Case Law Details
Pravinchandra A Shah L/H of Late Saryuben P Shah Vs Union of India (Gujarat High Court)
The case of Pravinchandra A Shah L/H of Late Saryuben P Shah Vs Union of India, adjudicated by the Gujarat High Court, brings to light an important aspect of tax law: the issuance of a notice to a deceased person. The High Court declared the notice issued under Section 148 of the Act against a deceased individual as void and invalid, marking a crucial point in tax jurisprudence.
The crux of the case was a notice issued under Section 148 of the Act against late Ms. Shah, who had passed away before the notice was sent. This action by the tax authorities was challenged as void ab initio since the notice was sent to a deceased person.
The High Court, after examining the presented evidence and various precedents, upheld the petitioner’s claim. Notably, an amendment to the Act came into effect after the notice was issued, implying that any subsequent notice issued under Section 148 of the Act needed to adhere to the procedures outlined in the amended Act.
The High Court further noted that legal precedents, as well as the guiding principles laid down by the Apex Court, clearly indicated that initiating proceedings against a deceased person was invalid, and hence, the order was quashed and set aside.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Since, the issue involved in this petition runs in a very narrow compass, learned Advocates for the parties, jointly, made a request to take-up the same for hearing and final disposal, at the admission stage.
2. Learned Advocate, Mr. Sangani, appearing with learned Advocate, Ms. Raval, waives service of rule for the Respondents.
3. The brief facts of the case, leading to the filing of this petition, are as under;
It is the case of the petitioner that one Ms. Saryuben Pravinchandra Shah filed her return of income for the Assessment Year 2015-2016 on 30.09.2015, declaring her income at Rs.60,73,400/-.
3.1 It appears that the case of Ms. Shah was taken-up for scrutiny and the Assessing Officer issued various notices, under Section 142(1) of the Income Tax Act, 1961 (in brief, ‘the Act’), so as to examine the transaction of sale of immovable property.
3.1.1 Ms. Shah replied to all the notices.
3.2 Subsequently, an order under Section 143(3) came to be passed on 12.09.2017, whereby, the returned income of Ms. Shah was accepted as the assessed income.
3.3 The original assessee, i.e. Ms. Shah, passed away on 16.02.2021. Pursuant to the same, Respondent No.2 issued the impugned notice, Dated: 27.03.2021, under Section 148 of the Act, asking late Ms. Shah to file return of income.
3.3.1 It seems that the present petitioner, being the heir and legal representative of late Ms. Shah, filed the return of income and he also sought the reasons for re-opening vide communication dated 15.04.2021.
3.3.2 Pursuant to the above, the reasons for reopening were supplied to the petitioner, against which the petitioner filed the objections. However, Respondent No.2 disposed of the same vide order dated 30.06.2021.
3.4 Being aggrieved with the same, the petitioner filed the present petition, wherein, this Court granted ad-interim relief in terms of Paragraph-7(c) vide order dated 22.03.2022.
3.4.1 Despite of the above, during the pendency of the present petition, the Respondents-authorities passed the assessment order on 29.03.2023 and therefore, the petitioner amended the present petition. Thereafter, this Court, once again, granted ad-interim relief in terms of Paragraph-7(cb) vide order dated 31.03.2022.
4. Learned Advocate, Mr. Soparkar, appearing for the petitioner submitted that the impugned notice, which is issued under Section 148 of the Act, is issued against the dead person and therefore, the same is bad in law and is also void ab initio, since, a notice cannot be issued against the dead person.
4.1 In support of the above submission, learned Advocate, Mr. Soparkar, placed reliance on the decision of this Court, rendered in the case of ‘Chandreshbhai Jayantibhai Patel Vs. ITO’, reported in 413 ITR 276 (Gujarat).
4.2 It was, further, submitted that the notice, under Section 148 of the Act, was issued in the name of the legal heir of late Ms. Shah, i.e. the present petitioner, which is also bad and illegal.
4.3 It was pointed out that after 01.04.2021, a notice under Section 148 of the Act can be issued, only as per the amended provisions of the Act and therefore, it was submitted that the impugned notice, which is issued without following the amended provisions of the Act, is bad and illegal.
4.3.1 In support of the same, learned Advocate, Mr. Soparkar, placed reliance on the decision of the Hon’ble Apex Court in the case of ‘UOI & Others Vs. Ashish Agarwal’, reported in 444 ITR 1 (SC).
4.4 It was, further, submitted that the Second Notice is issued, without recording the reasons or seeking the approval for the same, in the name of the dead person, i.e. Ms. Shah, which is not permissible under the law.
4.4.1 It was also submitted that the Second Notice is issued, without dropping the First Notice, which was issued to the dead person, i.e. Ms. Shah, which is not permissible.
