Income Tax Appellate Tribunal - Chandigarh
Late Sh. Raj Kumar Wadhwa Through L/H ... vs Dcit, Circle, Patiala on 14 June, 2021
आयकर अपील य अ धकरण, च डीगढ़ यायपीठ "बी", च डीगढ़
IN THE INCOME TAX APPELLATE TRIBUNAL,
CHANDIGARH BENCH 'B', CHANDIGARH
ीमती दवा संह, या!यक सद"य एवं, एवं ीमती अ नपण
ू ा& ग(ु ता, लेखा सद"य
BEFORE: SMT.DIVA SINGH, JUDICAL MEMBER
AND SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No.1335/Chd/2019
नधा रण वष / Assessment Year : 2008-09
Late Sh.Raj Kumar Wadhwa बनाम The D.C.I.T.,
Through L/H Smt.Usha Wadhwa, Circle Patiala.
Prop. M/s Lucky Traders, Lower
Mall Road, Patiala.
थायी लेखा सं./PAN NO: A A B P W 6 0 6 2 H
अपीलाथ /Appellant यथ /Respondent
नधा रती क ओर से/Assessee by : Shri Sudhir Sehgal, Adv.
राज व क ओर से/ Revenue by : Shri Ashok Khanna, Addl.CIT
सन
ु वाई क तार$ख/Date of Hearing : 31.03.2021
उदघोषणा क तार$ख/Date of Pronouncement: 14.06. 2021
(Virtual Court)
आदे श/Order
Per Annapurna Gupta, Accountant Member :
Th e a b ove a p p e al ha s b e e n p r e fer r e d b y the a ss essee a ga i nst the or de r of the C ommi ssi on e r of I ncome Ta x (A pp e a ls )[ i n s h o r t t h e ' L d . C I T( A )] , P a ti a la d a te d 1 5 .0 7 .2 0 1 9 ITA No.1335/Chd/2019 A.Y. 2008-09 Page 2 of 20 re la t in g t o a s se ssme nt ye a r 20 0 8-0 9 p a ss e d u/s 2 5 0 (6 ) ) of the I nc ome Ta x A ct, 1 9 6 1 ( he re i naf te r re fe r re d to as 'A ct'.
2. Th e a ss e ss ee ha s r a is e d the fol low i n g gr ou nd s of a pp e a l:
"1. That the Ld. CIT (Appeals), Patiala has erred in confirming the action of the Assessing Officer with regard to reopening of the case u/s 147 of the Income Tax Act and in proceeding to reassess the case of the appellant.
2. That there was no reason to believe that the income of the assessee has escaped assessment and, therefore, the reopening is bad in law.
3. Notwithstanding the above said fact, the addition of Rs. 58,58,134/- as confirmed by the Ld. CIT(A), has been made against the facts and circumstances of the case.
4. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off."
3. G r oun d N o 1 & 4 b e i n g ge ne r al i n na tu r e need no a dj ud i ca t ion .
4. D ur i ng th e cou r se of he a r in g bef or e u s, a t th e outs e t its e l f, the Ld .C o un se l fo r the a sse ssee s ta te d t ha t h e w ou ld be ma k in g hi s a rg ume nts on ly vi s a v is gr ou nd N o.2 ra i s e d , the re ma i ni ng gr ou nd s, i t w a s, st a te d b y t he Ld. C ou ns e l for the a s se s se e , we re no t be in g pre sse d be f ore us . Gr ou nd N o.3 ra i se d i s a c cor d ingl y d is mis se d a s no t p r e s se d . ITA No.1335/Chd/2019
A.Y. 2008-09 Page 3 of 20
5. Ta k in g u p g ro u n d N o .2 r a is e d , the Ld. C ou ns e l for th e a sse sse e co nte nde d th a t vi s-à -v is the imp ug ne d gro un d th e a sse sse e ha d sou gh t to c ha l l en ge the va l id i ty of th e a sse ssme nt f ra me d i n the p re se nt ca se u /s 14 7 o f the A ct on th e g r oun d th a t the r e a s on s re cor d e d for r e open i ng of th e ca se we re no t suf fi ci e n t f or f or min g t he be l ie f of es ca p e me n t of i nc ome . Re fe r ri ng to the f a cts of the ca se the Ld . C oun se l for th e a s se s se e p oi nte d out t ha t in th e p re se nt case no tice by th e Ass e ss i ng O ff i ce r (A O ) ha d b ee n is sue d u/s 14 8 of the Ac t f or a s sumin g t he ju r is d ic tio n to r e a s se ss the i nc ome of th e a sse s see , a s p e r t he p r ovi sion s of se c ti on 14 7 of th e Act , a n d t he re a son s r e c or de d for r e ope ni ng the ca se , he poi n te d out fr om th e a sse ss me n t or d e r , we re a s u nd e r:
"The case was processed u/s 143(1) of the Income Tax Act on 26/03/2009 at an income of Rs.12,49,340/-(Plus Agricultural income of Rs.2,15 , 250/- for rate purpose). On going through the Trading and profit & Loss Account of the assessee it reveals that the a s s e s s e e h a s s h o w n liasoning receipts o f Rs.10,74,196/- (Net) only. During the course of assessment proceeding for assessment year 2006-07, the assessee has stated that liasoning commission is from M/s Saravshaktiman Traders Private Limited and the figures reported in Profit & Loss account are net of the expenses incurred by the assessee for rendering services by the sub-agents/ service providers. But the expenses so claimed by the assessee were disallowed and added back to the income of the assessee to the tune of Rs.41,14,518/-. Though, the same have been deleted by the Ld. CIT(A), but the department has not accepted the order of the CIT(A). Therefore in order to safeguard the interest of revenue and keeping in view the above discussion, I have reason to believe that the income of the assessee has escaped assessment on the issue of ITA No.1335/Chd/2019 A.Y. 2008-09 Page 4 of 20 liasoning commission. Similarly, an addition of Rs. 3,02,600/- was made by the Assessing Officer on account of low household expenses shown by the assessee during assessment year 2006-07 by estimating monthly expenses of Rs.35,000/- of the assessee's family. The same has been confirmed by the Ld. CIT(A) vide order dated 30/04/2009. The issue requires to be examined in this year also in the light of the finding given by the Ld. CIT(A), as above.
