 EMERGES OUT OF PROCEEDINGS U NDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, WHEREAS IN ITA NO.918/AHD/2014 ITA NO.918 AND 919/AHD/2014 2 ASSESSEE IS IMPUGNING LEVY OF PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT. 3. FIRST WE TAKE QUANTUM APPEAL I.E. ITA NO.919/AHD /2014. 4. THE LD.COUNSEL FOR THE ASSESSEE, AT THE VERY OUT SET, SUBMITTED THAT HE HAS RAISED ADDITIONAL GROUND OF APPEAL, WHEREIN IT HAS BEEN PLEADED THAT LATE SHRI ATULKUMAR MANSUKHLAL SHAH EXPIRED ON 4.7.2011 AND T HIS FACT WAS BROUGHT TO THE NOTICE OF AO VIDE LETTER DATED 23.12.2011. IN SPITE OF THAT THE AO HAS PASSED THE ASSESSMENT ORDER IN THE NAME OF A DECEAS ED PERSON, THEREFORE, THE ASSESSMENT ORDER DESERVES TO BE DECLARED NULL AND V OID. 5. CONSIDERING THE VERY NATURE OF PLEA RAISED IN TH E ADDITIONAL GROUND OF APPEAL, MORE SO, BEING A LEGAL PLEA, WE ADMIT THIS GROUND OF APPEAL, AND PROCEED TO DISPOSE OF THE APPEAL ON MERIT. 6. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 29.5.2009 SHOWING TOTAL INCOME AT RS.1,41,830/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE UND ER SECTION 143(2) WAS ISSUED ON 30.8.2010 WHICH WAS DULY SERVED UPON THE ASSESSEE. IN ORDER TO SET ASSESSMENT PROCEEDINGS IN MOTION, THE LD.AO HAS ISS UED NOTICE UNDER SECTION 142(1) OF THE ACT. ON SCRUTINY OF THE DETAILS IT C AME TO THE NOTICE OF AO THAT CASH OF RS.11,79,000/- WAS DEPOSITED IN PUNJAB NATI ONAL BANK, SATELLITE BRANCH, AHMEDABAD. SIMILARLY, A SUM OF RS.25,95,00 0/- WAS DEPOSITED WITH HDFC BANK, MITHAKHALI BRANCH, AHMEDABAD. THE LD.C OUNSEL FOR THE ASSESSEE WHILE IMPUGNING THE ORDERS OF REVENUE AUTH ORITIES TOOK US THROUGH SECTION 159 OF THE INCOME TAX ACT, 1961 AND POINTED OUT THAT AS PER SUB- SECTION (2) OF SECTION 159 NOTICE UPON LEGAL HEIRS OUGHT TO HAVE BEEN ISSUED BY THE AO, WHICH THE AO HAS FAILED TO DO SO, AND THERE FORE, THE ASSESSMENT ORDER ITA NO.918 AND 919/AHD/2014 3 IS A NULLITY AND DESERVES TO BE QUASHED. IN ORDER TO BUTTRESS HIS CONTENTION, HE RELIED UPON DECISIONS OF THE HONBLE MADHYA PRADESH HIGH IN THE CASE OF CIT VS. DALUMAL SHYAMULAL, 276 ITR 62. HE FURTHER DREW OUR ATTENTION TOWARDS THE ORDER OF THE ITAT, AHMEDABAD BENCH IN THE CASE OF ITO VS. AKHTER NOORUDDINAHMED SAIYED REPORTED IN 40 CCH 0271 (AHD) (TRIB.). HE PLACED ON RECORD COPIES OF BOTH THESE DECISIONS. 7. ON THE OTHER HAND, THE LD.DR POINTED OUT THAT A PERUSAL OF SUB-CLAUSE (A) OF SUB-SECTION (2) AND SUB-SECTION (3) OF SECTI ON 159 WOULD CONTEMPLATES THAT IF ANY PROCEEDINGS TAKEN AGAINST THE ASSESSEE, WHO EXPIRED DURING THE PENDENCY OF THE PROCEEDINGS, THEN THE PROCEEDINGS M AY BE CONTINUED AGAINST LEGAL REPRESENTATIVES IN THE SAME CAPACITY AS IF TH E ASSESSEE WAS ALIVE, AND THE ORDER COULD NOT BE DECLARED AS NULLITY. AT THE MOST , IT CAN BE TREATED AS A PROCEDURE ILLEGALITY WHICH CAN BE CURED BY ISSUANCE OF NOTICE TO THE L/RS. 8. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. SECTION 159 OF THE INCOME TAX HAS A DIR ECT BEARING ON THE CONTROVERSY IN HAND, THEREFORE, IT IS IMPERATIVE UP ON US TO TAKE NOTE OF THIS SECTION. IT READS AS UNDER: 159. (1) WHERE A PERSON DIES, HIS LEGAL REPRESENTA TIVE SHALL BE LIABLE TO PAY ANY SUM WHICH THE DECEASED WOULD HAVE BEEN L IABLE TO PAY IF HE HAD NOT DIED, IN THE LIKE MANNER AND TO THE SAME EX TENT AS THE DECEASED. (2) FOR THE PURPOSE OF MAKING AN ASSESSMENT (INCLUD ING AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION UNDER SECTION 147) OF THE INCOME OF THE DECEASED AND FOR THE PURPOSE OF LEVYING ANY SUM IN THE HANDS OF THE LEGAL REPRESENTATIVE IN ACCORDANCE WITH THE PROVISI ONS OF SUB-SECTION (1), (A) ANY PROCEEDING TAKEN