Yoginder Singh v. The ACIT, Panchkula Circle, Panchkula
[Citation -2016-LL-1021-238]

Citation 2016-LL-1021-238
Appellant Name Yoginder Singh
Respondent Name The ACIT, Panchkula Circle, Panchkula
Court ITAT-Chandigarh
Relevant Act Income-tax
Date of Order 21/10/2016
Assessment Year 2006-07
Judgment View Judgment
Keyword Tags representative of assessee • reassessment proceedings • reopening of assessment • enhanced compensation • period of limitation • taxability of income • legal representative • condition precedent • issuance of notice • service of notice • valid assessment • interest income • issue of notice • capital gain • valid notice • dead person • legal heir
Bot Summary: The Assessing Officer is not justified in claiming that notice under section 148 of the Act was served upon assessee in the absence of any proof of service of such notice. Assessing Officer should not have proceeded against dead person and should not have issued notice under section 148 of the Act in the name of dead 7 assessee because no name of legal heirs have been mentioned in the notice under section 148. In the present case, notice under section 148 and all subsequent notices under section 148(2) were addressed to the deceased assessee Shri Yoginder Singh which phrase cannot alter the fact that they were addressed to the deceased assessee, who expired long back. All the notices including notice under section 148 have been sent to the dead person notice under section 148 of the Act upon a dead person is invalid. Ii) Decision of Allahabad High Court in the case of CIT V Shital Prasad Kharag Prasad 147 Taxman 441 in which it was held that Notice under section 148 is a jurisdictional notice and served according to provisions of the Act It was also held that it is settled law that serving of valid notice under section 148 is the foundation for initiation of re-assessment proceedings and a condition precedent for validity of notice. Vi) Decision of Delhi High Court in the case of Vipin Walia V ITO 67 Taxman.com 56 in which it was held, Where department intended to proceed under section 147 against assessee wh e n h e wa s a l r e a done so by issuing a notice to legal representative of assessee wi t h i n period of limitation f or issuance of notice. Counsel for the assessee clearly apply to the case of the assessee to hold that notice under section 148 of the Act was invalid and no notice under section 148 have been served upon the assessee.


IN INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SMT. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA No. 373/CHD/2015 Assessment Year: 2006-07 Shri Yoginder Singh, Vs ACIT, Th rough L/H Sh ri Virender Singh, Panchkula Ci rcle, Village - Khangesra, Panchkula. P.O. Kot,Panchkul a. PAN: AKOPS2088N (Appellant) (Respondent) Appellant by : Shri D.C.Aggarwal Respondent by : Shri Sushil Kumar, CIT-DR Date of Hearing : 04.10.2016 Date of Pronouncement : 21.10.2016 ORDERPER BHAVNESH SAINI, JM This appeal by assessee has been directed against order of ld. CIT(Appeals) Panchkula dated 27.02.2015 for assessment year 2006-07. 2. In this appeal, assessee challenged order of ld. CIT(Appeals) in confirming that notice under section 148 and also assessment order under section 143(3)/147 of Income Tax Act are valid. assessee also challenged impugned orders because same have been passed without providing proper 2 opportunity of being heard. It is, therefore, prayed that impugned orders may be quashed. assessee further challenged upholding of addition of Rs. 7,24,46,572/- on account of enhanced compensation and assessing same as capital gain and also not granting exemption under section 10(37) of Act. 3. We have heard ld. Representatives of both parties and perused material available on record. Brief facts of case are that assessee filed return of income on 31.07.2006 declaring total income of Rs. 42,96,825/-. return was processed under section 143(1) of Act on 26.10.2007. Later, proceedings under section 147 were initiated by issue of notice under section 148 of Act dated 25.03.2013 by recording following reasons which were served through speed post : Shri Yoginder Singh, resident of Khangesra, Post Office Kot, District Panchkula received enhanced compensation from LAO on 11.10.2005 at Rs. 7,24,46,572/- and interest on enhanced compensation of Rs. 7,53,20,932/- on 08.04.2006. Interest income has been assessed vide this office order dated 30.12.2009 under section 143(3) for assessment year 2007-08 and capital gains accrued on account of enhanced compensation has escaped assessment as land acquired has been treated non-cultivable land by this office . 3 According to Assessing Officer, notice under section 143(2) was issued on 25.09.2013 and was served upon assessee on same day. assessee filed reply dated 16.01.2014 stating notice under section 143(2) is time barred. In response to final Show Cause Notice, Shri Neeraj Jain, C.A. attended proceedings and submitted that no notice have been served under section 148 for assessment year under appeal. Assessing Officer did not accept contention of assessee because notices and questionnaire were issued and served by Speed Post and final show cause served through affixture. Assessing Officer computed income of assessee by making addition on account of capital gains in sum of Rs. 7.24 Cr and passed assessment order under section 143(3)/147 of Act dated 28.02.2014 in name of assessee i.e Shri Yoginder Singh . 