Income Tax Appellate Tribunal - Mumbai
Avinash V Vyas Legal Heir Of Late Sita ... vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH ' A '
BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND
SHRI R.K. PANDA, ACCOUNTANT MEMBER.
ITA Nos.3538 & 3539/Mum/10
(Assessment Years : 2004-05 & 2005-06)
Shri Avinash V Vyas, Vs. Income Tax Officer,
Legal Heir of Late Sita Vinod Ward 12(2)(3), Mumbai.
Vyas, Ganga Vihar,
174/177, S.V. Road, Andheri(W),
Mumbai-400 022
PAN AASPV6887G
Appellant. Respondent.
Appellant By : Dr. K. Shivaram.
Respondent By : Shri P.C. Maurya.
ORDER
PER SHRI R.K. PANDA :
The above two appeals filed by the assessee are directed against the separate orders dt.19.2.2010 of the learned Commissioner of Income Tax (Appeals)-23, Mumbai relating to Assessment Years 2004-05 & 2005-06 respectively. For the sake of convenience, both the appeals were heard together and are being disposed of by this common order for the sake of convenience.
-2- ITA Nos.3538 & 3539/Mum/10 ITA No.3538/Mum/2010 The Ground No.1 raised by the assessee reads as under :
" The learned Commissioner of Income Tax (Appeals) failed to appreciate that the order passed by the Assessing Officer is bad in law and nullity, as the recording of the reasons was in the name of dead person. Notice under section 148 was issued in the name of dead person, notice under section 143(2) was issued in the name of dead person and even the order under section 143(3) was passed in the name of dead person."
2. The facts of the case in brief are that the original return of income was filed by the assessee on 23.9.2004 declaring total income of Rs.11,320. The return was processed u/s. 143(1) of the Income Tax Act, 1961 (the Act). During the course of assessment proceedings for the A.Y. 2005-06, the Assessing Officer, while examining the details relating to assessee's investment u/s.54EC bonds, noticed that the claim u/s.54EC made in the Assessment Year 2004-05 was not fully acceptable. Accordingly, he recorded the reasons as per the order sheet notings dt.24.12.2007 for reopening the assessment u/s.147 and thereafter issued notice u/s.148. In response to this notice, the assessee filed return of
-3- ITA Nos.3538 & 3539/Mum/10 income on 24.1.2008 declaring the same income. In the original return of income, the assessee declared Long Term Capital Gains on grant of development rights of the property known as Ganga Vihar, more particularly described in the Schedule forming part of the Development Agreement dt.28.11.2003. The entire (100%) capital gain of Rs.4,86,00,000 was offered to tax in the hands of the assessee. The assessee is stated to have invested the entire capital gains in the eligible bonds of NABARD and REC. Thus, the taxable Long Term Capital Gains was declared as NIL in the original return. Along with the original return, a copy of Deed of Family Settlement, copy of development agreement with M/s. Disha Construction and copies of certificates issued by NABARD and REC in respect of investment in the bonds qualifying for exemption u/s.54EC were filed.
3. In the return filed in response to notice u/s.148, the assessee has claimed that only 80% of the originally offered Long Term Capital Gains i.e. Rs.3,88,80,000 was to be considered in the hands of the assessee. Besides this, the assessee has offered Rs.5,99,500 as part of Long Term
-4- ITA Nos.3538 & 3539/Mum/10 Capital Gain being value of flat No.61 along with car parking. Thus, as per this return, the total Long Term Capital Gains computed by the assessee is Rs.3,94,79,500.
3.1 The Assessing Officer called for various details from the assessee including the Deed of Family Settlement. After considering various submissions made by the assessee and arguments advanced before him, the Assessing Officer denied the benefit of exemption u/s.54EC to the assessee for the reason that name of the assessee does not appear on all the certificates. The Assessing Officer held that the claim of only 80% of the Long Term Capital Gains in the returns filed in response to notice u/s.148 is not acceptable since the assessee had offered 100% of the Long Term Capital Gains in the original return. The Assessing Officer further held that the Deed of Family Settlement is not acceptable since as per assessee's own admission, the Deed was to be given effect on the sale of the property. Since the name of the assessee appears either as the sole owner or the joint owner in certificates to the extent of Rs.3,23,70,000 only, the Assessing Officer allowed exemption u/s. 54EC to the extent of
-5- ITA Nos.3538 & 3539/Mum/10 Rs.3,23,70,000 only. The balance amount of Rs.1,71,00,000 was not allowed by him as exempt u/s.54EC since name of the assessee does not appear in the certificates.