4.5 Learned Advocate, Mr. Soparkar, submitted that during the pendency of the present petition, the Respondent-authorities passed the order of assessment and that too, in the name of the dead person, i.e. Ms. Shah, which is nothing, but, absolute nullity.
4.6 It was also pointed out that the Second Notice is issued to the legal heir, i.e. the present petitioner, under Section 148 of the Act, whereas, the order of assessment is passed in the name of the dead person, i.e. Ms. Shah, which is a clear nullity.
4.7 In support of the above submissions, learned Advocate, Mr. Soparkar, placed reliance on the following decisions;
(1) ‘PCIT Vs. Maruity Suzuki India Ltd.’, reported in 416 ITR 613 (SC);
(2) ‘Krishnaawatar Kabra Vs. Income-Tax Officer’, reported in [2022] 140 taxman.com 423 (Gujarat);
(3) ‘Rajender Kumar Sehgal Vs. ITO, Ward 56(1), New Delhi’, reported in [2019] 414 ITR 286 (Delhi);
(4) ‘Sandeep Chopra Vs. Principal Commissioner of Income Tax’, reported in [2023] 149 taxman.com 225 (Jharkhand);
(5) ‘Savita Kapila Vs. Assistant Commissioner of Income-tax, Circle 4(1)’, reported in [2020] 426 ITR 502 (Delhi);
4.8 Learned Advocate, Mr. Soparkar, further, submitted that the provisions of Section 292B and 292BB shall not apply in the facts of this case.
4.8.1 In support of the above, reliance is placed on the following decisions;
(1) ‘Sumit Balkrishna Gupta Vs. Assistant Commissioner of Income-tax, Circle 16(2), Mumbai’, reported in [2019] 414 ITR 292 (Bombay);
(2) ‘Savita Kapila’ (Supra);
(3) ‘Krishnaawatar Kabra’ (Supra);
(4) ‘Rajender Kumar Sehgal’ (Supra)
4.9 Learned Advocate, Mr. Soparkar, further, submitted that it is true that the petitioner filed the return of income and also asked for the reasons for re-opening. Thereafter, he informed the Respondents about the death of Ms. Shah, immediately. Therefore, in fact, the petitioner did not participate in the proceedings and despite that the Respondents continued the proceedings against the dead person.
4.10 It was submitted that the reliance placed on by the learned Advocate, Mr. Sangani, for the Respondents on the observations made by this Court in Paragraph-10 in the case of ‘Chandreshbhai Jayantibhai Patel’ (Supra), wherein, the facts of the case of ‘Smt. Kaushalyabai Vs. CIT’, reported in [1999] 238 ITR 1008 (Madhya Pradesh) are referred to are concerned, in the said case the petitioner raised the ground of death of the original assessee, for the first time, at the time of filing appeal and therefore, the same shall not apply in the facts of this case.
It was, therefore, prayed that this petition be allowed.
5. On the other hand, learned Advocate, Mr. Sangani, appearing with learned Standing Counsel, Ms. Raval, for the Respondents referred to the averments made in the affidavitin-reply filed on behalf of the Respondents and submitted that when the notice for re-opening was, initially, issued, the petitioner did not object to the same and in fact, he participated in the proceedings by filing return of income and requesting for the reasons for re-opening and it was only thereafter that the petitioner intimated the death of Ms. Shah.
5.1 It was, further, submitted that, in view of the above, the Respondent-authorities issued the notice to the legal heir of late Ms. Shah, i.e. the present petitioner, as provided under Section 292B of the Act.
5.2 It was submitted that the petitioner did not inform / intimate the Respondent-authorities about the demise of Ms. Shah, prior to issuance of notice under Section 148 of the Act and therefore, once the petitioner participated in the proceedings, it is, now, not open to him to raise the aforesaid contention.
5.3 It was, thus, submitted that the Respondent-authorities have committed neither any illegality nor any error and hence, this petition may be dismissed.
6. We have heard the learned Advocates for the parties and also perused the material produced on record, which reveals that late Ms. Shah filed her return of income on 30.09.2015 and pursuant thereto, scrutiny of the same was undertaken and the assessment, as provided under Section 143(3) of the Act, was done on 12.09.2017, whereby, the income shown in the return filed by late Ms. Shah was accepted, as the assessed income.
6.1 The original assessee, i.e. late Ms. Shah, passed away on 16.02.2021 and the notice, under Section 148 of the Act, came to be issued to late Ms. Shah on 27.03.2021. In response to the same, the present petitioner filed the return of income and also requested the Respondent-authorities to provide the reasons for re-assessment or re-opening. Thereafter, the petitioner, who is the legal heir of late Ms. Shah, intimated the Respondent-authorities about the sad demise of Ms. Shah.
