SURAJIBEN BACHUJI THAKOR SINCE DECD. THROUGH HIS LH LAXMANJI BACHUJI THAKOR V. INCOME TAX OFFICER, WARD 2(1)(1)

SCA/10186/2022

AI Insights

The case revolves around the legality of an assessment order and demand notice issued by the Income Tax Department against Surajiben Bachuji Thakor, who had deceased before these were issued. The legal heir, Laxmanji Bachuji Thakor, challenged the assessment order under Article 226 of the Constitution, arguing that the proceedings were initiated against a dead person, which is not permissible under the law. The court referenced a similar case, Himadri Kandarp Mehta L/H of Late Kandarp Yashshvibhai Mehta vs. The Income Tax Officer, and other precedents to conclude that the assessment and subsequent proceedings against a deceased individual are without legal basis unless the legal representatives have actively participated in the proceedings.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 747180 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 23-08-2022
• Assessment Year: misc
• Other Referred Cases: Himadri Kandarp Mehta L/H of Late Kandarp Yashshvibhai Mehta vs. The Income Tax Officer, Urmilaben Anirudhhasinji Jadeja Vs. Income Tax Officer, Ward 7(1)(3)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M R BHATT CO
• Assessee Lawyers: ASHUTOSH DAVE; JYOTINDRASINH VALA
• Keywords: Assessment Order; Demand notice; Jurisdictional defect; Legal heir; Void ab initio; Dead assessee
• Section: 147; 148; 144; 69; 271(1)(b); 271F; 292B; 271(1)(a)

