Case Law Details
Banwari Lal Soothwal Vs ITO (ITAT Jaipur)
ITAT Jaipur held that notice under section 148 of the Income Tax Act and order thereon issued in the name of Dead individual is null and void. Accordingly, the impugned notice and order held as void-ab-initio.
Facts- Assessee, Mr. Banwarilal Soothwal, expired on 09/02/2016. Assessing Officer(AO) issued notice u/sec.148 on 30/03/2018 in the name of deceased assesse. Later, AO passed the order u/sec.148 in the name of the deceased assessee. Accordingly, addition of Rs. 89,89,504/- was made on account of long term capital gain on sale of plots. CIT(A) confirmed the said addition. Accordingly, being aggrieved, the present appeal is filed.
Conclusion- In this case since the assessee was already dead at the time of issue of notice u/s 148, as per Section 159 of the Act it was mandatory for the Income tax Authorities to issue the notice u/s 148 in the name of the Legal representative. However, in this case the notice u/s 148 has been issued in the name of the deceased assessee. Income Tax Act has adopted the definition of Legal Representative as defined in Section 2(11) of Code of Civil Procedure 1908.
Hon’ble Bombay High Court in the case Devendra Vs. Addl.CIT has held that a Notice u/sec.148 issued in the name of Dead individual is null & void. The reassessment order passed in the name of dead individual is null & void. The Hon’ble Bombay High Court also held that Section 292B or 292BB will not be able to cure this defect.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal filed by the Legal Heir of assessee is against the order of ld. Commissioner of Income Tax(Appeals)[NFAC] passed under section 250 of the Income Tax Act, 1961 dated 16.04.2024 for the A.Y.2011-12. The assessee has raised the following grounds of appeal :
“1. The Ld.CIT(A), NFAC has erred on facts and in law in upholding the issuance of notice u/s 148 and consequent order passed u/s 147 of IT Act, 1961 by the AO in the name of deceased assessee.
2. The Ld.CIT(A), NFAC has erred on facts and in law in confirming the addition of Rs.89,89,504/- on account of long term capital gain on sale of 16 plots by not accepting the contention of assessee that:-
i) assessee is not the owner of plots and he had executed the registry as Power of Attorney holder of his wife Smt. Mishri Devi who is Director in M/s Rani Dadi Buildcon Pvt. Ltd.
ii) all the properties belong to M/s Rani Dadi Buildcon Pvt. Ltd. who has incorporated the same in their sales and
iii) similar issue was raised in AY 2012-13 where no addition was made. He has further erred in not allowing the deduction for indexed cost of acquisition in computing the long term capital gain and by substituting the actual sales consideration of Rs.44,45,326/- with the value assessed by the sub-registrar at Rs.89,89,504/-.
3) The appellant craves to alter, amend and modify any ground of appeal.
4) Necessary cost be awarded to the assessee.”
Submission of ld. Authorised Representative(ld.AR) :
2. The ld. Authorised Representative(ld.AR) for the Assessee submitted that the Assessee Mr. Banwarilal Soothwal expired on 09/02/2016. Copy of the death certificate was filed at Page 1 of the paper book. Ld.AR submitted that the Assessing Officer(AO) issued notice u/sec.148 on 30/03/2018 in the name of deceased assessee, then, the assessing officer passed the order u/sec.148 in the name of the deceased assessee. The Ld.AR invited our attention to the Assessment Order to demonstrate that the notice was issued in the name of the deceased person. Ld.AR submitted that the notice issued in the name of a deceased Individual is void-ab-initio and hence the order u/sec.148 is void-ab-initio. The Ld.AR relied on the following decisions:
> Decision of Supreme Court in the case of ITO Vs. Bhupendra Bhikhalal Desai dt.27.09.2021.
> Decision of Gujarat High Court Vs. Bhupendra Bhikalal Desai dt.08.03.2021.
> Decision of Supreme Court in case of PCIT Vs. Maruti Suzuki India Ltd. dt.25.07.2019.
2.1 Ld.AR also invited our attention to the page 5-9 of the ld.CIT(A)’s order to demonstrate that the ld.CIT(A) has erred.
2.2 The ld. Authorised Representative of the assessee filed a paper book.
Submission of ld. Departmental Representative(ld.DR) :
3. The Ld.DR submitted that during the assessment proceedings no submission was filed on behalf of the assessee. The fact of death of the assessee was not brought to the notice of the AO. There is no way for the AO to know this fact unless submitted by the Legal Heir. No submission made by the legal heir.
3.1 The ld.DR for the Revenue relied on the order of Assessing Officer(AO) and ld.CIT(A)[NFAC].
Findings & Analysis :
4. We have heard both the parties and perused the records. On perusal of page 1 of the paper book which is the death certificate of the assessee, it is observed that the Assessee expired on 09/02/2016. It is also a fact that the Notice u/sec.148 dated 30/03/2018 was issued in the name of the deceased assessee as seen from the Assessment Order. Ld.DR has not brought on record any evidence contrary to the fact that the notice u/sec.148 was issued in the name of the deceased person. The Order u/sec.148 was passed in the name of the deceased assessee. During the proceedings before the Ld.CIT(A), the Ld.CIT(A) had forwarded copy of the Death Certificate and other documents to the Assessing Officer as per Rule 46A for AO’s comments. The Ld.CIT(A) had mentioned on page 8 that no report was received from the AO. The Legal Heir of the Assessee had raised the legal ground before the Ld.CIT(A). The Ld.CIT(A) had forwarded the submission of the assessee to the AO for his comments but AO remained silent. By remaining Silent the AO had accepted that the notice u/s 148 was issued in the name of the deceased assessee. No contrary evidence has been brought to our notice by the department.