6.1.1 Pursuant to the same, the Respondent-authorities issued notice, under Section 148 of the Act, in the name of the present petitioner and thereafter, passed the impugned order of assessment, which is in the name of the dead person, i.e. late Ms. Shah, on 30.06.2021.
6.2 In view of the above, it would be relevant to refer to the provisions of Section 292B and Section 292BB of the Act, which provides that;
“292B. Return of income, etc., not to be invalid on certain grounds.- No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.]
XXX XXX XXX
292BB. Notice deemed to be valid in certain circumstances.—Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was—
(a) not served upon him; or
(b) not served upon him in time; or
(c) served upon him in an improper manner:
Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.”
6.3 In the case of ‘Rajender Kumar Sehgal’ (Supra), the Delhi High Court observed at Paragraphs- 2 and 3 as under;
“2. The undisputed facts are that the deceased assessee had filed income tax returns and continued to do so, till her death. The return for AY 2010-2011 was processed, in a routine manner and the deceased assessee was intimated about it. On 17.01.2015, the said assessee died. The impugned reassessment notice was issued under Section 148 of the Act to the said deceased; the petitioner, a legal representative of the deceased, Rajendra Kumar Sehgal (hereafter called the “petitioner”) and he was intimated this fact; without prejudice. Thereafter, vide letter dated 15.05.2017, the petitioner also sought a copy of the “reasons to believe”. The revenue furnished the “reasons to believe” recorded on its file in support of its opinion that reassessment was necessary. This indicated that according to information received, the deceased had shown some transactions which led to a claim for losses brought forward, pertaining to one Varun Capital Services Limited. The petitioner protested that this was not correct; after rejecting the objections received from the petitioners, the AO issued a clarification, ostensibly “clarifying” that the entity from which the deceased had received the amounts and claimed losses was different, and that the original “reason to believe” contained a typographical error.
3. The petitioner approached this court, seeking the reliefs that she has claimed, primarily on three grounds: firstly, the Act does not provide any mechanism for issuing and carrying on reassessment in respect of the dead person, if the reassessment notice is issued against a deceased. It is urged, secondly, that the “clarification” issued camouflages the fact that the so called “reasons to believe” was not based on application of mind and was also premised on no reason. The third ground is that the AO completed the reassessment without issuing notice under Section 143 (2) of the Act.”
6.4 The observations made by the Jharkhand High Court at Paragraphs-8 to 11 in the case of ‘Sandeep Chopra’ (Supra) reads thus;
“8. Thus, it appears that the very initiation of the reassessment proceedings against the original-assessee namely, Bhim Sain Chopra @ Bhim Sen Chopra is non est and void ab initio, especially because the said assessee had already died on 18.01.2016 itself and thus, the Re-assessment order dated 10.09.2021 (Annexure12) passed by Respondent No.4 under Section 147 of the Act against the deceased assessee Bhim Sain Chopra @ Bhim Sen Chopra is non est and illegal having been passed against the dead assessee without even substituting and/or transposing legal heirs of the said assessee in accordance with law.
9. It is true that as per the provisions of I. T. Act, 1961, for the purpose of making any assessment, any proceeding taken against the deceased before his death is by deeming fiction deemed to have been taken against his legal representatives and may be continued against the legal representatives from the stage at which it stood on the date of death of the deceased. However, in the instant case the re-assessment proceeding has been initiated after issuance of notice against the dead person, which is not permissible in the eye of law. The condition precedent for acquiring jurisdiction to reopen any assessment is that notice under Section 148 should be issued to a correct and alive person and not to the dead person.
Thus, in the instant case the jurisdictional requirement under Section 148 of the Act of Service of Notice was not fulfilled. The law mandates that the moment the revenue came to know about the death of the original assesse, they are legally bound to make the legal representative for the purpose of proceeding in the matter. At the cost of repetition, during the original assessment proceeding itself, the original assessee-Bhim Sen Chopra died and the assessing officer was well-informed, as such there was no question to issue a notice under Section 148 of the Act as against the dead person.