4. Before the learned CIT(A), the assessee challenged the validity of the assessment on the ground that the assessment order has been passed on the individual name of the assessee who has already expired on 28.11.2007. It was submitted that neither the assessment can be made on a deceased person nor a notice can be issued on a deceased person. The decision of the Hon'ble Madhya Pradesh High Court in the case of CIT Vs. Dalumal Shyamumal 276 ITR 62 (M.P.) was brought to the notice of the learned CIT(A). It was submitted before him that the defect in passing of the order on the deceased person for the A.Y.2005-06 and issue of notice u/s.147 on a deceased person for A.Y. 2004-05 goes to the very jurisdiction and therefore the assessment order for both the years are liable to be quashed.
-6- ITA Nos.3538 & 3539/Mum/10 4.1 However, the learned CIT(A) was not convinced with the
arguments advanced before him and dismissed the appeal of the assessee by holding as under :
" As per record it is seen that notice u/s.148 was issued on 27.12.2007 in the name of Ms. Sita Vinod Vyas. At the time of issue of notice, there is no intimation on record to indicate that the legal heirs had informed the Assessing Officer of the appellant's demise. In response to the notice return was filed on 24.01.2008, return was signed by Dr.AvinashVyas, L/H of late Sita Vyas. Notices issued by the Assessing Officer were complied with which shows that the L/H voluntarily submitted to the jurisdiction of the Assessing Officer. No objection as has been filed in Ground No.4 of appeal were filed before the Assessing Officer. The assessment order has been passed in the name of Late Mrs. Sita Vinod Vyas, the only irregularity is that the words "through legal heir Dr. Avinash Vyas have not been mentioned. This was only a typographical mistake. In all fairness the Assessing Officer intended to make assessment on the assessee through its legal heir. Since it was an inadvertent and typographical mistake committed by the Assessing Officer. I hereby correct the mistake and treat the assessment made by the Assessing Officer as an assessment on late Ms. Sita Vinod Vyas through L/H Dr. Avinash Vyas. The error is only a technical irregularly and it is worthwhile to mention here that the CIT(A)'s powers are coterminous with that of Assessing Officer and therefore CIT(A) has all powers to make rectification and required correct in the assessment order. It is the duty of CIT(A) to consider the matter in all its aspects, more so where the
-7- ITA Nos.3538 & 3539/Mum/10 Assessing Officer has failed to consider the matter in a proper manner. The mistake committed by Assessing Officer is a simple typographical mistake which is subject to correct and saved by the provisions of section 292B of the Act. It remained a cost of technical defect of wrong mention of name of legal heir without making any difference in the conclusion. It will not make addition/assessment null and void. Section 292Bcan protect the error of wrong mention of name in the assessment order.
Further, if the legal representative is present before the taxing authority or voluntarily appears in the proceeding without service of notice or upon service not addressed to him but to the deceased assessee, and does not object to the continuance of the proceeding against the deceased person, and has been heard by the Assessing Officer in regard to the tax liability of the deceased and invites an assessment on merits, such a legal representative must be taken to have exercised the option of abandoning the technical plea that the proceeding has not been continued against him although in substance and reality it has been so continued. It would not be open to him to take up a plea at the appellate stage as an after thought that the proceeding taken and the assessment order made against the deceased are a nullity. This position has been upheld in CIT Vs. Sumanbhai C Munshaw (1981) 128 ITR 142 (Guj). Similarly, in Maharaja of Patiale Vs. CIT (1943) 11 ITR 202 (Bom) though notice was issued to the deceased, but another received the same filed the return and filed appeal against the assessment, the assessment though not made in the legal representative was held to be valid by the Bombay High Court. Thus this ground is dismissed."
