Himanshubhai Vinodbhai Patel Vs ITO (Gujarat High Court)
The Gujarat High Court allowed the petition challenging reassessment proceedings initiated against late Vinodbhai Hirabhai Patel, who had expired on 26.02.2017. The respondent issued an unsigned notice under Section 148 of the Income Tax Act, 1961, dated 30.03.2019 in the name of the deceased assessee, followed by a notice under Section 142(1) dated 06.08.2019. The petitioner informed the respondent that Vinodbhai Hirabhai Patel had already died. The petitioner’s objection to the validity of the Section 148 notice was nevertheless rejected by order dated 21.10.2019, and show-cause notices proposing an addition of Rs.9,97,994/- were issued.
The petitioner reiterated the objection on 23.10.2019. Despite this, the respondent passed an assessment order dated 20.12.2019 under Section 144 read with Section 147, determining total income at Rs.5,05,55,465/-, and issued a demand notice under Section 156 raising a demand of Rs.4,34,48,210/-.
The petitioner relied upon Chandreshbhai Jayantibhai Patel v. Income Tax Officer, (2019) 101 taxmann.com 362 (Gujarat), submitting that reassessment proceedings initiated against a deceased person were non-est in law. The respondent contended that the proceedings were permissible under Section 159, under which the legal representative, spouse or executor may be liable for filing returns and outstanding tax dues of a deceased assessee.
The Court rejected the respondent’s contention in the circumstances of the case. It noted that the Section 148 notice had been issued to the deceased assessee nearly two years after his death and that the petitioner, as legal representative, had immediately informed the authority of the death. The Court observed that a notice under Section 148 issued against a dead person is invalid unless the legal representative submits to the jurisdiction of the Assessing Officer without raising objections.
The Court referred to Urmilaben Anirudhhasinhji Jadeja Vs. Income Tax Officer, [2020] 117 com 504 (Gujarat), observing that merely informing the Assessing Officer that the notice had been issued in the name of a deceased person does not amount to participation in the proceedings.
Since the petitioner had objected at the first instance and had not participated in the assessment proceedings, the Court quashed and set aside the Section 148 notice dated 30.03.2019, objection-rejection order dated 21.10.2019, assessment order dated 20.12.2019 and demand notice dated 20.12.2019. The Court, however, reserved liberty to the respondent to reopen or re-initiate proceedings against the petitioner if permissible under Section 159 of the Act.
Cases Discussed
- Urmilaben Anirudhhasinhji Jadeja Vs. Income Tax Officer (Gujarat High Court), [2020] 117 com 504 (Gujarat)
- Chandreshbhai Jayantibhai Patel v. Income Tax Officer (Gujarat High Court), (2019) 101 taxmann.com 362 (Gujarat)
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Heard Mr. Manish J. Shah, learned advocate for the petitioner and Mr. Karan G. Sanghani, learned Senior Standing Counsel for the respondent.
2. By way of the present petition, the petitioner herein has prayed for the following reliefs:
“10. In the premises aforesaid, the petitioner prays that:-
A. this Hon’ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned notice u/s 148 at Annexure-A, the order rejecting the objections at Annexure-E, Assessment order passed u/s 144 r.w.s 147 at Annexure-H and Notice of demand issued u/s 156 at Annexure-I.
B. Pending the hearing and final disposal of this application, this Hon’ble Court be pleased to stay the implementation of reassessment order passed u/s 144 r.w.s 147 at Annexure-H and also be pleased to stay the recovery proceedings in pursuance to notice of demand u/s 156 at Annexure-I.
C. This Hon’ble Court be pleased to grant any further or other relief as this Hon’ble Court deems just and proper in the interest of justice, and
D. This Hon’ble Court be pleased to allow this application with costs against the respondent.”
3. At the outset, it is submitted that the impugned unsigned notice dated 30.03.2019 issued by the respondent herein under Section 148 of the Income Tax Act, 1961, (for short, “the Act”) to late Vinodbhai Hirabhai Patel, who expired on 26.02.2017. Thereafter, the respondent issued notice under Section 142(1) of the Act dated 06.08.2019 along with annexure thereto, to Late Vinodbhai Hirabhai Patel and asked him to file return of income in response to notice under Section 148 of the Act. In response to the aforesaid notice, the petitioner conveyed to the respondent that Vinodbhai Hirabhai Patel expired on 26.02.2017.
3.1. Further, it is submitted that the respondent authority by the aforesaid letter addressed by the petitioner, treated the same as objection wherein an order came to be passed disposing the objections by order dated 21.10.2019, wherein the primary objection of the petitioner regarding validity of notice under Section 148 of the Act, issued by the respondent herein on deceased assessee, i.e., Late Vinodbhai Hirabhai Patel was rejected.