4. assessee challenged initiation of re- assessment proceedings as well as addition on merit before ld. CIT(Appeals) on various grounds which are reproduced in impugned order in which assessee briefly submitted that Assessing Officer was not justified in making assessment where notice under section 148 has not been served upon assessee therefore, assessment order is invalid and be quashed. claim of Assessing Officer that notice under section 148 dated on 25.03.2013 was issued and served 4 upon assessee is not justified as assessee expired on 08.04.2008. Assessing Officer is not justified in claiming that notice under section 148 of Act was served upon assessee in absence of any proof of service of such notice. Assessing Officer is not justified in passing assessment order in name of deceased without bringing on record all legal heirs of deceased assessee Shri Yoginder Singh. assessment order passed in name of assessee Shri Yoginder Singh who had expired on 08.04.2008, therefore, assessment order passed in name of deceased assessee is invalid. addition on merit was also challenged. 5. ld. CIT(Appeals) considered all submissions of assessee in detail and noted that notice under section 148 dated 25.03.2013 was issued in name of Shri Yoginder Singh ( through legal heirs). notice under section 148 of Act returned back on 03.04.2013 with remarks that Returned to f6 - 7 years theref ore, returned back to sender . ld. CIT(Appeals) noted that thereafter, statutory notices were sent for completion of assessment which have been served on same day as well as through affixture. ld. CIT(Appeals) considered service of notice in mode prescribed under section 282 of Act and deemed validity of certain notices as per Section 292BB 5 of Act. ld. CIT(Appeals) relied upon certain decisions in support of his findings that notice under section 148 have been duly served through legal heirs. It was also noted that copy of assessment order for assessment year 2007-08 was already served upon legal heirs. This shows that legal heirs were well aware about action to be taken for assessment year under appeal i.e. 2006-07 and apparently notice was refused to be accepted by legal heirs which was returned with remarks. ld. CIT(Appeals), therefore, held that notice under section 148 have been validly issued and served upon assessee within time. 5(i) ld. CIT(Appeals) on merit found that in assessment year 2007-08, Assessing Officer held that enhanced compensation is taxable. It was also noted that ld. CIT(Appeals) in assessment year 2007-08 has held that enhanced compensation received by assessee is taxable and dismissed appeal of assessee. ld. CIT(Appeals) following his order for assessment year 2007-08, confirmed addition on merit as well. He has also confirmed order of Assessing Officer in disallowing exemption under section 10(37) of Act following his order for assessment year 2007-08. appeal of assessee on these grounds was, accordingly, dismissed. 6 6. ld. counsel for assessee reiterated submissions made before authorities below. He has referred to PB-10 which is Death Certificate of assessee proving that assessee expired on 08.04.2008. PB-13 is copy of notice under section 148 dated 25.03.2013 in name of Shri Yoginder Singh ( through legal heirs) which was returned to Assessing Officer with remarks that addressee had already expired 6-7 years back. Copy of assessment order for assessment year 2007-08 under section 143(3) dated 30.12.2009 have been filed at page B-2 of Paper Book which is in name of legal heirs of Late Shri Yoginder Singh in which Assessing Officer has mentioned that assessee had died during pendency of assessment proceedings and after inquiries, legal heir of deceased Shri Yoginder Singh were brought on record namely Smt. Sumitra Devi, wife, Shri Virender Singh, son, Shri Naresh Singh, son, Shri Pradeep Singh, son and Smt. Sushma Devi, daughter. ld. counsel for assessee, therefore, submitted that on date of issue of notice under section 148 of Act dated 25.03.2013, Assessing Officer was aware of fact that assessee had already expired on 08.04.2008 and his legal heirs were already on record. Therefore, Assessing Officer should not have proceeded against dead person and should not have issued notice under section 148 of Act in name of dead 7 assessee because no name of legal heirs have been mentioned in notice under section 148. 