Case Law Details
Late Shri Shankar Mukund Shenai Vs ITO (ITAT Mumbai)
ITAT Mumbai held that issuance of notice for re-opening of assessment under section 148 of the Income Tax Act against the deceased assessee is null in the eyes of law.
Facts- The assessee had filed the return of income on 29.07.2009 for A.Y. 2009-10 which was processed u/s 143(1). Later, the case of assessee for AY 2009-10 was reopened u/s 147 of the Act, by issuance of notice u/s 148 of the Act. Pursuant thereto, AO notes that assessee requested AO to treat the original return filed on 28.07.2009 as the return filed in response to the notice u/s 148 of the Act. And thereafter, the assessee’s daughter filed a letter dated 27.06.2016 informing him (AO) that assessee (Shri Shankar Mukund Shenai) had expired on 17.01.2016; and she being the daughter of the deceased/legal heir objects to the reopening by stating that “Notice issued on deceased person is void ab initio and the law is very clear that notice cannot be served on the deceased person”. The AO rejected the objection raised by an order dated 02.08.2016 and proceeded to reassess the income of the assessee and made an addition of Rs.52,88,045/-.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the impugned notice for re-opening the assessment for AY 2009-10 u/s 148 of the Act dated 28.03.2016 was issued in the name of deceased assessee; and despite AO knowing that assessee had passed away on 17.01.2016, proceeded to frame re-assessment, without first dropping the proceedings initiated by issuance of the impugned notice. Therefore, issuance of notice to re-open u/s 148 of the Act against the deceased assessee is null in eyes of law, so, we allow the legal issue raised by the assessee and quash the reassessment framed by AO.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This is an appeal preferred by the assessee company against the order of Ld. Commissioner of Income Tax Appeals, Mumbai (hereinafter referred to as the “Ld. CIT(A)”]/NFAC, dated 23.1 1.2022 for AY. 2009-10.
2. At the outset, the Ld. Authorised Representative (AR) of the assessee drew our attention to the legal issue raised by the assessee against the reopening of assessment for assessment year 2009-10. And since, it is a legal issue, we will deal with it first.
3. The brief facts regarding the legal issue is that the assessee had filed the return of income on 29.07.2009 for assessment year 2009-10 declaring total income of Rs.7,39,340/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as “the Act” ). Later, the case of assessee for AY 2009-10 was reopened u/s 147 of the Act, by issuance of notice u/s 148 of the Act, on 28.03.2016. Pursuant thereto, Assessing Officer (AO) notes that assessee requested AO to treat the original return filed on 28.07.2009 as the return filed in response to the notice u/s 148 of the Act. And thereafter, the assessee’s daughter filed a letter dated 27.06.2016 informing him (AO) that assessee (Shri Shankar Mukund Shenai) had expired on 17.01.2016; and she being the daughter of the deceased/legal heir objects to the reopening by stating that “Notice issued on deceased person is void ab initio and the law is very clear that notice cannot be served on the deceased person”. The AO rejected the objection raised by an order dated 02.08.2016 and proceeded to reassess the income of the assessee and made an addition of Rs.52,88,045/-.
4 . The action of the AO to have issued notice u/s 148 of the Act, on 28/29.03.2016 was challenged by the assessee (legal heir) before the Ld. CIT(A) who was of the opinion that since the reopening of the assessment was for assessment year 2009-10 when the late assessee was alive, according to him, the action of AO was valid; and also he found fault with the legal heir not to have brought the fact of death of assessee to the notice of the AO. Therefore, the Ld. CIT(A) noted that the AO after coming to know about the death of the assessee (Shri Shankar Mukund Shenai) has brought on record his legal heir Smt. Sangeetha Samir Koppikar and framed assessment in her name, which he upheld.Thus, the Ld. CIT(A) did not find any merit in the legal issue raised by the assessee. This impugned action of the Ld. CIT(A) is challenged before us.