-8- ITA Nos.3538 & 3539/Mum/10
5. The learned counsel for the assessee referring to the letter dt.24.12.2007 addressed to the Assessing Officer, (copy of which is placed at paper book pages 30 & 31) submitted that in the said letter, name of the assessee has been mentioned as Late Sita Vinod Vyas.
Referring to page 39 of the paper book, the learned counsel for the assessee drew the attention of the Bench to the notice issued u/s.148 of the Act wherein the name is mentioned as Mrs. Sita Vinod Vyas.
According to the learned counsel for the assessee, this notice u/s.148 was issued on a dead person. Referring to pages 41 & 42 of the paper book he submitted that in the return filed in response to notice u/s.148 the name of the assessee was mentioned as Late Sita Vinod Vyas and it was singed by Dr.Avinash V Vyas, legal heir of Mrs. Sita Vinod Vyas.
Referring to pages 43 & 44 of the paper book, which are the statement of income, the learned counsel for the assessee again submitted that the name of the assessee was clearly mentioned as "Late Sita Vinod Vyas by L/H Dr. Avinash Vinod Vyas." Referring to page 46 of the paper book, the learned counsel for the assessee submitted that notice u/s. 143(2) was
-9- ITA Nos.3538 & 3539/Mum/10 issued on 1.11.2008 where the name of the assessee has been mentioned as Mrs. Sita Vinod Vyas. He submitted that since the notices issued are on a dead person and the assessment order has been made on a dead person, therefore, the entire order is a nullity since this is not a curable defect. He submitted that the Assessing Officer was duly intimated the death of Sita Vinod Vyas and the Assessing Officer was very much aware of the death of the person. Therefore, the entire assessment order is a nullity. For this proposition, he relied on the decision of the Hon'ble Madhya Pradesh High Court in the case of Shaik Abdul Kadar Vs. ITO (1958) 34 ITR 451 wherein it has been held that notice for reassessment on the person known to the department to be dead is invalid. Referring to the judgement of the Jodhpur Bench of the Tribunal in the case of ACIT Vs. Late Mangi Lal through L/H Badri Prasad Bhatia (2004) 4 SOT 130 (Jd), he submitted that reassessment was held to be null and void where notice u/s. 148 was not served on all the legal heirs of deceased-assessee.
Referring to the decision of the Madhya Pradesh High Court in the case of Dalumal Shyamumal (supra), the learned counsel submitted that when
- 10 - ITA Nos.3538 & 3539/Mum/10 assessee has died, pending any assessment proceedings, the Assessing Officer has to ensure compliance of section 159(2) before any orders are passed. The assessments framed against a dead person without bringing legal representative on record was a nullity. In the instant case, the Assessing Officer issued notice u/s.143(2) on a dead person instead of issuing the same on the legal heirs of the assessee. Therefore the entire assessment order is a nullity. Referring to the decision of Hon'ble Delhi High Court in the case of CIT Vs. Mani Kakar (2009) 18 DTR 145 (Del) and a few other decisions, he submitted that section 292BB is not retrospective in operation. He submitted that assessee's participation does not absolve the Assessing Officer of the statutory duty of issuing and serving notice u/s.143(2) on the legal heirs. He accordingly submitted since the reasons are recorded in notices u/s. 148, on a dead person, the notice issued u/s.143(2) on a dead person and the order u/s.143(3) has been passed on a dead person, therefore, the entire proceedings are a nullity.
- 11 - ITA Nos.3538 & 3539/Mum/10
6. The learned D.R., on the other hand, supported the order of the learned CIT(A). He submitted that this is a mere typographical error. The notices are usually prepared by the clerical staff and this mistake is not a mistake done by Assessing Officer. Much importance should not be given to the lapse of the technicalities. In view of the provisions of section 292B, this is a curable mistake and the assessment cannot be treated as null and void.