6(i) PB-9 is reply of legal heirs of assessee before Assessing Officer dated 24.02.2016 in which also it was intimated to Assessing Officer that Shri Yoginder Singh had already expired on 08.04.2008. ld. counsel for assessee, therefore, submitted that notice under section 148 issued against dead person is invalid and was never served upon dead person or upon legal heirs of assessee. There is no question of refusal by legal heirs because no name of legal heirs have been mentioned in notice under section 148 of Act. No proper opportunity have been given to legal heirs of assessee and there is no service of notice under section 148. assessment order is passed in name of dead person, therefore, assessment order is invalid and nullity. ld. counsel for assessee submitted that service of valid notice under section 148 is essential to make re-assessment. In this case, no notice under section 148 of Act have been served upon assessee or legal heirs therefore, it is invalid. Thus, valid service of notice on assessee strictly in terms of Section 148 read with Section 282(1) of Act is jurisdictional requirement. He has, further submitted that it was presumption of Assessing Officer/CIT(A) about service of notice which is wholly erroneous and illegal. onus is upon 8 revenue to prove that assessee or legal heirs have been served notice under section 148 of Act. In present case, notice under section 148 and all subsequent notices under section 148(2) were addressed to deceased assessee Shri Yoginder Singh ( through legal heirs) which phrase cannot alter fact that they were addressed to deceased assessee, who expired long back. Assessing Officer was aware from record that assessee Shri Yoginder Singh was not living, therefore his legal heirs were to be brought on record who have already been brought on record in assessment year 2007-08. Therefore, all notices including notice under section 148 have been sent to dead person, therefore, notice under section 148 of Act upon dead person is invalid. 6(ii) ld. counsel for assessee further submitted that no valid assessment can be made on dead person. Once assessee was dead, no valid assessment can be made upon him unless proceedings are initiated against all representatives ( legal heirs of assessee). Section 159 also requires that Assessing Officer should implead all legal heirs after death of assessee for carrying out further proceedings. ld. counsel for assessee relied upon following decisions: i) Decision of Madras High Court in case of CIT V M. Hemanathan 68 Taxman.com.22 in which it was held that, 9 Where notice issued in name of deceased- then, participated in proceedings, such against dead person . ii) Decision of Allahabad High Court in case of CIT V Shital Prasad Kharag Prasad 147 Taxman 441 in which it was held that Notice under section 148 is jurisdictional notice and served according to provisions of Act It was also held that it is settled law that serving of valid notice under section 148 is foundation for initiation of re-assessment proceedings and condition precedent for validity of notice. iii) Order of ITAT Agra Bench (TM) in case of ITO V Sikander Lal Jain 45 SOT 113 in which it was held that Notice issued in name of dead person was invalid . It was also held . iv) Order of ITAT Bombay Bench in case of Mrs. Jerbanoo N. Wadia Vs ACIT 36 ITD 185 in death is illegal and void . 10 v) Decision of Madhya Pradesh High Court in case of Sheikh Abdul Kadar V ITO 34 ITR 451 in which it was held that notices and all because legal representatives had been assessed in subsequent years taking into account assets of deceased S . In these . vi) Decision of Delhi High Court in case of Vipin Walia V ITO 67 Taxman.com 56 in which it was held, Where department intended to proceed under section 147 against assessee wh e n h e wa s l r e done so by issuing notice to legal representative of assessee wi t h i n period of limitation f or issuance of notice . vii) Decision of Allahabad High Court in case of Lal Chand Aggarwal V CIT, Agra 68 Taxman.com 102 in which it was held that Where notices issued to assessee for re- s s e s s me n t for bogus sale of shares we r e 11 7. ld. counsel for assessee further submitted that ld. CIT(Appeals) relied upon order of ITAT Agra Bench in case of ITO Vs Lal Chand Aggarwal 18 Taxman.com 125 in support of his findings which have been overruled by Hon'ble Allahabad High Court in above case of Lal Chand Aggarwal Vs CIT (supra). ld. counsel for assessee, therefore, therefore submitted that issue of notice under section 148 of Act against dead person and passing of assessment order in name of dead person is invalid and void, same may be set aside and quashed. 8. On other hand, ld. DR relied upon orders of authorities below and submitted that Assessing Officer reopened assessment on basis of findings given in assessment year 2007-08. LRs of assessee were aware of fact and taxability of interest and enhancement of compensation. Notices were issued under section 148 and 143(2) etc. through legal heirs which have been refused to accept by legal heirs. Refusal would amount to acceptance of notice as per law. He has submitted that if name of LRs are not mentioned in assessment order, it is only irregularity and relied upon decision of Hon'ble Supreme Court in case of CIT V Jai Parkash Singh 219 ITR 737 in which it was held that, Non service of notice under section 143(2) against 9 out of 10 legal representatives of deceased, did not invalidate 12 . Ld. DR also relied upon decision of Gujrat High Court in case of Atulbhai Hiralal Shah Vs DCIT 73 Taxman.com 320 (Gujrat) in which it was held as under : Where Assessing Officer had reopened assessment of assessee and sent notice to him through postal department at address contained in his PAN card, which was returned back with remark 'left and assessee challenged reopening of assessment contending that remark 'left' was totally incorrect, since assessee had not joined postal department to question why remark 'left' was made, only on ground of non service of notice, reassessment proceedings could not be terminated which have been confirmed by Hon'ble Supreme Court in case of Atulbhai HiralalShah Vs DCIT 73 Taxman.com 325. 