10. Heavy reliance has been made by learned Counsel for the Revenue that in view of the provision of Section 292 BB of the Act and the regular response by the petitioner has cured the defect of issuance of notice to the dead person. We are not in agreement with such contention, inasmuch as, Section 292 BB does not save complete absence of notice. It is only the infirmities in the manner of service of notice that this section seeks to cure, but in no case this section will save the revenue from issuing a notice to the dead person. In the case of RAJENDRA KUMAR SEHGAL vs. I.T.O. (Delhi High Court) reported in [2018 (12) TMI 697 (Delhi)], it is held that Section 292 BB of the Act, 1961 is applicable to an assessee and not to a legal representative. It is not a case where the proceedings under Section 14 7/148 were initiated against the assessee and during its pendency the assessee died and after his death the legal representative did not step into the shoes of the deceased assessee; it is a case where the first notice for reassessment was issued against the dead person, as such Section 159 of the Act, 1961 does not apply to the present case. Recently, in the case of PRINCIPAL COMMISSIONER OF INCOME TAX, NEW DELHI Versus MAR UTI SUZUKI (INDIA) LIMITED, reported in (2020) 18 SCC 331, the Hon’ble Apex Court has dealt a similar issue where the original company [Suzuki Powertrain India Ltd. (SPIL)] had been amalgamated with Maruti Suzuki India Ltd. The Hon’ble Apex Court has held that the notice issued to the original company as null and void. Paragraph 36 of the said judgment is quoted hereinbelow.
“36. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a coordinate Bench of two learned Judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2-11- 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the special leave petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment.”
11. Having regard to the discussions made hereinabove, notice issued under Section 148 for initiation of reassessment proceeding in the name of the deceased assessee (Bhim Sen Chopra) on his PAN and not in the name of his legal representative is held to be illegal and bad in law.”
6.5 In ‘PCIT Vs. Maruity Suzuki India Ltd.’ (Supra), the Hon’ble Apex Court observed and held as under at Paragraphs-20 to 33;
“20 In Spice Entertainment, a Division Bench of the Delhi High Court dealt with the question as to whether an assessment in the name of a company which has been amalgamated and has been dissolved is null and void or, whether the framing of an assessment in the name of such company is merely a procedural defect which can be cured. The High Court held that upon a notice under Section 143 (2) being addressed, the amalgamated company had brought the fact of the amalgamation to the notice of the assessing officer. Despite this, the assessing officer did not substitute the name of the amalgamated company and proceeded to make an assessment in the name of a non-existent company which renders it void. This, in the view of the High Court, was not merely a procedural defect. Moreover, the participation by the amalgamated company would have no effect since there could be no estoppel against law :
“11. After the sanction of the scheme on 11th April, 2004, the Spice ceases to exit w.e.f. 1st July, 2003. Even if Spice had filed the returns, it became incumbent upon the Income tax authorities to substitute the successor in place of the said „dead person‟. When notice under Section 143 (2) was sent, the appellant/amalgamated company appeared and brought this fact to the knowledge of the AO. He, however, did not substitute the name of the appellant on record. Instead, the Assessing Officer made the assessment in the name of M/s Spice which was non existing entity on that day. In such proceedings an assessment order passed in the name of M/s Spice would clearly be void. Such a defect cannot be treated as procedural defect. Mere participation by the appellant would be of no effect as there is no estoppel against law.
12. Once it is found that assessment is framed in the name of non-existing entity, it does not remain a procedural irregularity of the nature which could be cured by invoking the provisions of Section 292B of the Act.”
Following the decision in Spice Entertainment, the Delhi High Court quashed assessment orders which were framed in the name of the amalgamating company in:
(i) Dimension Apparels;
(ii) Micron Steels; and
(iii) Micra India.
21. In Dimension Apparels, a Division Bench of the Delhi High Court affirmed the quashing of an assessment order dated 31 December 2010. The Respondent had amalgamated with another company and thus, ceased to exist from 7 December 2009. The Court rejected the argument of the Revenue that the assessment was in substance and effect in conformity with the Act by reason of the fact that the assessing officer had used correct nomenclature in addressing the Assessee; stated the fact that the company had amalgamated and mentioned the correct address of the amalgamated company. It was the Revenue’s contention that the omission on the part of the assessing officer to mention the name of the amalgamated company is a procedural defect. The Delhi High Court rejected this contention. In doing so, it relied on the holding in Spice Entertainment, where the High Court expressly clarified that “the framing of assessment against a non-existing entity/person” is a jurisdictional defect. The Division Bench also relied on the holding in Spice Entertainment that participation by the amalgamated company in proceedings does not cure the defect as “there can be no estoppel in law”, to affirm the quashing of the assessment order.
22. In Micron Steels, a notice was issued to Micron Steels Pvt Ltd (original assessee) after it had amalgamated with Lakhanpal Infrastructure Pvt Ltd. A Division Bench of the Delhi High Court upheld the setting aside of assessment orders, noting that Spice Entertainment is an authority for the proposition that completion of assessment in respect of a non-existent company due to the amalgamation order, would render the assessment a nullity.
