Income Tax Appellate Tribunal - Jaipur
Ito, Jaipur vs Suman Lata Gehlot L/H Shri Rajendra ... on 10 November, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM
vk;dj vihy la-@ITA No. 411/JP/2016
fu/kZkj.k o"kZ@Assessment Year : 2007-08
Income Tax Officer, cuke Smt. Suman Lata Gehlot,
Ward-2(3), Vs. L/H Shri Rajendra Singh Gehlot,
Jaipur. G-139, Mandir Marg, Shyam Nagar,
N.S. Road, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABBPG 7574 M
vihykFkhZ@Appellant izR;FkhZ@Respondent
izR;k{[email protected]. No. 17/JP/2016
(Arising out of vk;dj vihy la-@ITA No. 411/JP/2016)
Smt. Suman Lata Gehlot, cuke Income Tax Officer,
L/H Shri Rajendra Singh Gehlot, Vs. Ward-2(3),
G-139, Mandir Marg, Shyam Nagar, Jaipur.
N.S. Road, Jaipur.
LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: ABBPG 7574 M
izR;k{ksid@Objector izR;FkhZ@Respondent
jktLo dh vksj ls@ Revenue by : Shri R.A. Verma (Addl.CIT).
fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.C. Jain (CA).
lquokbZ dh rkjh[k@ Date of Hearing : 28/10/2016
mn?kks"k.kk dh rkjh[k@ Date of Pronouncement: 10/11/2016
2 ITA 411/JP/2016 & C.O. 17/JP/2016_
ITO Vs Smt. Suman Lata Gehlot
vkns'k@ ORDER
PER: LALIET KUMAR, J.M. The appeal by revenue and cross objection by assessee arise from the order dated 29/02/2016 of Ld. CIT (A)-I, Jaipur for the A.Y. 2007-08.
Effective ground of revenue's appeal is as under:-
Ground in Revenue's Appeal.
"Whether on the facts and in the circumstances of the case and in law the ld. CIT(A) has erred in holding that Capital Gain was to be taxed in the year when sale agreement was partly executed and not in the year when sale agreement was fully executed and got registered with Registration and Stamp authority."
2. The Assessing Officer has observed that the assessee e-filed her return for the year under consideration on 31/03/2008 declaring total income of Rs. 4,18,380/-. The assessee derived income from 'income of other sources'. The assessee's husband (Rajendra Singh Gehlot, since deceased on 09-09-2013) during the previous year ended on 31-03-2007 had filed the return of income declaring therein the income from consultation as a Doctor and interest on capital gain bonds and of other interest receipts.
2.1 The assessee was issued summon No. ITO/Wd-2(4)/JPR/2013- 14/4384 dated sent by speed post on 06.01.2014 to file certain details as specified in the notice u/s 131 on 16-01-2014.
3 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot 2.2 The ld. AR for the assessee Shri S.C. Jain has filed a response on 09/01/2014 stating therein that Dr. Rajendra Singh Gehlot has passed away on 09/09/2013 and therefore, the notice U/s 131 of the Act cannot be complied. Alongwith the response, the death certificate issued by the Jaipur Municipal Corporation of Dr. Rajendra Singh Gehlot was also enclosed.
2.3 The Assessing Officer despite being informing/indicating of the death of the assessee Dr. Rajendra Singh Gehlot had issued the notice in the name of deceased Dr. Rajendra Singh Gehlot u/s 148 dated 14.03.2014. The notice was issued in the name of Dr. Rajendra Singh Gehlot, by the Assessing Officer, despite knowing fully well that he had passed away on 09/09/2013.
2.4 The AR namely Shri S.C. Jain had filed a reply to the notice dated 14/03/2014 and has submitted that the reopening initiated, in law is not maintainable and is therefore, required to be withdrawn. The ld. AR for the reason best known has not mentioned in this letter about the death of Dr. Rajendra Singh Gehlot and the reply was filed by him for and on behalf of the assessee namely late Shri Rajendra Singh Gehlot. In continuation of the above said reply, the ld AR of the assessee had again 4 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot filed a reply on behalf of the deceased late Shri Rajendra Singh Gehlot on 26/06/2014 objecting to the proceedings initiated U/s 147 of the Act.
However, the ld. A.O. has passed an order disposing of the objection U/s 148 of the Act vide order dated 19/06/2014. In the said order, the ld.
A.O., has dealt with the objections of the assessee dated 23/06/2014.
2.5 After deciding the objections, the ld. A.O. had passed the assessment order on 09/03/2015 thereby assessing the income of the assessee to an amount of Rs. 1,65,59,688/-.
3. The assessee feeling aggrieved by the order have filed the appeal before the ld. CIT(A) on the following grounds:
1. That the learned Assessing Officer had erred at law as well as in facts in issuing notice u/s 148 dated 14.03.2014 on a deceased person and in the name of the deceased person despite having information that the Dr. Rajendra Singh Gehlot has passed away on 09-09-2013.The proceedings u/s 148 are invalid.