9. ld. DR also relied upon decision of Madras High Court in case of Areva T&D India Ltd. 165 Taxman 123 in which it was held that Where re- s s e s s me n t order wa s passed by Assessing Off icer without considering objections of assessee in statutory notice under section 143(2), it amounted to nothing but procedural irregularities and hence, same ld. DR also relied upon decision of Hon'ble Punjab & Haryana High Court in case of V.R.A. Cotton Mills (P) Ltd. V UOI CWP No. 18193 of 2011 dated 27.09.2011 13 in which issue of service of notice under section 143(2) was considered and it was held that, 10. We have considered rival submissions. It is not in dispute that assessee had expired on 08.04.2008, copy of Death Certificate is also placed on record. It is also admitted fact that reasons for re-opening of assessment in assessment year under appeal 2006- 07 were recorded on basis of assessment order passed for assessment year 2007-08 under section 143(3) making addition on account of capital gains on account of interest on enhanced compensation. Copy of assessment order for assessment year 2007-08 dated 30.12.2009 is also placed on record which have not been disputed by ld. DR. In this assessment order, Assessing Officer has specifically mentioned that assessee Shri Yoginder Singh had died during pendency of assessment proceedings and Inspector of his office was directed to make necessary inquiries for submitting reports regarding legal heirs of late Shri Yoginder Singh so that they can be impleaded as representatives in pending assessment proceedings. On basis of report of Inspector, it was brought on record that legal heirs of late Shri Yoginder Singh are Smt. Sumitra Devi (wife) Shri Virender Singh, Shri Naresh Singh, Shri Pradeep Singh (sons) and Smt. Sushma Devi daughter. Assessing Officer passed 14 assessment order in names of legal heirs of late Shri Yoginder Singh. It is, therefore, clear that Revenue Department and Assessing Officer were aware of fact that Shri Yoginder Singh had already expired on 08.04.2008 and his legal heirs have been brought on record. After passing of assessment order for assessment year 2007-08 on 30.12.2009, Assessing Officer on these basis, reopened assessment for assessment year under appeal i.e. 2006-07 by recording reasons under section 148 of Act and issued notice under section 148 on 25.03.2013, copy of which is placed on record which is issued in name of deceased assessee Shri Yoginder Singh (assessee) through Legal Heirs This notice is issued in name of dead person without mentioning names of his legal heirs which were within knowledge of Assessing Officer as per assessment order for assessment year 2007-08. No reasons have been explained as to why legal heirs of deceased assessee were not brought on record and why names of legal heirs were not mentioned in notice under section 148 of Act. It is also clear that notice under section 148 was not issued in names of legal heirs of assessee. notice under section 148 have been issued only in name of deceased assessee i.e. dead person. 11. Hon'ble Delhi High Court in case of R.C.Jain 15 (Decd) Vs CIT & others 273 ITR 384 held as under : and yet no proper action was taken and proceedings we r e commenced against dead person. , under Section 158BC and Section 142 of Act,1961. e period given to assessee f or f iling return. In vie w of this, as principles of natural In this case, Hon'ble High Court observed that no explanation was rendered what-so-ever as to why proceedings were commended against dead person and directed CIT to render explanation in this behalf within period of 15 days. 13. Hon'ble Madhya Pradesh High Court in case of CIT Vs Smt. Santosh Rani 219 ITR 301 held as under : person N. No appeal lies against dead person. 16 14. decisions cited by ld. counsel for assessee also support case of assessee that when notice under section 148 have been issued on dead person, it would be invalid, void and should be considered as nullity. It may also be noted here that despite above facts in knowledge of A.O., A.O. was further intimated vide reply dated 24.02.2014 by legal heirs of assessee that assessee had already expired on 08.04.2008, Assessing Officer proceeded to pass impugned re-assessment order dated 28.02.2014 under section 143(3)/147 of Act in name of deceased assessee Shri Yoginder Singh . Assessing Officer, therefore, passed assessment order in name of dead person i.e. Shri Yoginder Singh without even mentioning name of legal heirs of assessee in assessment order. decisions relied upon by ld. counsel for assessee, therefore, clearly apply to facts and circumstances of case that Assessing Officer issued invalid notice under section 148 of Act as well as passed assessment order in name of dead person which are not merely irregularity but illegality committed by Assessing Officer which is not curable. Such re-assessment proceedings are nullity being initiated against dead person. 