23 In Micra India, the original assessee Micra India Pvt. Ltd had amalgamated with Dynamic Buildmart (P) Ltd. Notice was issued to the original assessee by the Revenue after the fact of amalgamation had been communicated to it. The Court noted that though the assessee had participated in the assessment, the original assessee was no longer in existence and the assessment officer did not the take the remedial measure of transposing the transferee as the company which had to be assessed. Instead, the original assessee was described as one in existence and the order mentioned the transferee’s name below that of the original assessee. The Division Bench adverted to the judgment in Dimension Apparels wherein the High Court had discussed the ruling in Spice Entertainment. It was held that this was a case where the assessment was contrary to law, having been completed against a non-existent company.
24. A batch of Civil Appeals was filed before this Court against the decisions of the Delhi High Court, the lead appeal being Spice Enfotainment. On 2 November 2017, a Bench of this Court consisting of Hon’ble Mr Justice Rohinton Fali Nariman and Hon’ble Mr Justice Sanjay Kishan Kaul dismissed the Civil Appeals and tagged Special Leave Petitions in terms of the following order :
“Delay condoned.
Heard the learned Senior Counsel appearing for the parties.
We do not find any reason to interfere with the impugned judgment(s) passed by the High Court.
In view of this, we find no merit in the appeals and special leave petitions.”
Accordingly, the appeals and special leave petitions are dismissed.”
25. The doctrine of merger results in the settled legal position that the judgment of the Delhi High Court stands affirmed by the above decision in the Civil Appeals.
26. The order of assessment in the case of the respondent for AY 2011-12 was set aside on the same ground. This resulted in a Special Leave Petition by the Principal Commissioner of Income Tax – 6 Delhi32. The Special Leave Petition was dismissed by a two judge Bench of this Court consisting of Hon’ble Mr Justice Rohinton Fali Nariman and Hon’ble Ms Justice Indu Malhotra on 16 July 2018 in view of the order dated 2 November 2017 governing Civil Appeal No. 285 of 2014 in Spice Enfotainment and the connected batch of cases. Though, leave was not granted by this Court, reasons have been assigned by this Court for rejecting the Special Leave Petition. The law declared would attract the applicability of Article 141 of the Constitution. For, as this Court has held in Kunhayammed:
“40… Where the order rejecting an SLP is a speaking order, that is, where reasons have been assigned by this Court for rejecting the petition for special leave and are stated in the order still the order remains the one rejecting prayer for the grant of leave to appeal. The petitioner has been turned away at the threshold without having been allowed to enter in the appellate jurisdiction of this Court. Here also the doctrine of merger would not apply. But the law stated or declared by this Court in its order shall attract applicability of Article 141 of the Constitution. The reasons assigned by this Court in its order expressing its adjudication (expressly or by necessary implication) on point of fact or law shall take away the jurisdiction of any other court, tribunal or authority to express any opinion in conflict with or in departure from the view taken by this Court because permitting to do so would be subversive of judicial discipline and an affront to the order of this Court.However this would be so not by reference to the doctrine of merger.”
27. The submission however which has been urged on behalf of the Revenue is that a contrary position emerges from the decision of the Delhi High Court in Skylight Hospitality LLP which was affirmed on 6 April 2018 by a two judge Bench of this 32 Special Leave Petition (C) (D) No. 14106 of 2018 Court consisting of Hon’ble Mr Justice A K Sikri and Hon’ble Mr Justice Ashok Bhushan. In assessing the merits of the above submission, it is necessary to extract the order dated 6 April 2018 of this Court:
“In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act.
The special leave petition is dismissed.
Pending applications stand disposed of.”
Now, it is evident from the above extract that it was in the peculiar facts of the case that this Court indicated its agreement that the wrong name given in the notice was merely a clerical error, capable of being corrected under Section 292B. The “peculiar facts” of Skylight Hospitality emerge from the decision of the Delhi High Court34. Skylight Hospitality, an LLP, had taken over on 13 May 2016 and acquired the rights and liabilities of Skylight Hospitality Pvt. Ltd upon conversion under the Limited Liability Partnership Act 200835. It instituted writ proceedings for challenging a notice under Sections 147/148 of the Act 1961 dated 30 March 2017 for AY 2010-2011. The “reasons to believe” made a reference to a tax evasion report received from the investigation unit of the income tax department. The facts were ascertained by the investigation unit. The reasons to believe referred to the assessment order for AY 2013- 2014 and the findings recorded in it. Though the notice under Sections 14 7/148 was issued in the name of Skylight Hospitality Pvt. Ltd. (which had ceased to exist 33 Special Leave Petition (C) No. 7409 of 2018 34 “Sky Light Hospitality LLP v Assistant Commissioner of Income Tax : (2018) 405 ITR 296 (Delhi) 35 “LLP Act 2008” upon conversion into an LLP), there was, as the Delhi High Court held “substantial and affirmative material and evidence on record” to show that the issuance of the notice in the name of the dissolved company was a mistake. The tax evasion report adverted to the conversion of the private limited company into an LLP. Moreover, the reasons to believe recorded by the assessing officer adverted to the approval of the Principal Commissioner. The PAN number of the LLP was also mentioned in some of the documents. The notice under Sections 14 7/148 was not in conformity with the reasons to believe and the approval of the Principal Commissioner. It was in this background that the Delhi High Court held that the case fell within the purview of Section 292B for the following reasons:
“18… There was no doubt and debate that the notice was meant for the petitioner and no one else. Legal error and mistake was made in addressing the notice. Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated 11.04.2017. They had objected to the notice being issued in the name of the Company, which had ceased to exist. However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was replied and dealt with by them. The fact that notice was addressed to M/s. Skylight Hospitality Pvt. Ltd., a company which had been dissolved, was an error and technical lapse on the part of the respondent. No prejudice was caused.”