Accord in gl y kee ping in vie w the above discussion, I have reason to believe that the income of the assessee has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961. Issue notice u/s 148 of the Income Tax Act, 1961."
6. Re fe rr i ng t o t he a f or e st a te d re ason s, the Ld . C o un se l for the a s se s se e c on te n de d th a t it i s cl e a r ly e vi de nt f r om th e a bo ve th a t the A O h a d n o re a son a t a l l f or for mi n g a n y be lie f of i n come ha v i ng e s ca pe d in th e ca se of t he a ss e ssee . Dr a w i ng our a tt e nt io n to the fi rst pa r a o f th e re a son s he poi n te d ou t th a t th e A O ha d r e fe r re d to in come ha v in g e sc a pe d on a c cou nt of a ll ow a n ce of e xpe nse s c la ime d by th e a sse sse e a ga i n st l ia i so ni ng re ce ip ts , w hi ch ha d b ee n di sa l l ow e d i n a sse ss me n t p r oce e d ings f or e a r l ie r a sse s sme n t ye a r i .e . A. Y 2 0 0 6 -0 7. The Ld . C oun se l f or t he a sse ssee poi n te d o ut tha t th e A O i n t he same r e a s on a nd i n th e s a me pa r a g ra p h ha s not e d the fa c t th at th e s a id d i sa l low a n ce for a sse ssme nt ye a r 2 00 6 -0 7 h a d stoo d d e le te d by th e CI T( A) , bu t d e s pi te be ing in th e k no w of t he sa i d fa c t he ha d pr oc ee de d to re cor d t ha t the i ncome of t he a s se sse e ha d e sc a pe d a s se ssme nt on a cc oun t of i mp ugn e d e xpe nse s ITA No.1335/Chd/2019 A.Y. 2008-09 Page 5 of 20 ha v in g be e n a l low e d to the a sse ss ee . He p oi nte d ou t tha t the AO h a d n ote d tha t s in ce the De pa r tme n t h a d n ot a cc e p ted the o rde r of the C I T( A) , th e r e f ore, he h a d re a son to be lie ve tha t the in come ha d e s ca p e d a sse s sme n t. The L d . C oun se l for the a s se sse e con te n de d tha t c le a rl y wh e n the in for ma t ion on t h e b a s is of w hi ch th e A O ha d f or me d th e be lie f of e sc a pe me n t of in come n o l on ge r su r vi ved , ha v in g be e n de le te d b y th e CI T( A) , th e r e p oss ib l y coul d not ha ve be e n a n y in fo rma t ion le a di n g t o t he for ma ti on of be lie f of e sc a pe me n t of i nc ome on th is a ccoun t. The re a fte r r efe r r in g to th e s e c ond p ar a o f t he r e a son s he p oin te d out tha t b a se d on t he a sse ss me nt or de r fo r a sse ssme nt ye a r 2 0 0 6 -07 wh e re in ce r ta i n a dd i ti on s ha d b ee n ma d e b y e s ti ma tin g hou se h ol d e xpe ns e s o f t he a sse ssee , t he AO h a d no te d th at thi s i ssu e re q ui re d e xa mi na ti on i n th e imp ug ne d ye ar a l so si nc e the CI T( A ) h a d con fi r me d th e sa me in the e ar l i e r ye a r a nd f or thi s r e a son, h e de r i ve d , th a t th e i n come had e s ca pe d a sse ssme nt . The Ld . C oun se l fo r th e a ss e ssee poi nt e d o ut tha t e ve n the AO w a s n ot s ur e w h e the r th e re wa s a ny un a ccou n te d h ou se h ol d e x pe nses h a vi ng n ote d tha t th e ma tte r ne e de d en q ui r y, so ho w c oul d t he re pos si b ly b e a n y for ma ti on of b el i e f of e s ca pe me n t on thi s c oun t. Th e Ld. C ou ns e l f or th e a sse ssee s ta te d t ha t i t w a s obv io us th a t the re w a s n o in for ma tio n a t a l l in th e p osse ss io n of th e AO ITA No.1335/Chd/2019 A.Y. 2008-09 Page 6 of 20 for the f or ma tio n of b e li e f o f e sc ap e me n t o f in com e e i the r on a ccou nt of c la i m of e xpe nse s a gai ns t l i a i son in g re ce ip ts or on a c cou nt of un a cc oun te d h ous e ho ld e xpe ns e s and, the re fo re , a ss ump ti on of j ur i sd ic ti on to r e ope n the ca se of the a sse ssee u/s 14 7 of the A ct, w a s ba d i n la w a nd the or de r p a sse d as a con se q u e n ce the re of n ee ded to be q ua sh e d . Th e Ld .C oun se l f or t he a s se sse e re fe r re d to the fol l ow in g de ci si on s in s up p or t:
1) C I T Vs . O ri e n t C r a ft Ltd . , 35 4 I TR 53 6 ( D e l )
2) M /s A mi t En gi n e e r i ng Vs . AC I T, 15 6 I TD 5 5 6 ( C h d . Tri b .)