3.2. Along with the said order, the petitioner also received two show-cause-notices of even date, i.e., 21.10.2019 proposing addition of Rs.9,97,994/-.
3.4. Thereafter, the petitioner again addressed a letter dated 23.10.2019 reiterating the stance that the impugned show-cause-notice is invalid, placing reliance on certain judgments.
3.5. It is submitted that ignoring the said objections raised by the petitioner, the respondent passed assessment order dated 20.12.2019, assessing total income of Rs. 5,05,55,465/- and also issued a demand notice under Section 156 of the Act raising a demand of Rs. 4,34,48,210/-. The aforesaid has given rise to the filing of the present petition.
3.6. Mr. Shah, learned advocate for the petitioner has placed reliance on the ratio laid down in case of Chandreshbhai Jayantibhai Patel v. Income Tax Officer, (2019) 101 taxmann.com 362 (Gujarat) and submitted that the impugned reassessment proceedings having been initiated against a dead person are non-est in eye of law. It is submitted that the present petition is required to be allowed on the aforesaid ground by setting aside the impugned notice dated 30.03.2019, order dated 21.10.2019, assessment order dated 20.12.2019 and notice of demand dated 20.12.2019.
4. Mr. Sanghani, learned Senior Standing Counsel has relied on the affidavit-in-reply and submitted that the reopening of the proceedings are in accordance with Section 159 of the Act and that if the assessee expires before filing the income tax return of any year in which a filing requirement exists, it becomes the liability of the spouse/legal representative/executor to file the income tax return and pay off any remaining tax dues of the deceased assessee. In the facts of the present case, the impugned notice dated 30.03.2019 came to be issued under Section 148 of the Act.
5. Having heard learned advocates appearing for the respective parties, the contention raised by the respondent having initiated proceedings under Section 159 of the Act, does not appeal to us, considering the fact that the show-cause-notice under Section 148 of the Act was issued on 30.03.2019 to deceased assessee, i.e., Vinodbhai Hirabhai Patel, who expired on 26.02.2017. Thereafter, the respondent issued notice under Section 142(1) of the Act on 06.08.2019 to late Vinodbhai Hirabhai Patel and asked him to file return, in response to such notice, admittedly, the petitioner herein conveyed on 09.08.2019 and further reiterated by communication dated 23.10.2019 to the respondent that Vinodbhai Hirabhai Patel expired on 26.02.2017, however, the impugned orders came to be passed rejecting the petitioner’s objections.
5.1. It is pertinent to note that a notice issued under Section 148 of the Act against a dead person is invalid unless a legal representative submits to the jurisdiction of the Assessing Officer without raising any objections.
5.2. In the facts of the present case, the petitioner herein, i.e., the legal representative of deceased Vinodbhai Hirabhai Patel, at the outset raised objection by way of aforesaid communications as referred to herein-above pointing out that Vinodbhai Hirabhai Patel expired as back as in the year 2017 and therefore, the notice under Section 148 of the Act is invalid.
6. At this stage, it is apposite to refer to the decision rendered in the case of Urmilaben Anirudhhasinhji Jadeja Vs. Income Tax Officer, [2020] 117 com 504 (Gujarat), more particularly, paragraph no. 18 which reads thus:
“18. We are not impressed by the submissions canvassed on behalf of the Revenue that the writ-applicant having participated in the proceedings cannot turn around and submit that the proceedings cannot continue as the notice was issued to a dead person. This argument of the learned counsel needs to be considered in light of the materials on record. We take notice of the fact that in fact the writ-applicant cannot be said to have participated in the proceedings in any manner. All that the writ-applicant did was, she informed the Assessing Officer that the notice was issued in the name of her husband who was already dead and gone. In our opinion, such intimation to the Assessing Officer cannot be termed as participating in the proceedings. We could have appreciated this argument canvassed on behalf of the Revenue if the writ-applicant would have filed her return accordingly. If that would have been the position, we could have very well accepted the argument that having participated in the proceedings, such issue could not have been raised.”
7. Considering the aforesaid position of law, in the facts of the present case, the petitioner herein at the first instance, responded to the notice by pointing out to the authority that the petitioner’s father had expired on 26.02.2017. The petitioner thus, cannot be said to have participated in the assessment proceedings and in view thereof, the impugned notice dated 30.03.2019, order dated 21.10.2019, assessment order dated 20.12.2019 and notice of demand dated 20.12.2019 are required to be quashed and set aside and the same are hereby quashed and set aside.
8. The present petition is allowed. However, liberty is reserved in favour of the respondent to reopen or re-initiate proceedings against the petitioner if permissible in accordance with Section 159 of the Act.