5. We have heard both the parties and perused the records. It has been brought to our notice that late Shri Shankar Mukund Shenai, the assessee had passed away on 17.01.2016, which fact was brought to the notice of the AO after receipt of notice u/s 148 of the Act, dated 28.03.2016 vide letter dated 27.06.2016, wherein, the assessee’s daughter (Smt. Sangeetha Samir Koppikar) informed the AO about the death of her father and enclosed a copy of the Death Certificate. She also objected to reopening, stating that the issuance of notice to a deceased person is invalid in the eyes of law and therefore, according to her, all proceedings consequent to it is null in the eyes of law. However, the AO brushed aside the objections raised by the daughter/legal heir and proceeded to reassess the total income of the assessee for assessment year 2009-10. This action of the AO has been upheld by the Ld. CIT(A). We cannot countenance such an action of the Ld. CIT(A)/AO. Since, it is an undisputed fact that notice u/s 148 of the Act proposing reopening of the assessment for assessment year 2009-10, was issued by the AO dated 28.03.2016 in the name of deceased assessee (late Shri Shankar Mukund Shenai who expired on 17.01.2016). And his daughter has brought this fact to the notice of the AO vide letter dated 27.06.2016 and despite knowing about it, still the AO proceeded to frame the reassessment (without first dropping the re-assessment action against the deceased person and thereafter, AO ought to have issued fresh notice u/s 148 of the Act, on the legal heir/Smt. Sangeetha Samir Koppikar and then proceeded to frame re-assessment in her name on behalf of deceased assessee.). In the light of the aforesaid undisputed fact, the legal issue raised is noted to be no longer re-integra and for that, we rely on the decision of Hon’ble High Court in the case of RanibenKhimji Patel vs. ACIT & ORs . Writ Petition No.2329 of 2021 wherein on similar facts, it was held as under:
“1. Facts in both petitions are identical, save change in assessment year. In Writ Petition No.2329 of 2021 it is AY. 2014-15 and in Writ Petition No. 2394 of 2021 it is A.Y. 2013-14.
2. Petitioner is the legal heir of one Khimji Karamshi Patel who died on or about 2nd March, 2021. The death of assessee Khimji Karamshi Patel has been communicated to respondent. Notwithstanding the communication of death of Khimji Karamshi Patel, respondent has issued a notice under Section 148 of the Income Tax Act, 1961 (the Act) dated 30° June, 2021 for A.Y. 2014-15 stating that there are reasons to believe that Khimji Karamshi Patel’s income chargeable to tax for A.Y. 2014-15 has escaped assessment.
3. Identical notice has been issued for A.Y. 2013-14 as well which is also challenged separately in Writ Petition No.2394 of 2021. By this common order we are disposing both the petitions with the consent of the parties.
4. Petitioner has challenged the notice itself without taking further steps like for example asking for reasons to believe that income as chargeable to tax has escaped assessment.
5. Petitioner has impugned this notice on the grounds that notice issued in the name of dead person for assessment is null and void and secondly, the notice having been issued on 30″ June, 2021 has been issued without following mandatory provisions of law that came into force on April, 2021.
6. On the first ground that notice issued to a dead person is null and void in law, this court in Sumit Balkrishna Gupta vs. Assistant Commissioner of Income Tax, Circle 16(2), Mumbai’ has held that notice issued in the name of a dead person for re-opening of assessment is null and void in law. Paragraph no.6 and 7 of the said judgment reads as under:
6. In view of the above, the submission of the Revenue reiterating the grounds in the impugned order dated 13 11 2018 stands negative on facts so far as grounds (b) ie registration as legal heir and (c) ie filing the return in the name of deceased assessee therein are concerned It is not seriously disputed by the Revenue before us that a reopening notice issued in the name of a deceased person is null and void. This in view of the decision of the Gujarat High Court in the case of Vikram Singh Vs Union of India [2018] 401 ITR 302 rendered on 22 1 2018 a decision of Delhi High Court in the case of Rajendra Kumar Sehgal Vs. ITO [2019] 101 taxmann.com 233/260 Taxman 412 rendered on 19 11 2018 and the decision of Madras High Court in the case of AlameluVeerappan Vs. ITO, [2018] 95 taxmann.com 155/257 Taxman 72 These Courts had occasion to consider an identical issue of notice of reopening in the name of the deceased assessee and after considering the same, came to the conclusion that the notice issued in the name of the dead person for reopening of assessment is null and void in law.
7. The issue of a notice under Section 148 of the Act is a foundation for reopening of assessment. The sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not a merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. Thus, a notice which has been issued in the name of the dead person is also not protected either by provisions of Section 292B or 292BB of the Act. This is so as the requirement of issuing a notice in the name of correct person is the foundational requirement to acquire jurisdiction to reopen the assessment. This is evident from Section 148 of the Act, which requires that before a proceeding can be taken up for reassessment, a notice must be served upon the assessee The assessee on whom the notice must be sent must be a living person ie legal heir of the deceased assessee, for the same to be responded. This in fact is the intent and purpose of the Act Therefore, Section 292B of the Act cannot be invoked to correct a foundational/ substantial error as it is meant so as to meet the jurisdictional requirement. Therefore, both the impugned notice dated 29.3.2018 and the impugned order dated 13.11.2018 are quashed and set aside. It is made clear that this order will not prohibit the Revenue from issuing a fresh notice for reassessment if requirement of Section 147/148of the Act are satisfied, including the limitation period therein.”