3) M /s S a ma r t Pl yw ood Ltd . Vs . AC I T i n I TA N o. 51 4 /C h d / 2 0 1 7 f or A .Y .2 0 0 8 -09
7. Th e Ld . DR , on t h e othe r h a nd , he a vi ly re l ie d up on th e or de r of the C I T( A) . H e d re w ou r a tte nti on to the fi n di n gs of the CI T(A ) a t p a g e 9 of h is o rde r as un d e r :
"That the Appellant had in Assessment Years 2006-07 and 2007-08 followed an accounting methodology whereby he had credited liaison income net of expenses is a matter of record and not in dispute. That additions in earlier years had been made after due investigation and on the basis of findings that the expenses were bogus/ inflated. During the process of reopening the Ld. AO would have had access to the departmental Computer Systems where both in the AST application and in the e-filing AO portal all of which show the details of e-filed returns/audit reports etc. It is my considered view that Ld. AO had adequate information on record to have reason to believe that the appellant had used the same accounting methodology and that the expenses for the liaison income would have been, like earlier years, prima-facie bogus/inflated. The language of the Ld. AO while recording ITA No.1335/Chd/2019 A.Y. 2008-09 Page 7 of 20 Reasons and the CIT (A)'s order deleting the addition notwithstanding; it is my considered view that the Ld. AO had information on Record; record including current year and earlier year records; that income of the appellant had escaped assessment. At the time of reopening the AO cannot divine what would the exact accounting practice and the quantum of the evasion. The consistent methodology followed by the appellant, becomes, in my considered opinion, cogent information qua reopening of the case as the information that lead to the subjective satisfaction in the Ld AO which was predicted on cogent information that lead to Reason to believe. Reliance is placed on the judgment of the Hon'ble Apex Court in the case of Raymond Woollen Mills Ltd. v. ITO And Others [19991] 236 ITR 34 (SC)/[1999] 152 CTR 418 (SC) where the Apex Court has held as under:
In determining whether commencement of reassessment proceedings was valid it has only to be seen whether there was prima fade some material on the basis of which the department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at this stage."
8. W e h a ve h e a r d both th e pa r ti e s an d ha ve a ls o ca re fu ll y gon e thr ou gh t he d oc ume n ts r e fe rr e d to b e f ore u s a nd a l so the or de r of the Ld .C I T(A ) & A O . Th e p r ima r y con te n ti on of the Ld .C oun se l for the a s se s se e be f ore us is tha t th e ju ri s di ct ion a ssu me d i n th e p re se nt ca se for re op e n i ng the a sse ssme nt of t he a sse s see u /s 1 4 7 o f the A ct w a s b a d si n ce the re a son s re cor d e d b y the A O f or r e o pe ni n g t he c a se d id not r e ve a l a ny in fo rma t ion w or t h i ts w h i le b e ing in th e pos se ssi on of the A O t o for m th e be l ie f of e scap e me nt of in come .