15. ld. DR contended that legal heirs were aware of facts and taxability of income on account of capital gains, therefore, when notice under section 148 17 was issued, it was refused to accept by legal heirs. contention of ld. DR is not tenable because no notice under section 148 was issued in names of legal heirs. notice under section 148 was issued in name of Shri Yoginder Singh i.e. dead person ( through legal heirs) without mentioning names of legal heirs. Assessing Officer was well aware of fact that assessee had already expired on 08.04.2008, therefore, he should not have issued notice dated 25.03.2013 under section 148 of Act in name of deceased assessee. It is for Assessing Officer to bring legal heirs on record in assessment order in appeal on basis of assessment order already passed in assessment year 2007-08, because re-opening is done on basis of assessment order passed in assessment year 2007-08 therefore, Assessing Officer was aware of fact that proceedings shall have to be commenced against legal heirs only. Assessing Officer cannot leave it to postal authorities to verify names of legal heirs of assessee while serving notice upon dead person. When no notice have been issued under section 148 in names of LRs of deceased assessee, therefore, there is no question of refusal to accept such notice under section 148 by legal heirs. It is presumption of ld. CIT(Appeals) only that notice under section 148 have been refused to accept by legal heirs. ld. DR also contended that when names of legal 18 heirs are not mentioned in notice and re-assessment order, it is merely irregularity. Notice under section 148 is jurisdictional notice and have been issued in name of dead person. It is, therefore, clearly illegality and nullity in issuing notice under section 148 in name of dead person. re-assessment order is also passed in name of dead person, therefore, re- assessment order is illegal, invalid, null and void and shall have to be declared nullity. It is not mere irregularity. Decisions cited by ld. DR are, therefore, not applicable to facts and circumstances of case. 16. ld. CIT(Appeals) also referred to provisions of Section 292BB of Act and provisions of Section 282 for service of notice. Sine notice under section 148 of Act and other statutory notices have been issued in names of dead person, there is no question of having any irregularity in same. Further, Section 292BB prohibits assessee in any enquiry or proceedings to raise plea of non service, un-timely service or improper service of notice, if he has participated in assessment or re-assessment proceedings and such objection has not been raised before completion of such assessment or re-assessment proceedings. notice under section 148 and others were issued in name of dead person. Therefore, there is no question of applicability of such provisions 19 against assessee or his legal heirs. It is also noted that this Section was inserted into Income Tax Act by Finance Act, 2008 w.e.f. 01.04.2008 and thus, will not be applicable to assessment year under appeal i.e. 2006-07. ITAT Delhi (SB) in case of Kuber Tobacco Products Pvt. Ltd. Vs DCIT 28 SOT 292 held that Sec 292BB cannot be construed retrospectively as same have been made applicable by Statute w. e . f . 01.04.2008, theref ore Section 292BB is applicable years . Therefore, findings of ld. CIT(Appeals) cannot sustain in law. 16(i) ld. CIT(A) relied upon order of ITAT Agra Bench in case of Lal Chand Aggarwal (supra) which have been held over-ruled by Hon'ble Allahabad High Court. ld. CIT (A) also relied upon certain decisions in support of his findings but these decisions are clearly distinguishable on facts and circumstances of case as noted above. decisions cited by ld. counsel for assessee clearly apply to case of assessee to hold that notice under section 148 of Act was invalid and no notice under section 148 have been served upon assessee. assessment order against dead person is nullity and is void. 17. Considering above discussion, we are of view that notice under section 148 dated 25.03.2013 issued is invalid and have not been served upon deceased 20 assessee or legal heirs which is essential to make re-assessment order. No valid re-assessment order have been passed being it is passed in name of dead person. In this view of matter, we set aside and quash notice under section 148 of Act as well as re-assessment order under section 143(3)/147 dated 28.02.2014. ld. CIT(Appeals) was, therefore, not justified in upholding re-opening of assessment in matter. Resultantly, we quash impugned order as well. 18. Since we have set aside and quashed re- assessment order, therefore, all additions made therein would stand deleted. addition on merit is not decided here because it is left for academic discussion only. 19. In result, appeal of assessee is allowed. Order Pronounced in Open Court. Sd/- Sd/- (ANNAPURNA GUPTA) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 21st October,2016. Poonam Copy to: 1. Appellant 2. Respondent 3. CIT(A) 4. CIT,DR Assistant Registrar, ITAT/CHD Yoginder Singh v. ACIT, Panchkula Circle, Panchkula
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