Case Law Details
Brief of the Case
Delhi High Court held In the case of Vipin Walia vs. ITO that the revenue was to initiate proceedings under Section 147 against the deceased Assessee for AY 2008-09. The limitation for issuance of the notice under Section 147/148 was 31st March 2015. On 27th March 2015, when the notice was issued, the Assessee was already dead. If the Department intended to proceed under Section 147, it could have done so prior to 31st March 2015 by issuing a notice to the LRs of the deceased. Beyond that date it could not have proceeded in the matter even by issuing notice to the LRs of the Assessee. Further, the decision relied upon by revenue in Commissioner of Income Tax, Shillong v. Jai Prakash Singh (1996) 3 SCC 525 is clearly distinguishable on facts. The Court fails to understand how the above decision is of any help to the Revenue in the present case where the initial notice under Section 147/148 of the Act was issued to a dead person. The Revenue was unable to issue a notice to the LR of the deceased Assessee under Section 147/148 within the period of limitation. That would be a plain illegality and not a mere irregularity.
Facts of the Case
A notice under Section 148 dated 27th March 2015 was addressed by the Income Tax Officer to one Mr. Inder Pal Singh Walia, seeking to reopen the assessment for AY 2008-09. The above notice was returned unserved to the Department with the postal authorities endorsing on it the remarks “Addressee expired”. That was a correct statement by the postal authority since indeed Mr. Inder Pal Singh Walia had expired on 14th March 2015. In other words, the notice dated 27th March 2015 had been addressed to a dead person.
Contention of the Petitioner
The Petitioner submitted that his father Shri Inder Pal Singh Walia had expired on 14th March 2015 and that the proceedings initiated under Section 148 were barred by limitation. Additionally, it was stated that he was unaware of the financial affairs or transactions carried on by his late father.
Held by the Revenue
The ld counsel of the revenue submitted that since the intimation of the death of Shri Inder Pal Singh Walia on 14th March 2015 was not received by her office “therefore the notice was not issued on a dead person”. Another stand taken in the letter dated 18th July 2015 is treating the endorsement made by the postal authority (‘addressee expired’) as a refusal by the family members of the Assessee to accept the notice. Proceeding on the above two erroneous stands the Department compounded its errors by insisting on continuing with the proceedings under Section 147/148.
Held by High Court
High Court held that Section 159(2) (b) envisages any proceeding which could have been taken against the deceased if he had survived. It permits such a proceeding to be taken against the LRs of the deceased Assessee even if it had not taken while the Assessee was alive. Section 159(2) (b) is relevant as far as the present case is concerned. What was sought to be done by the ITO was to initiate proceedings under Section 147 against the deceased Assessee for AY 2008-09. The limitation for issuance of the notice under Section 147/148 was 31st March 2015. On 27th March 2015, when the notice was issued, the Assessee was already dead. If the Department intended to proceed under Section 147, it could have done so prior to 31st March 2015 by issuing a notice to the LRs of the deceased. Beyond that date it could not have proceeded in the matter even by issuing notice to the LRs of the Assessee.
Further a perusal of decision of the Supreme Court in Commissioner of Income Tax, Shillong v. Jai Prakash Singh (1996) 3 SCC 525, on which revenue placed reliance reveals that it is clearly distinguishable on facts. Para 2 of the said decision shows that the son of the deceased Assessee there had filed returns for the three Assessment Years (‘AYs’) for which the deceased Assessee had failed to file the returns. In other words, the proceedings at the instance of the LR of the deceased Assessee were already in progress when the question arose about the notice being issued only to the LR who filed the returns or to all the LRs. The question was whether the failure to issue notice to all the LRs would render the proceedings invalid. It is in those circumstances it was held that the non issuance of notice to all the LRs would be only an irregularity and not an illegality. The Court fails to understand how the above decision is of any help to the Revenue in the present case where the initial notice under Section 147/148 of the Act was issued to a dead person. The Revenue was unable to issue a notice to the LR of the deceased Assessee under Section 147/148 within the period of limitation. That would be a plain illegality and not a mere irregularity.
Consequently, the Court has no hesitation in holding that the actions of the Revenue in this case in persisting with the proceedings under Section 147/148 against the Petitioner were wholly misconceived both on facts as well as on merits.
Accordingly, appeal disposed of.