AGAINST THE DECEASED BEFO RE HIS DEATH SHALL BE DEEMED TO HAVE BEEN TAKEN AGAINST THE LEGAL REPR ESENTATIVE AND ITA NO.918 AND 919/AHD/2014 4 MAY BE CONTINUED AGAINST THE LEGAL REPRESENTATIVE F ROM THE STAGE AT WHICH IT STOOD ON THE DATE OF THE DEATH OF THE DECE ASED; (B) ANY PROCEEDING WHICH COULD HAVE BEEN TAKEN AGA INST THE DECEASED IF HE HAD SURVIVED, MAY BE TAKEN AGAINST THE LEGAL REPRESENTATIVE; AND (C) ALL THE PROVISIONS OF THIS ACT SHALL APPLY ACC ORDINGLY. (3) THE LEGAL REPRESENTATIVE OF THE DECEASED SHALL, FOR THE PURPOSES OF THIS ACT, BE DEEMED TO BE AN ASSESSEE. 9. A PERUSAL OF THIS SECTION WOULD INDICATE THAT AN Y PROCEEDINGS TAKEN AGAINST AN ASSESSEE BEFORE HIS DEATH SHALL BE DEEME D TO HAVE TAKEN AGAINST THE LEGAL REPRESENTATIVES WHICH MAY BE CONTINUED AGAINS T THE L/RS. FROM THE STAGE AT WHICH IT STOOD ON THE DATE OF THE DEATH OF THE A SSESSEE. A PERUSAL OF THE RECORD WOULD INDICATE THAT A NOTICE UNDER SECTION 1 43(2) WAS ISSUED ON 30.8.2010 WHEN SHRI ATULKUMAR M. SHAH WAS ALIVE. A N OPPORTUNITY TO THE ASSESSEE WAS GIVEN TO MAKE SUBMISSION IN SUPPORT OF HIS RETURN, AS REQUIRED UNDER SECTION 143(2). THIS ASSESSMENT PROCEEDINGS WAS SET IN MOTION BY THE AO WHEN THE ASSESSEE WAS ALIVE. FACT OF DEATH OF T HE ASSESSEE WAS BROUGHT TO THE NOTICE OF THE AO AT THE VERY FAG END I.E. VIDE LETTER DATED 23.12.2011. THE AO HAS, THOUGH TAKEN COGNIZANCE OF THIS LETTER, BUT FAILED TO ISSUE NOTICE TO THE L/RS. SO THAT THEY CAN PUT THEIR DEFENCE BEFORE HIM . AS FAR AS TWO CASE LAWS CITED BY THE LD.COUNSEL FOR THE ASSESSEE BEFORE US IS CONCERNED, IN THE CASE OF CIT VS. DALUMAL SHYAMULAL (SUPRA) IT REVEALS THAT T HE ASSESSEE DIED ON 11.7.1991 AND ASSESSMENT ORDER WAS PASSED ON 24.2.1 993. THE TIME GAP WOULD SUGGEST THAT NOTICE UNDER SECTION 143(2) APPE ARS TO HAVE BEEN SERVED UPON THE ASSESSEE AFTER HIS DEATH. SIMILARLY A GAP OF MORE THAN TWO YEARS IS AVAILABLE IN THE CASE OF AKHTER NOORUDINAHMED SAIYE D (SUPRA). CONSIDERING THESE TWO FACTORS, ASSESSMENT MUST HAVE BEEN DECLAR ED NULL AND VOID IN THOSE ITA NO.918 AND 919/AHD/2014 5 CASES. FACTS ARE QUITE DISTINGUISHABLE WITH THE FA CTS OF THE PRESENT CASE. THEREFORE, IN OUR OPINION, THERE IS NO ILLEGALITY C OMMITTED BY THE AO. HE ONLY COMMITTED AN IRREGULARITY AND IT IS SETTLED PO SITION THAT WHEREVER ANY IRREGULARITY CREPT IN THE PROCEEDINGS, THE PROCEEDI NGS ITSELF CANNOT BE DECLARED VOID, RATHER IRREGULARITY DESERVES TO BE RECTIFIED. CONSIDERING THESE ASPECTS, WE ALLOW APPEAL OF THE ASSESSEE FOR STATISTICAL PUR POSE. WE SET ASIDE BOTH THE IMPUGNED ORDERS AND RESTORE ALL ISSUES TO THE FILE OF THE AO FOR ADJUDICATION AFRESH. THE LD.AO SHALL RE-DETERMINE INCOME OF THE ASSESSEE ON MERIT AFTER CONSIDERING PLEA OF THE ASSESSEE WHETHER LOSS SUFFE RED BY THE ASSESSEE IN SHARE TRADING DESERVES TO BE SET OFF AGAINST ULTIMATE ASS ESSED INCOME. THE LD.AO SHALL ISSUE NOTICE TO THE LEGAL REPRESENTATIVES BY PROVIDING REASONABLE OPPORTUNITY OF HEARING, AND THEREAFTER PASS ASSESSM ENT ORDER. 10. SO FAR AS LEVY OF PENALTY UNDER SECTION 271(1)( C) OF THE ACT IS CONCERNED, WE ARE OF THE VIEW THAT SINCE VERY GENES IS FOR IMPOSITION OF PENALTY HAVE BEEN SET ASIDE TO THE FILE OF THE AO F OR RE-ADJUDICATION, THEREFORE, THIS APPEAL CHALLENGING IMPOSITION OF PENALTY IS AL SO SET ASIDE TO THE FILE OF THE AO. HOWEVER, IT WILL BE IN DISCRETION OF THE AO TO INITIATE OR NOT INITIATE PENALTY AFTER PASSING THE ASSESSMENT ORDER. 11. IN THE RESULT, BOTH APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON 16 TH NOVEMBER, 2017 AT AHMEDABAD. SD/- SD/- ( AMARJIT SINGH ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 16/11/2017