7. We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. Admittedly in this case, the assessment was reopened by the Assessing Officer on the basis of examination of details furnished during the assessment proceedings for A.Y. 2005-06. The assessee vide letter dt.24.12.2007 addressed to the Assessing Officer during assessment proceedings for A.Y. 2005-06 has mentioned the name of the assessee as Late Sita Vinod Vyas. The copy of the death certificate of the assessee has been filed in paper book page 32 which
- 12 - ITA Nos.3538 & 3539/Mum/10 was filed before the Assessing Officer as per certification by the legal heir of the assessee and the same has not been disputed by the revenue. The return of income in response to notice u/s.148 has been filed in the name of Late Sita Vinod Vyas and the certification has been done by Dr. Avinash Vinod Vyas, legal heir of Late Sita Vinod Vyas. The computation statement filed along with the return of income also mentions name of the assessee as Late Sita Vinod Vyas by Dr. Avinash Vinod Vyas. All the above things should have prompted the Assessing Officer to issue notices to the legal heirs of Late Sita Vinod Vyas. However, we find the notice u/s.143(2) Dt.1.11.2008 has been issued to Mrs. Sita Vinod Vyas. Even the assessment order u/s.143(3)/147 has been issued in the name of Late Sita Vinod Vyas. This type of conduct on the part of the Assessing Officer shows that either he was unaware of the law he was administering or failed to understand the law. 7.1 It has been held by the Hon'ble Supreme Court in the case of CIT Vs. Amarchand N. Shroff 48 ITR 59 that an order passed by the Assessing Officer against a dead person becomes a nullity. In the instant
- 13 - ITA Nos.3538 & 3539/Mum/10 case, sufficient material was available before the Assessing Officer that the assessee has died. Still the Assessing Officer has passed the order against a dead person. Therefore, in our opinion the entire assessment proceedings becomes a nullity. The various decisions relied on by the CIT(A) are distinguishable and not applicable to the facts of the present case. We, therefore, quash the assessment and the Ground No.1 raised by the assessee is allowed.
7.2 The Hon'ble Supreme Court in the case of Kapurchand Shrimal Vs. CIT reported in 131 ITR 451 has held that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose direction the appeal is preferred to dispose of the whole or any part of the matter afresh, unless forbidden from doing so by nature. In light of the above, the Assessing Officer is at liberty to initiate fresh proceedings or to continue the proceedings from where the irregularities intervened, if otherwise permissible under the law.
- 14 - ITA Nos.3538 & 3539/Mum/10
8. Since the assessee succeeds on this preliminary ground, we are not adjudicating the other grounds as well as the additional grounds raised by the assessee as these become academic in nature.
9. In the result the appeal filed by the assessee is allowed. ITA 3539/Mum/2010
10. The assessee in the grounds of appeal has challenged the order of the CIT(A) in confirming the addition of Rs.63,081 made by the Assessing Officer on protective basis being proportional additional interest on REC Bonds.
11. After hearing both the sides, we find the assessee had claimed exemption u/s.54EC against the Long Term Capital Gains during the Assessment Year 2004-05 being investments made in REC Bonds and NABARD Bonds. Since the entire investment was made out of the funds belonging to the assessee, the Assessing Officer treated the interest from entire investment of Rs.4,94,70,000 as income of the assessee. Since the assessee has offered to tax only interest income of Rs.2,52,324 corresponding to REC Bonds of Rs.3,95,76,020 in the revised return, the
- 15 - ITA Nos.3538 & 3539/Mum/10 Assessing Officer brought to tax the balance amount of Rs.63,081 on protective basis which was confirmed by the CIT(A). Both the parties fairly agreed that the issue raised is consequential to the outcome of the appeal in ITA No.3538/Mum/2010 for the Assessment Year 2004-05. We have already decided the appeal and have treated the assessment as nullity. In view of the same, the ground raised by the assessee is allowed.
12. In the result the both the appeals of assessee are allowed.
Order pronounced in the open Court on 20.07.2011.
Sd/- Sd/-
(D. MANMOHAN) (R.K. PANDA)
VICE PRESIDENT ACCOUNTANT MEMBER
Mumbai,
Dt.20-07-2011.
*Gpr
True copy
- 16 - ITA Nos.3538 & 3539/Mum/10
Copy to :
1. The Assessee.
2. The Assessing Officer.
3. CIT(Appeals)
4. CIT
5. Departmental Representative, ITAT, Mumbai.
6. Guard Copy.
By order Dy./Asst.Registrar, ITAT, Mumbai