28. The decision in Spice Entertainment was distinguished with the following observations:
“19. Petitioner relies on Spice Infotainment Ltd. v. Commissioner of Service Tax, (2012) 247 CTR 500. Spice Corp. Ltd., the company that had filed the return, had amalgamated with another company. After notice under Section 14 7/148 of the Act was issued and received in the name of Spice Corp. Ltd., the Assessing Officer was informed about amalgamation but the Assessment Order was passed in the name of the amalgamated company and not in the name of amalgamating company. In the said situation, the amalgamating company had filed an appeal and issue of validity of Assessment Order was raised and examined. It was held that the assessment order was invalid. This was not a case wherein notice under Section 14 7/148 of the Act was declared to be void and invalid but a case in which assessment order was passed in the name of and against a juristic person which had ceased to exist and stood dissolved as per provisions of the Companies Act. Order was in the name of nonexisting person and hence void and illegal.”
29. From a reading of the order of this Court dated 6 April 2018 in the Special Leave Petition filed by Skylight Hospitality LLP against the judgment of the Delhi High Court rejecting its challenge, it is evident that the peculiar facts of the case weighed with this Court in coming to this conclusion that there was only a clerical mistake within the meaning of Section 292B. The decision in Skylight Hospitality LLP has been distinguished by the Delhi, Gujarat and Madras High Courts in:
(i) Rajender Kumar Sehgal;
(ii) Chandreshbhai Jayantibhai Patel; and
(iii) Alamelu Veerappan.
30. There is no conflict between the decisions of this Court in Spice Enfotainment (dated 2 November 2017)36 and in Skylight Hospitality LLP (Supra).
31. Mr Zoheb Hossain, learned Counsel appearing on behalf of the Revenue urged during the course of his submissions that the notice that was in issue in Skylight Hospitality Pvt. Ltd. was under Sections 147 and 148. Hence, he urged that despite the fact that the notice is of a jurisdictional nature for reopening an assessment, this Court did not find any infirmity in the decision of the Delhi High Court holding that the issuance of a notice to an erstwhile private limited company which had since been dissolved was only a mistake curable under Section 292B. A close reading of the order of this Court dated 6 April 2018, however indicates that what weighed in the dismissal of the Special Leave Petition were the peculiar facts of the case. Those facts have been noted above. What had weighed with the Delhi High Court was that though the notice to reopen had been issued in the name of the erstwhile entity, all the material on record including the tax evasion report suggested that there was no manner of doubt that the notice was always intended to be issued to the successor entity. Hence, while dismissing the Special Leave Petition this Court observed that it was the peculiar facts of the case which led the court to accept the finding that the wrong name given in the notice was merely a technical error which could be corrected 36 Civil Appeal No. 285 of 2014 and connected cases 37 Special Leave Petition No. 7409 of 2018 under Section 292B. Thus, there is no conflict between the decisions in Spice Enfotainment on the one hand and Skylight Hospitality LLP on the other hand. It is of relevance to refer to Section 292B of the Income Tax Act which reads as follows:
“292B. No return of income, assessment, notice, summons or other proceeding, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, summons or other proceeding if such return of income, assessment, notice, summons or other proceeding is in substance and effect in conformity with or according to the intent and purpose of this Act.” In this case, the notice under Section 143(2) under which jurisdiction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B.”
In this context, it is necessary to advert to the provisions of Section 170 which deal with succession to business otherwise than on death. Section 170 provides as follows:
“170. (1) Where a person carrying on any business or profession (such person hereinafter in this section being referred to as the predecessor) has been succeeded therein by any other person (hereinafter in this section referred to as the successor) who continues to carry on that business or profession,—
(a) the predecessor shall be assesseed in respect of the income of the previous year in which the succession took place up to the date of succession;
(b) the successor shall be assesseed in respect of the income of the previous year after the date of succession.