2. That the learned Assessing Officer had erred at law as well as in facts in taking the value applied by the Stamp Authority of Rs. 1,61,41,308/- as chargeable to tax without allowing any deductions for the cost of acquisition and investment made by the assessee in the bonds u/s 54EC.
3. That the learned Assessing Officer had erred at law as well as in facts in completing the assessment in the 5 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot name of Smt. Suman Lata Gehlot as L/H of Dr. Rajendra Singh Gehlot when the notice was issued u/s 148 in the name of the deceased Dr. Rajendra Singh Gehlot.
4. That the learned Assessing Officer had erred at law as well as in facts in taxing the transaction of sale of property MP-1, Lai Kothi Scheme, Jaipur in assessment years 05 - 06 and again in A.Y. 07 -08. How the transaction of sale is to be assessed in two assessment years.
4. The ld. CIT(A) had recorded the finding on ground No. 1 in the following manner:
"(i) I have carefully perused the submissions of the appellant, assessment order and the material placed on record. The brief facts of the case are that Shri Rajendra Singh Gehlot has filed its return of income for the assessment year under consideration on 31.03.2008 declaring total income of Rs.
4,18,380/-. The AO received information from the ADIT(lnv), Jaipur that during the year under consideration, Rajendra Singh Gehlot sold property situated at MP-1, Lai Kothi, Jaipur for a consideration of Rs. 76,56,900/- to M/s Star Crown Popcorn P Ltd which was valued by the Sub Registrar for the purposes of stamp duty at Rs. 1,61,41,308/- and on verification from the return of income filed by the appellant, it was observed by the AO that it had not shown such transaction thereof. Consequently, in view of the provisions of section 50C of the Act, the AO initiated proceedings u/s 6 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot 147 of the Act as the difference amount of Rs. 84,84,408/- (Rs. 1,61,41,308 - Rs. 76,56,900) between the sale consideration and the valuation as per the stamp duty has escaped assessment and the notice u/s 148 was issued in the name of Rajendra Singh Gehlot on 14.03.2014 by ITO, Ward 2(4), Jaipur.
(ii) During the appellate proceedings, the appellant challenged the validity of notice issued u/s 148 on 14.03.2014 in the name of Rajendra Singh Gehlot on the plea that notice was issued in the name of a deceased person despite of giving information of his death on the following grounds:
* The ITO, Ward - 2(4), Jaipur vide summon dated 02.01.2014 issued u/s 131 of the Act to Shri Rajendra Singh, S/o Shri Ram Prakash, G-139, Shyam Nagar Vistar, New Sanganer Road, Jaipur asked him to provide the information and details as specified in the summon.
* A reply dated 09.01.2014 to the above summon dated 2.1.2014 by the widow on behalf of the Late Dr. Rajendra Singh Gehlot was filed in the office of the ITO, Ward - 2(4) on 10.01.2014 by stating that Dr. Rajendra Singh Gehlot, has passed away to heavenly abode on 9thSepember, 2013 and no more alive, and enclosing therein a copy of the Death Certificate of Dr. Rajendra Singh Gehlot dated 09.09.2013.
7 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot * The ITO, Ward - 2(4), Jaipur issued a notice u/s 148 dated 14.03.2014 in the name of deceased Shri Rajendra Singh Gehlot stating that the income for assessment year 2007 - 08 had escaped assessment. This notice was sent by speed post and was received by the appellant's Widow - Dr. Suman Lata Gehlot.
* The ITO, Ward - 2(4), Jaipur issued a notice u/s 142(1) with detailed query letter on 29.04.2014 to Rajendra Singh Gehlot to furnish the details and information relating to the assessment proceedings for assessment year 07 - 08 and the proceedings were attended by the AR and a letter dated 09.05.2014 wherein it was again informed to the ITO, Ward 2(4), Jaipur that Rajendra Singh Gehlot passed away in September, 2013 and death certificate has already been filed.
* The ITO, Ward - 2(4), Jaipur vide letter dated 30.05.2014, issued again in the name of the deceased, Dr. Rajendra Singh Gehlot provided the copy of reasons recorded and required further details to be furnished.
* The reasons were recorded in the name of Dr. Rajendra Singh Gehlot when on the date of recording of reasons the named person was not alive and was died and the information of this was available with the concerned ITO.
