Shantha Jayaram V. Assistant Commissioner of Income Tax International Taxation, Circle-1(2) and Deputy Commissioner of Income Tax International Taxation, Circle-1(2) and Commissioner of Income Tax International Taxation

WP/2792/2020

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The case involves a writ petition filed by Smt. Shantha Jayaram, the widow of the deceased assessee Sri H.N. Jayaram, challenging the ex parte re-assessment of income for the assessment year 2011-12. The re-assessment was conducted by the Assistant Commissioner of Income Tax, International Taxation, Bengaluru, after reopening the concluded proceedings. The petitioner argued that the sale consideration from a transaction involving M/S Daffodil Designers and Developers Pvt Ltd, which was self-assessed, should not be taxed in her late husband's hands as he did not receive the consideration amount. The respondents defended the re-assessment, but the court found procedural lapses in issuing the notice to the deceased, leading to the quashing of the re-assessment order.

• Counselvise Citation: [2020] 140 COUNSELVISE.COM (IT) 798991 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 18-02-2020
• Assessment Year: misc
• Other Referred Cases: Jaydeepkumar Dhirajlal Thakkar vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961, Articles 226 & 227 of the Constitution of India
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: M V SHESHACHALA
• Keywords: Deceased assessee; Income Tax; Legal personality; Notice; Re-assessment; Writ petition
• Section: 147; 148; 144; 142(1)

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA, BENGALURU DATED THIS THE 18TH DAY OF FEBRUARY, 2020 BEFORE THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT WRIT PETITION NO. 2792 OF 2020 (T-IT) BETWEEN: HIREMAGALUR NARASIMHAIYENGAR JAYARAM (DEAD) REP SMT. SHANTHA JAYARAM (WIFE) AGED 76 YEARS, R/AT 100, GREY BARN ROAD, JACKSONVILLE, NC-28540 NOW AT NO.59/29, NAGHASIMHA 7TH MAIN, 2ND BLOCK, JAYANAGAR, BANGALORE - 560 011 ... PETITIONER (BY SRI. M V SHESHACHALA, SENIOR COUNSEL FOR SRI. ARAVAIND V CHAVAN, ADVOCATE) AND: 1. ASSISTANT COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-1(2) BMTC BUILDING 80 FEET ROAD, KORAMANAGALA BENGALURU - 560 095. 2. DEPUTY COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, CIRCLE-1(2) BMTC BUILDING, 80 FEET ROAD, KORAMANAGALA, BENGALURU - 560 095. 2 3. COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION, BMTC BUILDING 80 FEET ROAD, KORAMANAGALA, BENGALURU - 560 095. ...RESPONDENTS (BY SRI. JEEVAN J NEERALGI, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLES 226 & 227 OF THE CONSTITUTION OF INDIA PRAYING TO DECLARE THAT THE SALE CONSIDERATION RISING FROM THE SALE DATED 17.02.2011 HAVING BEEN SELF-ASSESSED IN THE HANDS OF M/S DAFFODIL DESIGNERS AND DEVELOPERS PVT LTD., WHO RECEIVED THE CONSIDERATION AMOUNT CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE PETITIONER WHO HAS NOT RECEIVED THE CONSIDERATION AMOUNT FOR ASSESSMENT YEAR 2011-12. THIS PETITION COMING ON FOR PRELIMINARY HEARING IN ‘B’ GROUP THIS DAY, THE COURT MADE THE FOLLOWING:- O R D E R Petitioner claiming to be the widow of deceased assessee Sri H.N.Jayaram is knocking at the doors of Writ Court for assailing the order dated 11.12.2019, made by the first respondent, a copy whereof is at Annexure-M, whereby ex parte re-assessment of income of the deceased has been done u/s.144 r/w Sec.147 of the Income Tax Act, 1961, after re-opening the concluded proceedings. 2. After service of notice, the respondents having entered appearance through their Senior Panel Counsel 3 resist the writ petition making submission in justification of the impugned orders. 3. Having heard the learned counsel for the parties and having perused the petition papers, relief needs to be granted to the petitioner because: (a) re-opening of the assessment being a serious matter, the procedure prescribed by law needs to be strictly adhered to; Section 142 (1) of the Act prescribes issuance of notice to the assessee as a sine qua non for reopening the assessment proceedings; (b) the original assessee Sri H.N.Jayaram having died on 07.02.2015, which fact is evidenced by a copy of the Death Certificate now placed on record by a memo, the notice dated 31.03.2018 could not have reached the deceased, is not in dispute; legal personality of a natural person comes to an end with his death, says ‘Salmond’s Jurisprudence’; thus apparently there was no notice either to the assessee or those who represent his estate, after the demise; however, the impugned orders have been structured on a wrong premise that notice has duly been served on the assessee, when apparently it was not; and, 4 (c) the Division Bench of Hon’ble High Court of Gujarat in the case of JAYDEEPKUMAR DHIRAJLAL THAKKAR vs. INCOME TAX OFFICER, (2018) 401 ITR 0302 (GUJ) in more or less a similar set of facts has held that the notice u/s.148 of the Act having been issued against a dead person being incompetent, the proceedings that have been founded on such a notice are a nullity and therefore cannot be sustained. In the above circumstances, this writ petition succeeds; a Writ of Certiorari issues quashing the impugned order dated 11.10.2019; however, it is open to the respondents to proceed against the estate of the deceased by issuing notice to his legal representatives, in accordance with law. All contentions of the parties are otherwise kept open. No costs. Sd/- JUDGE Snb/ "