7. There are many other judgments including one of the Gujarat High Court in case of Bhupendra Bhikhalal desai Vs. Income Tax Officer Ward 1(2)(1) where also the court held that notice issued to a dead person is not valid. This judgment of the Gujarat High Court has been upheld by the Hon’ble Apex Court in ITO Vs. Bhupendra Bhikhalal Desai.
8. In the circumstances, we hereby grant prayer clause- (i) which reads as under: –
(i) that this Hon’ble court may be pleased to issue a writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, Order or direction, calling for the records of the Petitioner’s case and after going into the legality and proprietary thereof, to quash and set aside the said notice u/s 148 of the Act dated 30 June 2021 (“Exhibit I”)
9. Since we have quashed the notice itself as not maintainable having been issued to a dead person, we are not considering the other aspect as to whether respondent was correct in issuing notice without following the mandatory provisions of law.”
6. The Ld AR drew our attention to following judicial precedents on this issue: –
b. Suresh Chandra Jaiswal High Court of Allahabad (2008) 76 CCH 0641 AII HC (2010) 325 ITR 0563 held that… Valid notice U/s 148 is ajurisdictional issue. Notice was issued to a deceased person and no fresh notice was issued on legal heirs within the limitation period provided under the law. In view of the invalid Notice U/s 148 the Ld. AO lacks the jurisdiction to make valid assessment.
c. I.T. vs. Shri. M. Hemanathan (Mad HC) reported in 384 ITR 0177 Para 31 “Therefore, the very initiation of the proceedings against the dead person and the continuation of the same despite having noticed the factum of death of the assessee, cannot be approved. Hence, the tax case appeal is dismissed and the questions of law are answered against the Department”
d. KESAR DEVI vs. C. I. T. (Raj HC) reported in (2009) 77 CCH 0152 RajHC (2010) 321 ITR 0344, Para No.12“ So far as question framed that notice to the dead person has been issued is concerned, notices have no doubt been issued to the dead person. It is settled principle of law that the case cannot be decided in the absence of the affected party Therefore, notice to the dead person was illegal.”
e. The Kerala High Court in P.N. Sasikumar&Ors. vs. CIT (1988) 69 CTR (Ker) 78 : (1988) 170 ITR 80 (Ker)hasheld that the issue of a notice under s 148 of the IT Act, 1961, is a condition precedent to the validity of any assessment order to be passed under s. 147 of the Act. It is also settled law that if no such notice is issued or if the notice is invalid or is not in accordance with law or is not served on the proper person in accordance with law, the assessment would be illegal and without jurisdiction.
f. SRI NATH SURESH CHAND RAM NARESH vs. COMMISSIONER OF INCOME TAX HIGH COURT OF ALLAHABAD (2004) 72 CCH 1099 AIIHC (2005) 196 CTR 0416, (2006) 280 ITR 0396 Bhagwan Devi Saraogi vs. ITO (1979) 118 ITR 906 (Cal) quoted following passage from it:
“…… If the authority concerned does not acquire jurisdiction in the absence of a valid notice being served, the entire proceeding will be without jurisdiction and void, and even the consent on the part of the assessee would confer no jurisdiction on the ITO.”
In the present case, the notice is improperly issued on a deceased person. We vehemently submit before your Honour that the Ld. AO has assumed jurisdiction erroneously. In absence of jurisdiction, the entire assessment is void and infructuous. Hence this assessment should be annulled.”
7. In the light of the aforesaid judicial decisions, since we find that the impugned notice for re-opening the assessment for AY 2009-10 u/s 148 of the Act dated 28.03.2016 was issued in the name of deceased assessee; and despite AO knowing that assessee had passed away on 17.01.2016, proceeded to frame re-assessment, without first dropping the proceedings initiated by issuance of the impugned notice. Therefore, issuance of notice to re-open u/s 148 of the Act against the deceased assessee is null in eyes of law, so, we allow the legal issue raised by the assessee and quash the reassessment framed by AO.
8. In the result, the appeal filed by the assessee is allowed
Order pronounced in the open court on this 29/05/2023
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