* The recording of reasons u/s 147 were in the name of deceased person as well as against such property which 8 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot stands also disclosed in the return in A.Y. 05 - 06 and stands assessed vide order u/s 143(3), then how the same can be taken up again in A.Y. 07 - 08 which indicates the change of opinion. The proceedings taken up u/s 148 because of the change of opinion as held by the various Courts of the Country including the Apex Court are not the valid proceedings. The AR relied upon a number of judicial pronouncements in support of its contention that the issuance of notice and recording of reasons in the name of deceased person are not valid under the IT Act including the recent decision of the ITAT, Delhi Bench dated 2nd July, 2015 in the case of Late Sh. Somnath Malhotra, through Smt. Raj Rani Malhotra Vs ITO in ITA No. 519/Del/2013 for the AY 2003-04.
(iii) I have duly considered the above contentions of the appellant. It is noted from the copy of the notice u/s 148 dated 14.03.2014 that it was issued in the name of Shri Rajendra Singh Gehlot. It may be mentioned that the decisions relied upon by the appellant are distinguishable on facts. In the case of Somnath Malhotra, the notice u/s 148 was served upon the Munim of the assessee therein whereas in the instant case under consideration, the notice u/s 148 was received by Smt. Suman Lata Gehlot, wife and legal heir of deceased Sh. Rajendra Singh Gehlot. In the case of Avinash Vyas, the assessment was made in the name of the 9 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot deceased assessee and not in the name of legal heir. In the instant case under consideration, the assessment was made in the name of legal heir of the deceased. In the case of Veema Vij, the income tax return was filed by the legal heir and notice u/s 148 was issued in the name of the deceased assessee. In the instant case under consideration, the income tax return for the year under consideration was filed by the deceased assessee himself while he was alive.
(iv) It may be mentioned that as per provisions of section 2(7) of the Act, an assessee inter alia includes every person who is deemed to be an assessee under any provision of IT Act. Further, in view of the provision of section 159(3) of the Act, the legal representative of the deceased shall for the purposes of this Act be deemed to be an assessee and in view of the provisions of section 159(2)(b), the proceedings can be taken against the legal representative. It is an undisputed fact that the notice u/s 148 was served upon Dr. Suman Lata Gehlot, the wife and legal heir of deceased Shri Rajendra Singh Gehlot. It may be mentioned that the Hon'ble High Court of Delhi in the case of Braham Parkash Vs ITO 275 ITR 242 (Del), held that:
"Obviously, the notice could not have been served upon the deceased. Moreover, there was nothing on record to show that the notice under section 148 was served on the petitioner either. The revenue had submitted that section 148 mandated service of the notice on the assessee, however, in view of section 2(7) read with section
10 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot 159(2)(b), the petitioner, being a legal representative of the deceased, would be deemed to be an assessee. However, nothing was placed before the High Court to show that any notice was served even on the deemed assessee. As such, it was clear that notice under section 148 was neither served on the original assessee nor on the deemed assessee. Therefore, the subsequent proceedings were bad in law as there was breach of the principles of natural justice as well as the mandatory provisions contained in section 148. The principle of audi alteram ought to have been followed by the revenue. Therefore, the notice of demand, the notice under section 221(1) as also the order of assessment and the order of penalty were to be quashed. In other words, all proceedings, notices, orders pursuant to the said notice under section 148 were quashed and set aside. The writ petitions were accordingly, allowed."
(v) It may be mentioned that in a recent decision in the case of Vipin Walia Vs ITO W.P.(C) 8273/2015 in order dated 15.02.2016, the Hon'ble Delhi High Court has considered the above decision in the case of Braham Parkash Vs ITO (Supra) and stated therein but did not over rule the same.
(vi) It was the contention of the appellant that there was change of opinion while reopening the assessment of Rajendra Singh Gehlot for the year under consideration. It is noted that the appellant has not brought on record any material, which may suggest that assessment u/s 143(3)/144 was passed earlier for the assessment year under consideration i.e. AY 2007-08. Therefore, there is no question of forming any opinion and consequently there was 11 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot no change of opinion as alleged by the appellant. Therefore, this contention of the appellant is failed.
(vii) In view of the above discussion, It is held that the AO was justified in issuing notice u/s 148 of the Act even in the name of deceased Sh. Rajendra Singh Gehlot which was duly received by the legal heir of Rajendra Singh Gehlot. Hence, these grounds of appeal are hereby rejected."
5. The ld. CIT(A) has allowed the appeal on merit i.e. on other grounds, however, ground No. 1 before him was dismissed for the reasons stated hereinabove. The L.Rs. of the assessee namely Smt. Suman Lata Gehlot has filed the C.O. against the dismissal of the ground as mentioned hereinabove raising the following grounds:-
"1. Whether the learned CIT(Appeals) is correct in holding that the issuance of notice U/s 148 dated 14/03/2014 after recording of reasons U/s 147 in the name of deceased Dr. Rajendra Singh Gehlot who passed away on 09/09/2013 despite having information of his death given to the ITO vide letter dated 09/01/2014 in response to notice U/s 131.