9. We a re in a gr e e me n t w it h th e con te nti on of the Ld. C ou ns e l for th e a s se sse e . W e h a ve g one thr ough the ITA No.1335/Chd/2019 A.Y. 2008-09 Page 8 of 20 re a son s a s re cord e d b y the AO a n d re p ro du ce d i n e a r lie r pa r t of ou r or d e r a b ove . W e h a ve no te d , tha t th e AO h a s re cor de d hi s be l ie f of e s ca pe me nt of i n come on tw o co un ts;
i) in cor r e c t cl a i m of e xp e n se s ag a in st li a i son i ng re ce i p ts a n d;
ii ) a ga i nst u na c cou nte d h ouse h old exp e n se s. 10 . Th e ba s i s for f or ma ti on of be li e f of e sca pe me nt of in come on t he a for e sa i d t w o c ounts b y the A O, we f i nd , r e s ts on th e a s se ssme nt fr a me d i n t he ca se of the a ss e ssee on id e n ti ca l i s sue s in e a r l ie r a sses sme n t ye a r , A .Y . 2 0 0 6 -07 wh e re in , a s n ote d by the AO in his re a so ns , e xpe nse s a ga i nst l i a i son in g r e ce i pt s w e re d is a l low e d a n d a d d i ti on ma de on a c cou nt of ho use hol d e xp e n se s. B ut g oin g f or w a rd fr om he r e w e fi nd th a t i n ca s e of e xpe n se s c l a ime d a ga i n st li a i son in g r e ce i pts, th e A O a ls o n ote d t he fa c t th at th e di sa l l ow a nc e ma d e of the sa me in a ss e ss me n t ye a r 2 0 0 6 -07 stood d e le te d by th e C I T( A) . C on si d e r i ng the sa i d f a ct , un dou b te d l y at th e ti me of r e cor d i ng of r e as ons , th e in for ma t ion i n the p osse ss io n o f the AO w a s, the re for e , th at the cl a im o f th e a s se s se e of e xpen se s a ga in st t he li a i son in g re ce i p ts w a s in a cc or d a nce w ith l a w a nd no t lia b l e to be di sa l l ow e d . The re a re no tw o v ie w s v is -à -vi s thi s fa c t. I n the ba c k dr op of th i s fa c t sur e ly the re c a nn ot be a ny f or ma ti o n ITA No.1335/Chd/2019 A.Y. 2008-09 Page 9 of 20 of b e l ie f of e s cap e me nt of in co me on a c cou nt o f cl ai m of e xpe n se s a g a in st li a i son i ng r e ce ip ts . The not in g of the AO tha t the De p a rtme n t ha s no t a cc e p te d the or d e r of the C I T( A) , a n d h e n ce , the f or ma ti on of b e l ie f of e sca pe me n t of in come , w e fi n d, i s n ot a cce pt a ble . Th e b e l ie f of e sca p e me n t of in co me i s to b e ba se d on i n forma ti on i n th e p osse ss ion of the A .O w h ic h has to be re a d i n its e nt ire ty a nd i t ca n not be le ft to the d is cr e ti on of the AO to a c ce p t p ar t of the in for ma t ion a l o n e , i gnor i n g th e re st a s p e r h is w hi ms a nd fa n ci e s. I n the pr e se n t ca se , t he i n for ma ti on a va i l a b l e w it h the AO w a s th at th e c l a im o f t he a sse ssee to l i a son in g e xpe n se s i nc ur red i n A. Y 20 0 5 -06 w a s i n a cc or da n ce w it h la w , a s p e r the or d e r of the f i rs t a p pe ll a te a u th or ity . A nd thi s i n for ma ti on sur e ly c a nn ot l e a d to t he f orma ti on of be lie f of e s ca pe me nt of in co me on a cc oun t of a l lo wa nce of li a son i ng e x pe nse s i n the i mp ug ne d ye a r. 11 . As f a r a s the be l ie f of e s ca pe me nt of i n come on a ccou nt of h ou se h ol d e xpe n se s, we a ga i n no te th a t t he re is p a l pa bl y no i n for ma ti on in th e p oss e ss ion of th e A O r e ga r d in g th e e sc a pe me n t of a ny s uc h i nc o me p e r ta i ni n g to th e i mp ug ne d ye a r , on t hi s a cc oun t. I n fa c t, w e f in d , tha t t he AO note s in hi s r e a son s th a t th e i ssue nee ds to be e xa mi n e d a n d his for ma ti on of be li e f , we fi n d, r e sts on the f a ct th at s uc h ITA No.1335/Chd/2019 A.Y. 2008-09 Page 10 of 20 a dd i ti on ha d be en ma d e in a sse ssme nt of th e a sse ssee for a sse ssme nt ye a r 2 0 0 6-0 7 . It is t he re fo re on ly a me re sus p ic ion th a t i n come on th i s a cc oun t ma y ha v e e s ca ped a sse ssme nt a n d r e ope n i ng ca n no t b e re sor te d to on me re sus p ic ion . Th e r e ha s be "be l ie f" of e sca pe me n t of in come . C le a r ly, t he re fo re , the re is n o b as is f or f or ma tio n of be lie f of e sc a pe me n t of i n come o n a cc oun t of hou se hol d e xp e n se s in the i mp ugn e d yea r . I t i s se ttle d la w tha t r e o pe nin g c a nn ot be re sor te d to f or con d uc tin g any r ovi ng and fi sh in g in q ui r ie s a s h a s be e n so ugh t b y th e A O w he n he no te s i n the re a s ons th at t he i ssue o f hou se h ol d e xpe ns e s ne e d s e xa mi na ti on .
12 . As r i ght ly p oin te d o ut by th e Ld .C oun se l f or the a sse sse e the re a son s re cor de d by th e AO do n ot d e mons tr a te a ny b a s is fo r f or ma ti on of be li e f of e s ca pe me n t o f i nc ome e i the r on a cc oun t of li a i son in g e xpe nse s c la ime d or un a ccou n te d hou se h ol d e xpe n ses . Th e re a son s r e c or de d, the re fo re , we h old do not just if y t he a ssump ti on of ju ri s di ct ion t o re ope n the c a se of th e a s se sse e u/s 1 47 of the Ac t a n d th e or de r p a sse d in con se q u e n ce th e re of i s li a b le to be qua s he d . Gr ou nd N o. 2 of t he appeal is a ccor d i ng ly a l lo we d .
ITA No.1335/Chd/2019
A.Y. 2008-09 Page 11 of 20 13 . F ur th e r v ide a p p li ca t ion d a te d 1 8 .0 1 .2 0 2 1 th e a sse ssee ha s r a i se d the f ol lo wi n g a dd i ti ona l gr oun d s of a p p ea l :
"1. "Notwithstanding the above said grounds of appeal, the assessment as framed by the Assessing Officer, in the name of 'dead person' is void abinitio, since the assessee concerned died on 21.07.2013 and, therefore, completion of assessment in the name of dead person is void abinitio and, as such, the assessment proceedings deserve to be quashed."
2. "Notwithstanding grounds of appeal with regard to reopening of the case, the assessment having been reopened beyond four years and no permission from the Joint Commissioner of Income Tax/ Commissioner of Income Tax, Patiala having been taken, before issuance of notice u/s 148 as per inspection of file sought by the assessee and, thus, reopening is bad in-law.".
14 . Th e Ld .C o u ns e l f or the a ss e ssee con te n d e d tha t h e wo ul d on ly b e ma ki n g h i s a r g um e n ts on a d d it iona l gr ou nd no 1 r a ise d a nd w a s n ot p re s si ng the a dd i ti ona l gr ou nd no. 2 r a i se d . Ld C oun se l for the a s se sse e took u s th r oug h gr oun d N o .1 of t h e a dd i ti on a l gr ou nd s a n d r e f e r ri ng to th e sa me he s ta te d th a t in the i mp ug ne d gr ou nd the c ha l l e n ge to th e va l i di ty of th e a sse ssme nt or d e r s o f r a me d wa s on the gr oun d th a t the a s se s sme n t has b ee n fr a me d on a d e a d pe r son , w h i ch wa s not pe r mi ssi b le i n la w . Th e Ld . C oun se l for th e a s se s se e con te nde d tha t all fa c ts re le v a nt for a dj ud i ca t in g th e i ss ue we re b or ne out f r om th e rec or d s a n d be in g a le ga l i ssu e the gr oun d ne e de d t o be a d m i tte d. He ITA No.1335/Chd/2019 A.Y. 2008-09 Page 12 of 20 re lie d u p on the d e c is io n o f t he H on'b l e Ape x C our t in th e ca se of N TP C Li m i te d Vs . CI T, 2 2 9 I TR 3 8 3 ( SC ).
Th e Ld . D R d id n ot ob j e ct to the sa me .
15 . Ac cor d i ng ly, c on si de r in g t ha t the a sse s see h as ra i se d a le ga l is sue i n th e a d d i tio na l gr ou nd of a p pe a l N o.1 b e f ore us a n d a d mi tte dl y, a ll fa c ts r e lev a nt f or a d ju d ic a tin g th e is sue a re b or ne ou t f ro m the re co rd s , th e a d d i ti onal gr ou nd so r a i se d b y t he a s se s see i s be i ng a d mit te d f or a d j ud i ca ti on . Si nc e the Ld. C ou ns e l ma d e n o sub mis si on s f or a d mis si on of a dd i ti ona l gr oun d n o.2 the s ame was not a dmi tte d for a dj ud i ca t ion . Th e or de r wa s pr on ou nc e d i n the op e n c our t du r in g the c our se o f he a r in g itse lf .
16 . Th e r e a f te r p rocee d in g w it h h is a r gume nt th e Ld. C ou ns e l f or th e a sse ssee con te nde d tha t i n the f a ct s of the p re se nt c ase the a s se sse e , La te S hr i Ra j Kuma r Wa d h w a , w a s a l i ve w he n noti ce u/s 1 4 8 o f th e A ct for re ope n in g of the ca s e of t he a s se sse e w a s i ss ue d on 3 0 -03 - 20 1 3 . Th a t su bs e q ue nt ly the re a fte r the a sse ssee e xp ire d on 21 . 07 . 2 01 3 a nd th i s fa ct w a s d u l y i n ti ma te d t o t h e AO b y the w ife of the de ce a se d , w ho a lso c la r i fi e d t ha t sh e w a s the le ga l he ir o f the a sse ssee . Th a t d e sp i te be i ng so i n for me d the AO co nti n ued i ss ui ng not ic e s u/s 1 4 2 ( 1) i n t h e na me of ITA No.1335/Chd/2019 A.Y. 2008-09 Page 13 of 20 the de ce a se d a sse s see . Th e Ld .C o un se l fo r t he a sse ssee poi n te d o ut that tw o su ch no tic e s we re i ssued to th e a sse sse e d a te d 0 8. 0 1 .2 0 1 4 a nd 1 8 .0 2 .2 0 1 4 . Th a t e ve n the a sse ssme nt was f r a me d in the na me of the d e ce a se d a sse sse e a nd dema nd n oti ce w a s a l s o i ssu e d i n hi s na me . Th e Ld . C oun se l f or the a sse ssee con te n de d tha t in th e case of a de ce a se d a sse sse e the Le g is la t ur e h a s p r ovi de d for the ma nn e r i n w hi ch t he a sse ss me n t i s to be f ra me d , u/s 1 59 of the Ac t, a s pe r w h ic h a fte r the d e mi s e of the a ss e ssee a ll pr oc ee d i ng s a re to b e c a r rie d o n w i th the le ga l hei r a nd the a sse ssme nt f r a me d i n t he n a me of the le ga l he i r. I t w a s con te n de d tha t t he s a id p re sc r ib e d p r oce du re by l a w h as cl e a r ly n ot bee n fol l ow e d i n the pr e se nt ca se a n d , t he re fore , a ls o th e a sse ssme n t f ra me d w a s b a d in l a w, be i ng in the na me of a de a d as se s se e a n d the re f ore l i a b le to be q u a sh e d . Th e Ld .C o un se l for th e a sse ss ee i n th is r e ga r d d r e w our a tte n ti on to the se q ue n ce of e ve nts b r i ngi n g out th e a bo ve fa ct s a s un de r :
S.NO. PARTICULARS DATE OF
FILING/ISSUING
1. R e tu r n f i l e d b y th e as s e s s ee 2 7 . 0 9. 2 0 0 8
d u r i n g h i s l if e tim e
2. R e tu r n p r oc e ss e d u / s 1 43 ( 1 ) 2 6 . 0 3. 2 0 0 9
3. N o ti c e u / s 1 4 8 i s s u e d , p l ac e d at 3 0 . 0 3. 2 0 1 3
p ag e 1 o f th e P ap e r B o o k i n th e
n am e o f S h . R aj K u m ar W ad h wa.
4. A ss es se e died on ( D e ath 2 1 . 0 7. 2 0 1 3
c er ti f i c ate p l ac e d at p ag e 4 o f
th e P ap e r B o o k. )
ITA No.1335/Chd/2019
A.Y. 2008-09
Page 14 of 20
5. N o ti c e u / s 1 4 2 ( 1 ) i s s u e d i n th e 0 6 . 0 1. 2 0 1 4
n am e o f th e d ead p e r s o n f o r
0 8 . 0 1. 2 0 1 4 , p l ac e d at p ag e 2 of
P ap e r B o o k.
6. L e g al H e i r f il e d r e p l y, d ate d 8.01.2014
0 8 . 0 1. 2 0 1 4 s ta ti n g th at S h . R aj
K u m ar W ad h wa died an d
i n ti m a te d th e n am e o f l e g al ,
al o n g wi th d e ath c e r ti f i c ate
p l ac e d a t p ag e s 3 & 4 of P ap e r
B oo k .
7. T h e L e g al H e i r ag ai n f i l e d a 1 3 . 0 1. 2 0 1 4
r e p l y as le g al h e i r , as p e r p ag e 5
o f th e P ap e r B o o k.
8. A ss es s i n g Of f ice r ag ai n i s s u e d 1 8 . 0 2. 2 0 1 4
n o ti c e u/s 1 42 ( 1 ) al o n g i th
q u es ti o n n ai r e , d a te d 1 8 . 0 2. 2 0 14
i n th e n am e o f " d e ad p e r s o n "
d e s p i te k n o wi n g th e n am e o f th e
" l e g al h e i r " a n d n o t b r i n g i n g th e
l e g al h e i r o n re c o rd as p e r
s ec ti o n 1 5 9 . ( C o p y e nc l o s e d ) .
9. A ss es sm e n t o r d e r p as s e d i n th e 2 8 . 0 2. 2 0 1 4
n am e o f d e ad p e r so n wi th o u t
b r i n g i n g o n r ec o r d th e n am e o f
l e g al h e i r , p ag e 2 2 o f P ap e r
B oo k .
10. D e m an d n o ti c e u / s 1 5 6 i s s ue d i n 2 8 . 0 2. 2 0 1 4
th e n am e of " d e ad p e r s o n " as
p e r p ag e 2 1 o f th e P ap e r B o o k.
17 . C op ie s of d oc ume n ts r e l ie d upon b y the Ld . C oun se l
for th e a ss e ssee to s ub st a nti a te h i s a r gu me nt s w e re a l so pl a ce d be f ore us i n a pa p e r b ook a s u nd e r:
1) Copy of Notice dated 30.03.2013 as issued u/s 148 by the by. Commissioner of Income Tax Circle, Patiala in the name of Sh, Raj Kumar Wadhwa.
2. Copy of Notice dated 03.01.2014 as issued u/s 142(1} by the by. Commissionerj of Income Tax Circle, Patiala in the name of Late Sh. Raj Kumar Wadhwa.
3. Copy of letter dated 08.01.2014 alongwith copy of death certificate to the ACIT intimating about the death of Sh, Raj Kumar Wadhwa on 21.07.2013.
ITA No.1335/Chd/2019
A.Y. 2008-09 Page 15 of 20
4) Copy of letter dated 13.01.2014 furnishing Audit report, Balance Sheet, Trading and Profit and loss account alongwith relevant Annexures submitted by Smt.
5) Usha Wadhwa legal heirs of Sh, Raj Kumar Wadhwa for AY 2008-2009 as per return already filed original.
6) Copy of the demand notice u/s 156 in the name of dead person vide notice dated 1 28.02.2014 and 1E| page of assessment order u/s 143(3) r.w.s 147 as passed in , the name of dead person which is void ab-initio. 18 . F ur th e r he re l ie d u po n the fol l ow in g d e ci si ons in sup p or t of h is a b ove c onte n tio n:
1) C I T V s. D h a lu ma l Sh ya mu ma l, 27 6 I TR 6 2 ( MP )
2) Ha r ya n a G r a mi n B a nk ( N ow Sa r va H a ry a n a Gr a mi n B a n k) Vs. D C I T, 83 ITR ( Tr i b. ) ( S. N . ) 8( D e l . Tr i b .)
3) B .G . Sh a r ma (D e ce a se d ) Vs. I TO , I TA N o.3 8 7 / Mu m /2 0 12 (M u m. Tr i b .)
19 . Th e Ld . D R, on t he othe r ha n d , rel ie d up on t he or de r of the Ld .C I T(A ) sta t in g th a t t he sa me w a s on l y a t e ch ni c a l e r r or and w hi ch s tood c or r e cte d in th e a p p e l l a te pr oc ee d i ng s. He dr e w ou r a tte n tion to t he r e le van t fi n di n gs of th e Ld . C I T( A) a t p a ge 1 0 of hi s or d e r a s u nde r :
"F u r the r th e p as sin g of th e i mpu gn ed ord er u / s 1 4 3 ( 3) r / w 1 47 of th e A c t i n th e ap pel l an t' s n a me an d n o t in th e n ame of th e es ta te /l e g al h e ir i s a te ch n ic al e rr or wh ich h a s bee n co rrec te d in th e a p pel l a te pro ce e din g s. T h e ap p el lan t f ail s o n th i s gro un d of ap pe al. It i s ord ere d ac c ord in gl y."
20 . W e ha ve c on si de re d the r iv a l su bmi s si ons a n d ha ve a ls o go ne thr ou gh a l l th e d oc ume n ts re fe r re d to b e f ore us ITA No.1335/Chd/2019 A.Y. 2008-09 Page 16 of 20 a nd a l so the or d e r s of the a ut hori ti e s be l ow . Th e c on te n ti on of the Ld .C o un sel f or th e a sse ssee is th a t a s se s sme n t in th e pr e se n t ca se is not v a l id , h a vi n g be e n fr a me d on a d e a d pe r son , in comp l e te vi ol a ti on of th e p ro ce d u re p res cr i be d i n la w w h e re an a ss e s see is d e ce a se d du r in g a s se s sme n t pr oc ee d i ng s .
21 . I t i s n ot di sp u ted th a t the a sse ss ee wa s a l i ve only ti l l the ti me the j uri sd i cti on a l n oti ce u/s 14 8 of the Ac t w a s is sue d to hi m on 3 0-0 3 -2 0 13 a n d ha d e x pi re d ther e a fte r on 21 -0 7 -2 0 13 , d ur i ng t he pe nde nc y of th e i mpu gn e d re - a sse ssme nt p r oce e d in gs .
22 . In c a se s w he re th e a sse ssee e xp ire s d u ri ng th e pe nde n cy of th e a s se s sme n t p r oce e d i ng s, the Le g is la t ure ha s p r e sc r ibe d the me thod ol ogy for f r a min g a ss e ssme n t u /s 15 9 o f the A ct. Th e sa me i s be i ng r e p r od uce d he re un de r :
"Legal representatives.
159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.
(2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section
147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1),--
(a) any proceeding taken against the deceased before his death shall be deemed to have been taken against ITA No.1335/Chd/2019 A.Y. 2008-09 Page 17 of 20 the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased;
(b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and
(c) all the provisions of this Act shall apply accordingly.
(3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.
(4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undischarged, he creates a charge on or disposes of or parts with any assets47 of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of or parted with.
(5) The provisions of sub-section (2) of section 161, section 162, and section 167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative.
(6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub-
section (5), be limited to the extent to which the estate is capable of meeting the liability."
23 . As is e v ide nt fro m th e a b ove , th e Le gi sl a ture has pr e scr i be d u/s 1 5 9( 2 ) , t ha t wh e re an a sse ssee e xp i re s du r in g p e n d e n cy o f p r oce e d in gs , t he pr oc ee d i ng s h a ve to be con tin u e d w i th t he le g a l he i r a n d a s se ssme nt i s to be fr a me d in t he n ame of th e le ga l he i r .
24 . I n the fa c ts of th e p re se nt c a se , w hi ch sta n d re cor d e d by th e AO a l so in h is a ss e ss me n t or d e r , the AO we fi nd h a s fa i le d t o fo ll ow th e sta t utor i l y p r e sc ri be d p r oce du r e . Tha t ITA No.1335/Chd/2019 A.Y. 2008-09 Page 18 of 20 de sp i te the AO be i n g d ul y i n for me d on 08 -0 1 -2 014 , th a t the a sse sse e h a d e x pi r e d on 2 1 -0 7- 13 a n d th a t h is w i fe wa s the le ga l he i r , he con ti nu e d the a ss e ss me n t p r oce e d in gs , is sui n g not ic e u/s 1 4 2( 1 ) of the A ct on 1 8 -0 2 -2 0 1 4 , i n th e na me of the de cea se d a sse ssee , an d fu r the r e ve n w e n t on to fr a me the a s se s sme nt a nd i ss ue th e de ma nd n oti ce d a te d 28 -0 2 -2 0 14 , in th e n a me of the d e ce a se d a sse ssee . Th e a for e s ta te d fa c ts st a nd n ote d in th e a sse ss me nt or d e r i tse l f a nd h a ve re ma i ne d u nco ntr ove r te d b e f ore us. 25 . I t i s e v ide nt ther e f ore th a t the a s se s sme n t fr a me d i n the p re se nt c a se i s not i n a cco rd an ce w i th l a w . Th e re li a nce pl a ce d b y t he Ld .C ou ns e l f or th e asse ssee on th e de c is io n of the Ho n'b le Ma d h ya P r a de sh Hig h C ou r t i n th e c a se of Dh a l uma l S h ya mu ma l (s up r a ) i s a p t, w he r e in in i de nti c a l se t o f f a cts w he re the a s se s see ha d e xp ire d d u r in g the pe nde n cy of a s se ssme nt p r ocee di ng s, wh i ch fa c t w a s d ul y in ti ma te d to th e A O , wh o d e sp ite t he sa me , i s sue d no n oti ce to the le g a l re p re se n ta ti ve s of the a s se s se e a nd fr a me d th e a sse ssme nt in th e na me of t he d e ce a se d a s ses se e , the Hon 'b l e H i gh c our t h e l d th a t the or de r so p a sse d w as a nu ll i ty ha v in g b ee n p a ss e d a ga inst a d e a d p e r so n. Th e Hon 'b l e H ig h c our t h e l d th a t th a t i t w a s the d u ty of th e A O to ha v e f oll owe d th e p r oce d ure p r e s cr i be d in la w i n s uc h ITA No.1335/Chd/2019 A.Y. 2008-09 Page 19 of 20 ca se s u/s 1 59 of th e A ct. The r e le va n t fi n di ngs o f the Hon 'b l e H i gh C o ur t a r e a s u nde r:
"This is an IT reference made by the ITAT (Tribunal) under s. 256(1) of the IT Act at the instance of Revenue (i.e., CIT) in RA No. 119/Ind/1998 arising out of an order dt. 6th May, 1998, passed by Tribunal in ITA No. 393/Ind/1994 to this Court for answering following question of law :
"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in annulling the assessment framed by the AO against a dead person without bringing the LRs on record ?"
The question is founded on following facts as stated in statement of case drawn by the Tribunal.
2. One Dalumal Shyamumal was an assessee. For the asst. yr. 1990-91, the AO passed an assessment order on 24th Feb., 1993 (Annex. A), under s. 143(3) of the Act. It is not in dispute that assessee had expired prior to passing of the assessment order. It is also not in dispute that AO had the knowledge of the death because a letter to that effect was sent to AO on 11th July, 1991, i.e., much prior to passing of order on 24th Feb., 1993. It is also not in dispute that no notice as contemplated under s. 159 of the IT Act was sent to any of the legal representatives of assessee. In such circumstances, the order passed by AO on 24th Feb., 1993, becomes a nullity having been passed against the dead person [see CIT vs. Amarchand N. Shroff (1963) 48 ITR 59 (SC) and ITO vs. Ram Prasad & Ors. (1972) 86 ITR 145 (SC)].
3. In a case where an assessee dies pending any assessment proceedings, the provisions of s. 159 of the Act get attracted. It is the duty of AO to ensure compliance of sub-s. (2) of s. 159 before any orders are passed."
26 . The non c ompl i a nc e by t he AO of th e s ta tut or il y pr e scr i be d pr oced u re , a p p li c a ble i n the fa ct s of the pre se n t ca se , c a nn ot be s a id to b e a me re te ch ni c a l e r r or as he l d b y the Ld .C I T( A) .
ITA No.1335/Chd/2019
A.Y. 2008-09 Page 20 of 20 I n vie w of the a bove , we h a ve n o he si ta ti on i n hold in g tha t the imp u gn e d or de r i s n ot su st a in a b le in la w ha v in g be e n fr a me d on a d e a d p e r s on a nd i s, th e r e f ore , l iab l e to b e q ua sh e d . The a dd i ti ona l gr ou nd r a i se d b y t he a sse sse e i s a ls o a l l ow e d .
27 . I n t he re s ul t, the a bo ve a p pe a l of th e a sse ssee i s pa r tl y a ll ow e d .
Sd/- Sd/-
(DIVA SINGH) (ANNAPURNA GUPTA)
या!यक सद"य/ Judicial Member लेखा सद"य/ Accountant Member
Dated: 14th June, 2021
*रती*
आदे श क त*ल+प अ,े+षत/ Copy of the order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent
3. आयकर आयु-त/ CIT
4. आयकर आयु-त (अपील)/ The CIT(A)
5. +वभागीय त न0ध, आयकर अपील$य आ0धकरण, च2डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File आदे शानस ु ार/ By order, सहायक पंजीकार/ Assistant Registrar