(2) Notwithstanding anything contained in subsection (1), when the predecessor cannot be found, the assessment of the income of the previous year in which the succession took place up to the date of succession and of the previous year preceding that year shall be made on the successor in like manner and to the same extent as it would have been made on the predecessor, and all the provisions of this Act shall, so far as may be, apply accordingly.
(3) When any sum payable under this section in respect of the income of such business or profession for the previous year in which the succession took place up to the date of succession or for the previous year preceding that year, assesseed on the predecessor, cannot be recovered from him, the 99[Assessing] Officer shall record a finding to that effect and the sum payable by the predecessor shall thereafter be payable by and recoverable from the successor and the successor shall be entitled to recover from the predecessor any sum so paid.
(4) Where any business or profession carried on by a Hindu undivided family is succeeded to, and simultaneously with the succession or after the succession there has been a partition of the joint family property between the members or groups of members, the tax due in respect of the income of the business or profession succeeded to, up to the date of succession, shall be assesseed and recovered in the manner provided in section 171, but without prejudice to the provisions of this Explanation.—For the purposes of this section, “income” includes any gain accruing from the transfer, in any manner whatsoever, of the business or profession as a result of the succession”
Now, in the present case, learned Counsel appearing on behalf of the respondent submitted that SPIL ceased to be an eligible assessee in terms of the provisions of Section 144C read with clause (b) of sub section 15. Moreover, it has been urged that in consequence, the final assessment order dated 31 October 2016 was beyond limitation in terms of Section 153(1) read with Section 153 (4). For the purposes of the present proceeding, we do not consider it necessary to delve into that aspect of the matter having regard to the reasons which have weighed us in the earlier part of this judgment.
32. On behalf of the Revenue, reliance has been placed on the decision of this Court in Commissioner of Income Tax, Shillong v Jai Prakash Singh38 (“Jai Prakash Singh”). That was a case where the assessee did not file a return for three assessment years and died in the meantime. His son who was one of the legal representatives filed returns upon which the assessing officer issued notices under Section 142 (1) and Section 143 (2). These were complied with and no objections were raised to the assessment proceedings. The assessment order mentioned the names of all the legal representatives and the assessment was made in the status of an individual. In appeal, it was contended that the assessment proceedings were void as all the legal representatives were not given notice. In this backdrop, a two judge Bench of this Court held that the assessment proceedings were not null and void, and at the worst, that they were defective. In this context, reliance was placed on the decision of the Federal Court in Chatturam v CIT39 holding that the jurisdiction to assess and the liability to pay tax are not conditional on the validity of the notice : the liability to pay tax is founded in the charging sections and not in the machinery 38 (1996) 3 SCC 525 39 (1947) 15 ITR 302 (FC) provisions to determine the amount of tax. Reliance was also placed on the decision in Maharaja of Patiala v CIT40 (“Maharaja of Patiala”). That was a case where two notices were issued after the death of the assessee in his name, requiring him to make a return of income. The notices were served upon the successor Maharaja and the assessment order was passed describing the assessee as “His Highness…late Maharaja of Patiala”. The successor appealed against the assessment contending that since the notices were sent in the name of the Maharaja of Patiala and not to him as the legal representative of the Maharaja of Patiala, the assessments were illegal. The Bombay High Court held that the successor Maharaja was a legal representative of the deceased and while it would have been better to so describe him in the notice, the notice was not bad merely because it omitted to state that it was served in that capacity. Following these two decisions, this Court in Jai Prakash Singh held that an omission to serve or any defect in the service of notices provided by procedural provisions does not efface or erase the liability to pay tax where the liability is created by a distinct substantive provision. The omission or defect may render the order irregular but not void or illegal. Jai Prakash Singh and the two decisions that it placed reliance upon were evidently based upon the specific facts. Jai Prakash Singh involved a situation where the return of income had been filed by one of the legal representatives to whom notices were issued under Section 142(1) and 143(2). No objection was raised by the legal representative who had filed the return that a notice should also to be served to other legal representatives of the deceased assessee. No 40 (1943) 11 ITR 202 (Bombay) objection was raised before the assessing officer. Similarly, the decision in Maharaja of Patiala was a case where the notice had been served on the legal representative, the successor Maharaja and the Bombay High Court held that it was not void merely because it omitted to state that it was served in that capacity.
33. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the jurisdictional notice was issued only in its name. The basis on which jurisdiction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment on 2 November 2017. The decision in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment.”
6.6 In the case of ‘Savita Kapila’ (Supra), the High Court of Delhi observed as under at Paragraphs- 23 and 24 and 35 to 37;
“23. It is well settled law that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition in at least three contingencies, namely, where the writ petition has been filed for the enforcement of any of the Fundamental Rights or where there has been a violation of the principles of natural justice or where the order or notice or proceedings are wholly without jurisdiction or the vires of an Act is challenged. [See Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others, (1998) 8 SCC 1].