Judgement Text

"C/SCA/10186/2022 ORDER DATED: 23/08/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 10186 of 2022 ========================================================== SURAJIBEN BACHUJI THAKOR SINCE DECD. THROUGH HIS LH LAXMANJI BACHUJI THAKOR Versus INCOME TAX OFFICER, WARD 2(1)(1) ========================================================== Appearance: MR ASHUTOSH S DAVE(8865) for the Petitioner(s) No. 1 MR JYOTINDRASINH J VALA(10975) for the Petitioner(s) No. 1 M R BHATT & CO.(5953) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA Date : 23/08/2022 ORAL ORDER (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) In the facts and circumstances of the case and having regard to the compass of the controversy involved in the petition, this Special Civil Application was taken up for final consideration today. 1.1 Rule, returnable forthwith. Learned advocate Mr. Karan Sanghani for M. R. Bhatt & Co. waives service of Rule on behalf of the respondent. 2. Heard learned advocate Mr. Ashutosh Dave for the petitioner and learned senior advocate Mr. M. R. Bhatt for M. R. Bhatt & Co. for the respondent. 3. Filed under Article 226 of the Constitution, the challenge in this petition is directed against assessment order dated 23.3.2022 as well as the demand notice of even date against one Surajiben Bachuji Thakor. Also under challenge are notices issued under sections 271 (1)(a), 271 (1) (b) and 271F of the Income Tax Act, 1961. It is prayed that all the proceedings initiated as above are liable to be declared as void ab intio Page 1 of 6 C/SCA/10186/2022 ORDER DATED: 23/08/2022 and non-est. 3.1 It appears that on 9.3.2016, a sale deed was executed by the above named assessee Surajiben Bachuji Thakor alongwith other co-owners in respect of the land bearing Survey Nos. 454, 455 and 456 at Gota, Ahmedabad. The said Surajiben Bachuji Thakor against whom demand notice and penalty notice have been issued, passed away on 20.08.2016. 3.2 The factum of death of said Surajiben Bachuji Thakor is evidenced by death certificate produced on record of the petition (copy at page 61 Annexure-D). She died on 20.08.2016. 4. As per the above assessment order passed under section 147 of the Act for the Assessment Year 2016-2017, the tax demand was raised on the premise that the entire amount of sale consideration was unaccounted in view of provisions of section 69 of the Income Tax Act. The above named Surajiben Bachuji Thakor is presently represented by her legal heir Laxmanji Bachuji Thakor who was one of the co-owners of the lands sold as above. 5. The only issue to be considered in the present petition is whether the Assessment proceedings are maintainable against the dead person. Similar question had come up for consideration before this court in Himadri Kandarp Mehta L/H of Late Kandarp Yashshvibhai Mehta vs. The Income Tax Officer being Special Civil Application No. 16323 of 2019 decided on 1.8.2022. 5.1 Extracting the relevant part of the decision in Himadri Kandarp Mehta (supra) which would apply and cover the present case, “5. The Division Bench of this Court in Urmilaben Page 2 of 6 C/SCA/10186/2022 ORDER DATED: 23/08/2022 Anirudhhasinji Jadeja Vs. Income Tax Officer, Ward 7(1)(3) [(420) ITR 226], addressed the very issue. The Court considered various decisions of the Supreme Court and the High Court, touching the aspects of the issue, held that there cannot be any assessment against a dead person. In that case also, notice was issued to the dead assessee under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the \"Act\"). 5.1 While holding that the proceedings would be nullity against the dead assessee, the rider was provided that in cases where legal representatives participate in the assessment or re-assessment proceedings, the proceedings may be maintained and continued. It was at the same time held that mere intimation by the legal representative to the assessing officer that the noticee is dead, would not amount to legal representation on participation in that proceedings. 5.2 In Urmilaben Anirudhhasinji Jadeja (supra), while the revenue raised various contentions seeking a proposition that the proceedings against the dead assessee would be maintained, the Court negatived them all. 5.3 One of the contention was based on Section 292B of the Act. The said provision contemplates that the notice shall be deemed to be valid in certain circumstances. It mentions that where an assessee has appeared in any proceedings or cooperated in any inquiry relating to assessment or re-assessment, it shall be deemed that a notice required to be served under the Act has been duly served upon him. Such, it is provided, shall be precluded by taking any objection about the service of the service of the notice and manner of the service. 5.4 The Division Bench held that the said provision would not apply in cases where notices are gone to the dead assessee and the proceedings are started against a dead assessee. It was observed and held in paragraph 23 thus, \"The purport of Section 292B of the Act is that in the event of any mistake, defect or omission in the notice or other proceedings, if the same is in conformity with or according to the intent and purpose of the Act, the notice cannot be Page 3 of 6 C/SCA/10186/2022 ORDER DATED: 23/08/2022 termed as invalid. To put it in other words, the notice should be in conformity with and in accordance with the intent and purpose of the Act. In our opinion, a case in which notice is issued to a dead person could be termed as nullity. It is something like a safeguard passing a decree against a dead person which cannot be executed through the legal representatives of the judgment-debtor.\" 5.4.1 The continuation of proceedings pursuant to notice under Section 148 of the Act was held to be without authority of law by the Court stating thus - \"...the notice under section 148 of the Act, which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has not complied with the same. The legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid. In the absence of a valid notice, the Assessing Officer has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding under section 147 of the Act pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained.\" 5.5 Thus, the law is well settled that unless the heirs and legal representatives of the deceased assessee could be said to have been submitted to the jurisdiction of the assessing officer and have participated in the assessment or re-assessment proceedings, notice to the dead assessee and commencement of assessment or re- assessment proceedings against dead person is rendered null and void. 5.6 The attempt on the part of the income tax authorities to start proceedings for assessment or re-assessment against the dead person is viewed not merely as procedural irregularity but it is stated as jurisdictional defect. Page 4 of 6 C/SCA/10186/2022 ORDER DATED: 23/08/2022 5.7 There cannot be an assessment against the dead person. As noticed above, the provisions of Section 292B of the Act are also not applicable and no assessment can be framed against a non- existing entity or a person who has died.” 5.2 In light of the above, reverting back to the facts of the present case, Surajiben Bachuji Thakor died on 20.08.2016. Notice under section 148 of the Income Tax Act came to be issued on 31.3.2021 and the Assessment Order was passed under section 147 of the Act read with section 144 of the Act on 23.3.2022. The total income of the said deceased assessee was determined to be Rs. 7,70,00,000/- and the tax demand of Rs. 6,39,55,500/- was raised. 5.3 Not only that the assessment order came to be passed after six years from the death of the assessee, noticeably it transpires from the record that on 23nd March, 2022, the legal heir of the deceased Surajiben Bachuji Thakor intimated the Income Tax authorities about the death of the assessee. On the very date, the order of Assessment came to be passed. Request of the heir of the deceased assessee prayed as above, was rejected by the authority. In the meantime, the Assessment Order was passed. Be as it may. The fact which stands established is that the authority concerned had the knowledge about the death of the assessee, yet it proceeded to pass the assessment order without paying heed to the intimation given by the heir as above. 6. Reverting back to the facts of the present case, Surajiben Bachuji Thakor died on 20.08.2016 in whose name, notice was issued by the income tax authorities on 31.3.2021 under Section 148 of the Act seeking to reopen assessment in respect of Assessment Year 2016-2017. The petitioner herein who happens to be the legal representative intimated to the income tax officer concerned that the noticee Surajiben Bachuji Page 5 of 6 C/SCA/10186/2022 ORDER DATED: 23/08/2022 Thakor had died long back and that the notice was without jurisdiction. The Income Tax authorities did not pay heed to the said intimation. 6.1 The facts of the case did not offer any fact or circumstances to suggest that the legal representative of the deceased assessee in any manner submitted to the jurisdiction of the income tax authorities or in any way participated in the proceedings. On the contrary, communication dated 23.3.2022 was sent to the income tax officer by the legal representative that the noticee Surajiben Bachuji Thakor had died. 6.2 In view of the above, the present petition deserves to be allowed. It is hereby allowed by holding that the impugned notice, which was against the dead assessee, could not have been sustained. 6.3 Resultantly, the assessment order dated 23.3.2022 issued in the name of Surajiben Bachuji Thakor, as a dead person, by the income tax department is held to be illegal. 7. Assessment order dated 23.3.2022 issued by the Income Tax authorities is set aside. The Income Tax authorities shall not proceed against the said dead assessee. Rule is made absolute to the aforesaid extent. (N.V.ANJARIA, J) (BHARGAV D. KARIA, J) C.M. JOSHI Page 6 of 6 "