4.1 We have perused the copy of the notice dated 30.03.2018 submitted by ld.AR of the assessee. The notice u/sec.148 was issued in the name of a dead person. The notice u/sec.148 is as under :
4.2 The notice u/sec.148 is a Jurisdictional Notice as the Assessing Officer assumes jurisdiction through the notice for reassessment. Therefore, the notice u/sec.148 should be issued and served on a living person. Since in this case the assessee had already died, there is no question of service of notice on the deceased assessee. Thus, in this case there was no valid notice and no valid service.
4.3 Section 159 of the Income tax Act gives the procedure for issuing notice where the assessee is dead. The Section 159 of the Income tax Act is reproduced here as under :
Legal representatives.
159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.
(2) For the purpose of making an assessment (including 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 provisions of sub-section (1),—
(a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased;
(b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and
(c) all the provisions of this Act shall apply accordingly.”
4.3.1 Thus, as per Section 159(2) (b) any proceedings which could have been taken against the deceased if he would have been surviving, may be taken against the Legal representative. In this case since the assessee was already dead at the time of issue of notice u/s 148, as per Section 159 of the Act it was mandatory for the Income tax Authorities to issue the notice u/s 148 in the name of the Legal representative. However, in this case the notice u/s 148 has been issued in the name of the deceased assessee. Income Tax Act has adopted the definition of Legal Representative as defined in Section 2(11) of Code of Civil Procedure 1908.
4.4 The Hon’ble Bombay High Court in the case Devendra Vs. Addl.CIT 461 ITR 463 (Bombay)[13-07-2023] has held as under :
Quote “ 17. The issue which falls for consideration is as to whether the impugned notice under section 148 of the I.T. Act, 1961 is issued in the name of dead person said Shri Vasudeo Jambhulkar is enforceable in law. The fact that Shri Vasudeo Jambhulkar died on 87-2020 is not disputed. The notice issued in the name of the dead person is unenforceable in the eye of law. 1
8. The respondents seek to justify their stand by contending that they were not intimated about the death of the assessee. The legal heirs did not take any steps to cancel the PAN registration in the name of assessee.
19. It has observed by the Delhi High Court in Savita Kapila v. Asstt. CIT [2020] 118 com 46/273 Taxman 148/426 ITR 502/108 CCH 0049 Del HC] as under: “In the absence of a statutory provision it is difficult to cast a duty upon the legal representatives to intimate the factum of death of an assessee to the income tax department” “Consequently, the legal heirs are under no statutory obligation to intimate the death of the assessee to the revenue.”
20. While informing on mail, the petitioner has mentioned that the legal heirs of the assessee submits the documents which proves that it was sufficient for the respondents to know that the assessee is no more and the legal heirs are submitting the documents. Legal heirs are under no statutory obligation to intimate the death of the assessee to the department.
It is also observed by the Delhi High Court in Savita Kapila (supra) as under: “32. This Court is of the view that in the absence of a statutory provision it is difficult to cast a duty upon the legal representatives to intimate the factum of death of an assessee to the income tax department. After all, there may be cases where the legal representatives are estranged from the deceased assessee or the deceased assessee may have bequeathed his entire wealth to a charity. Consequently, whether PAN record was updated or not or whether the Department was made aware by the legal representatives or not is irrelevant.”
9. The Madras High Court in Alamelu Veerappan v. ITO [2018] 95 com 155/257 Taxman 72/102 CCH 0118 Chen HC] has observed as under :”Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration.”
22. The High Court of Mumbai in Sumit Balkrishna Gupta v. Asstt. CIT [2019] 103 com 188/262 Taxman 61/414 ITR 292/104 CCH 0379 Mum HC] has observed as under :
“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 i.e. 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.”
23. The learned Counsel for the petitioner has also relied on the judgment in the case of Dharamraj v. ITO [2022] 113 CCH 0096 Del HC].
24. The Principal Seat of this Court has recently passed the order in Dhirendra Bhupendra Sanghvi v. Asstt. CIT [2023] 151 com 541/[Writ Petition No. 10163 of 2022, dated 27-6-2023] and has observed that the notice issued on dead persons is null and void.
25. For the reasons stated above and several High Courts have observed that the notice issued on dead person or re-opening of assessment of a dead person is null and void, this Court holds that the notice and all consequential proceedings in the name of the deceased assessee are null and void and consequentially the impugned notice dated 31-3-2021 under section 148 of the Income-tax Act is quashed and set aside and all actions in furtherance thereto are prohibited. Hence, the petition is allowed.” Unquote.
4.4.1 Thus, the Hon’ble Bombay High Court held that a Notice u/sec.148 issued in the name of Dead individual is null & void. The reassessment order passed in the name of dead individual is null & void. The Hon’ble Bombay High Court also held that Section 292B or 292BB will not be able to cure this defect.
4.5 Therefore, respectfully following the Hon’ble Bombay High Court (supra), we hold that the impugned Notice under section 148 dated 30.03.2018 and the Order u/sec.148 are void ab initio.
5. We have heard both the parties only on the Legal Issue. No arguments were made on the merits of the case. Since we have decided the Legal Issue against Revenue, we do not intend to discuss merits of the additions made in the Assessment Order as we have held that the Assessment Order is Void-Ab-initio. Accordingly, the Legal Ground Number 1 is allowed.
5.1 Ground Number 2 is not adjudicated as discussed above.
5.2 Ground Number 3 is general in nature and does not need any adjudication.
6. In the result, appeal of the assessee is Allowed.
Order pronounced in the open Court on 25th July, 2024.
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