24. Further, the fact that an assessment order has been passed and it is open to challenge by way of an appeal, does not denude the petitioner of its right to challenge the notice for assessment if it is without jurisdiction. If the assumption of jurisdiction is wrong, the assessment order passed subsequently would have no legs to stand. If the notice goes, so does the order of assessment. It is trite law that if the Assessing Officer had no jurisdiction to initiate assessment proceeding, the mere fact that subsequent orders have been passed would not render the challenge to jurisdiction in fructuous. In Calcutta Discount Co. Ltd. Vs. Income Tax Officer, Companies District I Calcutta and Another, AIR 1961 SC 372 the Supreme Court has held as under:-
“27. …… It is well settled however that though the writ of prohibition or certiorari will not issue against an executive authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settled, will issue appropriate orders or directions to prevent such consequences.
28. Mr Sastri mentioned more than once the fact that the Company would have sufficient opportunity to raise this question viz. whether the Income Tax Officer had reason to believe that underassessment had resulted from non-disclosure of material facts, before the Income Tax Officer himself in the assessment proceedings and if unsuccessful there before the appellate officer or the Appellate Tribunal or in the High Court under Section 66(2) of the Indian Income Tax Act. The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action.
29. In the present case the Company contends that the conditions precedent for the assumption of jurisdiction under Section 34 were not satisfied and come to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under Article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons…… “
THE SINE QUA NON FOR ACQUIRING JURISDICTION TO REOPEN AN ASSESSMENT IS THAT NOTICE UNDER SECTION 148 SHOULD BE ISSUED TO A CORRECT PERSON AND NOT TO A DEAD PERSON. CONSEQUENTLY, THE JURISDICTIONAL REQUIREMENT UNDER SECTION 148 OF THE ACT, 1961 OF SERVICE OF NOTICE WAS NOT FULFILLED IN THE PRESENT INSTANCE.
XXX XXX XXX
35. This Court is of the opinion that issuance of notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission. Consequently, Section 292B of the Act, 1961 does not apply to the present case.
36. In Skylight Hospitality (supra) notice was issued to Skylight Hospitality Pvt. Ltd. instead of Skylight Hospitality LLP. In that factual context, this Court had observed, “Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated April 11, 2017. They had objected to the notice being issued in the name of the company, which had ceased to However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was relied and dealt with by them.” The Supreme Court while dismissing the SLP had also observed “In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act.”
37. In any event, Section 292B of the Act, 1961 has been held to be inapplicable viz-a-viz notice issued to a dead person in Rajender Kumar Sehgal (supra), Chandreshbhai Jayantibhai Patel (supra) and Alamelu Veerappan (supra). In all the aforesaid cases, the judgment of Skylight Hospitality (supra) had been cited by the revenue.
IN RAJENDER KUMAR SEHGAL (SUPRA) A COORDINATE BENCH OF THIS COURT HAS HELD THAT SECTION 292BB OF THE ACT, 1961 IS APPLICABLE TO AN ASSESSEE AND NOT TO A LEGAL REPRESENTATIVE.”
6.7 Having gone through the decisions referred to herein above, it is pertinent to note here that, in the case on hand, the Respondent-authorities initiated the proceedings, under Section 148 of the Act, against the dead person, i.e. late Ms. Shah, by issuing notice on 27.03.2021. Subsequently, an amendment in the Act came into force with effect from 01.04.2021. Under the circumstances, we are of the considered opinion that, if, any notice is to be issued under Section 148 of the Act in post 01.04.2021 period, the procedure required under the amended Act was required to be followed.
6.7.1 Here, it is pertinent to note that the notice was issued in the name of the present petitioner, who happens to be the legal heir of the original assessee, i.e. late Ms. Shah. Thus, it becomes clear that, before issuing the notice to the present petitioner, the Respondent-authorities failed to comply with the provisions of the amended Act. It is not being disputed by the Respondent-authorities that the impugned order is also passed in the name of the dead person, i.e. late Ms. Shah, which is a nullity. Under the circumstances, the provisions of Section 292B and 292BB of the Act shall not apply in the facts of the case on hand, as discussed herein above.
6.7.2 Keeping in mind the ratio laid down by the Apex Court on the issue involved in this matter as well as the decisions of the other High Courts, we are of the view that the proceedings initiated by the Respondent-authorities against a dead person, i.e. late Ms. Shah in this case, as well as the impugned orders passed by it deserves to be quashed and set aside.
7. In the result, present petition is ALLOWED and the impugned notices, Dated: 27.03.2021 & 30.06.2021, as well as the impugned order of assessment dated 29.03.2023 are quashed and set aside. Rule is made absolute, accordingly. Direct service is permitted.
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