2. Whether the learned CIT(Appeals) is correct in holding that the service of notice U/s 148 of Dr. Rajendra Singh Gehlot on Smt. Suman Lata Gehlot sent by 12 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot speed post was after making her as Legal Heir of the deceased.
3. Whether the learned CIT(Appeals) is justified in holding that the proceedings completed U/s 144 read with section 147 and the notice issued U/s 148 are the valid proceedings."
6. The ld AR for the C.O. appellant has submitted that the order passed by the ld. CIT(A) was contrary to the provisions of law. It was submitted that once the ld. A.O. and CIT(A) were duly informed before the issuance of notice U/s 148 about the death of Dr. Rajendra Singh Gehlot on 09/09/2013, there was no reason for the A.O. to issue the notice U/s 148 of the Act. Issuance of the notice in the name of the deceased person by the A.O., is bad in law and is all the proceedings emanating from such notice, are required to be declared as null and void or nonest in the eyes of law.
7. On the other hand, the ld Sr. DR of the revenue has submitted that though it is correct that the AR has informed the A.O. about the death of Dr. Rajendra Singh Gehlot at the time of filing the response pursuant to the notice U/s 131 of the Act, but the legal heirs and the AR cannot be permitted to say that the proceedings were bad in law after they had 13 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot filed their reply and objections to the proceedings. It was further submitted that the reply to the notices were filed by the ld. AR on behalf of the assessee, if the argument of the assessee is accepted then who was instructing the ld. AR to file the reply to the notices, therefore, it was concluded that the ld. AR cannot be permitted to take the benefit of their own wrong by not mentioning about the death of late Dr. Rajendra Singh Gehlot in their reply U/s 148 of the Act.
8. We have heard the argument and have perused the record. The A.O. namely Shri Sunil Verma had issued the summons U/s 131 of the Act asking to produce the evidence namely copy of the ITR returns for A.Y. 2007-08, all books of accounts relating to the business for last three years and copies of sale and purchase deeds of plot No. MP-1, Lal Kothi, Jaipur and the AR in response thereto had categorically mentioned about the death of late Dr. Rajendra Singh Gehlot on 09/09/2013. However, despite the A.O. being aware about the death of late Dr. Rajendra Singh Gehlot had issued the notice U/s 148 on 14/03/2014 and the reply were filed on 23/06/2014 and 26/6/2014 by the AR Shri S.C. Jain. As mentioned hereinabove, the same A.O. to whom earlier the AR had informed about the death of late Dr. Rajendra Singh Gehlot had passed an order on 19/06/2014 i.e. four days prior to receipt of the reply dated 14 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot 23/06/2014 and 26/06/2014. In our view, the order disposing the objections is not sustainable in the eyes of law as it was passed on 19/06/2014 without considering the reply dated 23/06/2014 and 26/06/2014. Besides that even if we ignore the reply dated 23/06/2014 and 26/06/2014 then also the A.O. was aware of the death of late Dr. Rajendra Singh Gehlot prior to issuance of notice dated 14/3/2014, therefore also, there was no occasion for the A.O. to issue the notice U/s 148 against the deceased person. Therefore, in our view, the order passed by the A.O. against the deceased person is required to be set aside and the C.O. of the assessee is required to be allowed. Accordingly, we allow the C.O. of the assessee. At this stage, it will be useful to mention here that in law the A.O. could have initiated the proceedings within the stipulated time against the estate of deceased late Dr. Rajendra Singh Gehlot. However, the A.O. had failed to initiate the proceedings against the lawful person and have passed the incorrect order. Let this matter be left to the discretion to the Chief Commissioner of the Income Tax to take appropriate steps/action/proceedings as he may deem fit for this lapse by the A.O. namely Shri Sunil Verma.
9. Since we have allowed the C.O. of the assessee, and we have held that the reopening of the assessment proceedings was bad in law as it 15 ITA 411/JP/2016 & C.O. 17/JP/2016_ ITO Vs Smt. Suman Lata Gehlot has been initiated against a deceased person, therefore, the grounds of appeal of the revenue are dismissed being academic in nature and accordingly, the appeal of the revenue is dismissed.
10. In the result, the revenue's appeal is dismissed and C.O. of the assessee is allowed.
Order pronounced in the open court on 10/11/2016.
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(BHAGCHAND) (Laliet Kumar)
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fnukad@Dated:- 10th November, 2016
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vkns'k dh izfrfyfi vxzsf'kr@Copy of the Order forwarded to:
1. vihykFkhZ@The Appellant- The ITO, Ward-2(3), Jaipur.
2. izR;FkhZ@ The Respondent- Smt. Suman Lata Gehlot, Jaipur.
3. vk;dj vk;qDr@The CIT
4. vk;dj vk;qDr¼vihy½@ CIT(A)
5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur
6. xkMZ QkbZy@ Guard File (ITA No. 411/JP/2016 & CO 17/JP/2016) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar