Income Tax Appellate Tribunal - Mumbai
Late Shri Pradeep Ramkaran Modi, Mumbai vs Ito 31(2)(5), on 30 November, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL,MUMBAI BENCH "C", MUMBAI
BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBERAND
SHRI RAVISH SOOD, JUDICIAL MEMBER
ITA No. 393/Mum/2017
Assessment Year: 2009-10
Late Shri Pradeep Ramkaran Modi ITO - 31(2)(5)
through L.H Smt Anita Modi, Mumbai.
E-1410, 14th Floor, Royal Samar, Vs.
S.V. Road, Goregaon (West),
Mumbai - 400 062
PAN - AABPM2545D
(Appellant) (Respondent)
Assessee by : Shri Meelkant Khandelwal
Revenue by : Shri V. Vidhyadhar (DR)
Date of hearing : 29.11.2018
Date of Pronouncement : 30.11.2018
ORDER
PER PRADIP KUMAR KEDIA, AM:
1. The captioned appeal has been filed at the instance of the assessee against the order of the CIT(A) dated 02.09.2016 arising in the assessment order passed by the A.O dated 16.03.2015 u/s 143(3) r.w.s 147 of the Income tax Act, 1961 ('the Act').
2. As per the grounds of appeal, the assessee has sought to impugn the action of the CIT(A) in sustaining the order of the A.O by alleging (i) lack of jurisdiction u/s 147 of the Act; as well as (ii) addition of Rs. 2,50,76,244/- on account of alleged bogus purchases on merits.
3. The assessee has also moved petition for admission of additional grounds of appeal in terms of Rule 11 of Income Tax (Appellate Tribunal) Rules, 1963. As per additional grounds the assessee has sought to raise a legal ground that the entire 2 ITA No. 393/Mum/2017. Late Shri Pradeep Ramkaran Modi, LH by Smt Anita Modi, Mumbai assessment proceedings are null and void owing to the fact that the statutory notices have been initiated on the deceased assessee as well as the assessment has been framed on the deceased. The additional ground as raised is produced hereunder for proper appreciation thereof.
"The Income-tax Off icer - 31(2)(5), Mumbai erred in initiating and thereaf ter f raming the impugned assessment order on the deceased, that is on Mr. Pradeep Modi whereas the assessment ought to have been initiated and f ramed on the legal heir of the deceased, Mrs Anita Modi as the legal heir of Mr. Pradeep Modi, and having not done so the entire assessment proceedings are null and void".
4. When the matter was called for hearing, the Ld. AR for the assessee straightaway adverted our attention to the legal objection raised by way of additional ground and contended that the entire assessment order passed under section 143(3) r.w.s 147 of the Act is vitiated and thus a nullity in law. The Ld. AR adverted our attention to para No. 3 of the assessment order and submitted that in response to notice under section 148 of the Act, the legal heir (Smt. Anita Modi) duly submitted before the A.O that her husband (assessee herein) Shri Pradeep Ramkaran Modi expired on 14.10.2008 and he is survived by her and his two children. The legal heir of the assessee also requested to drop the case citing that no assessment can be made against deceased person. The Ld. AR for the assessee thereafter adverted our attention to the notice issued under section 142(1) dated 29.12.2014 and submitted that despite specific intimation towards death of the assessee, the A.O has continued issue notices in the name of deceased assessee 'Shri Pradeep Ramakaran Modi'. The Ld. AR thereafter adverted our attention to the Notice of Demand dated 16.03.2015 issued under section 156 of the Act as well as Penalty Notice issued under section 274 r.w.s 271(1)(c) of the Act as well as the assessment order passed under section 143(3) r.w.s 147 of the Act and submitted that the assessment order as well as demand notice and penalty notice has 3 ITA No. 393/Mum/2017. Late Shri Pradeep Ramkaran Modi, LH by Smt Anita Modi, Mumbai been issued in the name of non-existent person and thus cannot be enforced against the a deceased person in law. For this proposition the Ld. AR adverted our attention to a very recent decision of the Hon'ble Madras High Court in the case of Alamelu Veerappan Vs. ITO, [2018] 95 taxmann.com 155 (Mad). Placing heavy reliance on the aforesaid decision, the Ld. AR submitted that a notice issued in the name of the deceased person is unenforceable in law and the Revenue is not entitled to plead that the notice is merely a defective one. The assessment order on a deceased person based on relevant notices issued in the name of deceased person is required to be declared as invalid without sanctity of law. The Ld. AR accordingly pleaded that entire proceedings is bad in law and requires to be set aside and quashed in the light of the additional grounds.
5. The Ld. DR, on the other hand, relied on the orders of the authorities below and submitted however that a report from the A.O in this regard would be desirable for disposal of the dispute raised.
6. We have carefully considered the rival submissions. The assessee has raised a precise legal objection of substantive nature by way of additional grounds of appeal. Having regard to the decision of the Hon'ble Supreme Court in the case of NTPC Vs. CIT, 229 ITR 383 (SC), such additional ground of a legal nature deserves to be admitted for adjudication albeit at this belated stage.
7. As stated above, the assessee has, in essence, challenged the action of the A.O in issuance of various notices in the name of deceased person despite specific information to the effect placed before the A.O. It is thus the case of the assessee that the assessment order passed in the name of the deceased person pursuant to such inherently defective statutory notices including the notice of demand and penalty notices is unenforceable in law. We find ourselves in complete agreement with the aforesaid plea raised on behalf of the assessee in the light of the decision of the Hon'ble High Court of Madras in the case of Alamelu Veerappan Vs. ITO 4 ITA No. 393/Mum/2017. Late Shri Pradeep Ramkaran Modi, LH by Smt Anita Modi, Mumbai (supra) as well as the decision of the Hon'ble Delhi High Court in the case of Sky Light Hospitality LLP Vs. ACIT, [2018] 90 taxmann.com 143 (Del). The Hon'ble Madras High Court has categorically stated and reiterated the settled legal principle that a notice issued in the name of the deceased person is unenforceable in law. The Hon'ble Madras High Court has gone to the extent of making observations that the action of the Revenue cannot be justified even on the plea that it had no knowledge about the death of the assessee.
8. It will be apt to reproduce the relevant operative para of the decision of the Hon'ble Madras High Court.
13. This Court has carefully considered the submissions made by the learned counsel on either side and perused the records.
14. The issue, which falls for consideration, is as to whether the impugned notice under Section 148 of the Act issued in the name of the dead person - the said Mr.S.Veerappan is enforceable in law and the subsidiary issue being as to whether the petitioner, being the wife of the said Mr.S.Veerappan, can be compelled to participate in the proceedings and respond to the impugned notice. The fact that the said Mr.S.Veerappan died on 26.1.2010 is not in dispute. If this fact is not disputed, then the notice issued in the name of the dead person is unenforceable in the eye of law.
15. The Department seeks to justify their stand by contending that they were not intimated about the death of the assessee, that the legal heirs did not take any steps to cancel the PAN registration in the name of the assessee and that therefore, the Department was justified in directing the petitioner to cooperate in the proceedings pursuant to the impugned notice.
16. The settled legal principle being that a notice issued in the name of the dead person is unenforceable in law. If such is the legal position, would the Revenue be justified in contending that they, having no knowledge about the death of the assessee, are entitled to plead that the notice is not defective. In my considered view, the answer to the question should be definitely against the Revenue.
17. This Court supports such a conclusion with the following reasons :
Admittedly, the limitation period for issuance of notice for reopening expired on 31.3.2017. The impugned notice was issued on 30.3.2017 in the name of the dead person. On being intimated about the death, the Department sent the notice to the petitioner - his spouse to participate in the proceedings. This notice was well beyond the period of limitation, as it has been issued after 31.3.2017. If we approach the problem sans complicated facts, a notice issued beyond the period of limitation i.e. 31.3.2017 is a nullity, unenforceable in law and without jurisdiction. Thus, merely because the Department was not intimated about the death of the assessee, that cannot, by itself, extend the period of limitation prescribed under the Statute. Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration.
18. In such circumstances, the question would be as to whether Section 159 of the Act would get attracted. The answer to this question would be in the negative, as the proceedings under Section 159of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued 5 ITA No. 393/Mum/2017. Late Shri Pradeep Ramkaran Modi, LH by Smt Anita Modi, Mumbai as against the legal heirs. The factual position in the instant case being otherwise, the provisions of Section 159 of the Act have no application. 19. The Revenue seeks to bring their case under Section 292 of the Act to state that the defect is a curable defect and on that ground, the impugned notice cannot be declared as invalid.
20. The language employed in Section 292 of the Act is categorical and clear. The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. Undoubtedly, the issue relating to limitation is not a curable defect for the Revenue to invoke Section 292B of the Act.
21. All the above reasons are fully supported by the decision in the case of Vipin Walia. In that case, the notice dated 27.3.2015 was issued under Section 148 of the Act to the assessee, who died on 14.3.2015. The validity of the said notice was put to challenge. The Income Tax Officer took a stand that since the intimation of death of the assessee on 14.3.2015 was not received by her, the notice was issued on a dead person. However, the fact regarding the death of the assessee could not be disputed by the Department. The Department continued the proceedings under Section 147/ 148 of the Act and at that stage, the son of the deceased approached the High Court of Delhi. The High Court of Delhi pointed out that what was sought to be done by the Income Tax Officer was to initiate proceedings under Section 147 of the Act against the deceased assessee for the assessment year 2008-09, for which, the limitation for issuance of notice under Section 147/148 of the Act was 31.3.2015 and on 02.7.2015 when the notice was issued, the assessee was already dead and if the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31.3.2015 by issuing the notice to the legal heirs of the deceased and beyond that date, it could not have proceeded in the matter even by issuing notice to the legal representatives of the assessee. The decision in Vipin Walia fully supports the case of the petitioner herein.
22. The decision in the case of Vipin Walia was followed in the decision of the High Court of Gujarat in the case of Rasid Lala, in which, the re-assessment proceedings were initiated against the dead person, that too, after a long delay. The Court pointed out that even if the provisions of Section 159 of the Act are attracted, in that case also, the notice was required to be issued against and in the name of the heirs of the deceased assessee and under the said circumstances, Section 159 of the Act shall not be of any assistance to the Revenue.
23. In the decision of the Delhi High Court in the case of Spice Entertainment Ltd., one of the questions, which fell for consideration, is as to whether such framing of assessment against a non existing entity or a dead person could be brought within the ambit of Section 292B of the Act and after referring to the decisions on the point including the decision of the Allahabad High Court in the case of Sri Nath Suresh Chand Ram Naresh Vs. CIT [reported in (2006) 280 ITR 396], it has been held that the provisions of Section 292B of the Act are not applicable and that framing of assessment against a non existing entity/person goes to the root of the matter, which is not a procedural irregularity, but a jurisdictional defect, as there cannot be any assessment against a dead person.
24. The learned Senior Standing Counsel for the Revenue has sought to distinguish the decision in the case of Spice Entertainment Ltd., by referring to Sky Light Hospitality LLP.
25. On a perusal of the factual position therein, the Court came to the conclusion that the defect was curable because it was held that the notice was not addressed to the correct name and that the PAN mentioned was also incorrect. The factual background was taken into consideration and the Court held that errors and mistakes cannot and should not nullify the proceedings, which are otherwise valid and that no prejudice had been caused, as this being the mandate of Section 292B of the Act. The decision in the case of Sky Light Hospitality LLP is clearly distinguishable on facts and it does not support the case of the Revenue.
6 ITA No. 393/Mum/2017.Late Shri Pradeep Ramkaran Modi, LH by Smt Anita Modi, Mumbai
26. For all the above reasons, this court holds that the impugned notice is wholly without jurisdiction and cannot be enforced against the petitioner.
9. In parity with express and categorical observations of the Hon'ble Madras High Court decision (supra), we find substantial merit in the plea of the assessee raised by way of additional grounds. Consequently, the assessment order passed under section 143(3) r.w.s 147 of the Act dated 16.03.2015 is set aside and quashed.
9. The other grounds raised in the main appeal are accordingly rendered infructuous and therefore not being addressed.
10. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on this 30 th Nov, 2018.
Sd/- Sd/-
(RAVISH SOOD) (PRADIP KUMAR KEDIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
मुंबई Mumbai; दनांक Dated 30/11/2018
KRK / PS
आदेशक ितिलिपअ
ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2.
यथ / The Respondent.
3. आयकरआयु (अपील) / The CIT(A), Mumbai.
4. आयकरआयु / CIT
5. िवभागीय
ितिनिध, आयकरअपीलीयअिधकरण, मुंबई/ DR,
ITAT, Mumbai
आदेशानुसार/BY
ORDER,
6. गाड फाईल / Guard file.
स यािपत
ित //True Copy/
उप सहायकपंजीकार
/
(Asstt.Registrar)
आयकरअपीलीयअिधकरण, मुंबई / ITAT, Mumbai