Appellan v. Sh. Yoginder Singh

IN THR HIGH COURT OR PUNJAB AND HARYANAAT CHANDIGARH ITA No. 271 of 2017 (O&M) Date of Decision: 23.19.2018 Pr. Commissioner of Income Tax, Panchkula. ....... Appellan Versus Sh. Yoginder Singh ..... Respondent CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL, JUDGEHON'BLE MR. JUSTICE AVNEESH JHINGAN, JUDGE Present:Mr. Yogesh Putney, Senior Standing Counselfor the revenue-appellant. Mr. Arvind Bansal, Advocatefor the assessee-respondent. — 0000 AVNEESH JHINGAL, J. The appellant-revenue has filed the present appeal under Section260-A of the Income Tax Act, 1961 (for short ‘the Act’) against the order dated21.10.2016 passed by the Income Tax Appellate Tribunal, Division Bench,Chandigarh, (for short ' the Tribunal’) in ITA No. 373/CHD/2015. Theassessment year involved is 2006-07. 2.The appellant has claimed following substantial questions of law: ++(1)Whether on the facts and in the circumstances of the case theId. ITAT was right in law in holding the notice issued and served undeSection 148 of the Income Tax Act, 1961 as invalid on the assumptionthat the notice was not addressed in the name of Legal Representativesof the deceased-Assessee, ignoring the fact that the notice wasaddressed to the deceased-Assessee through legal heirs?(11)Whether on the facts and in the circumstances of the case the Id.ITAT was right in law in holding the re-assessment proceedings asinvalid on the ground that the said notice was addressed to thedeceased-Assessee, through legal heirs ignoring the fact that theAssessing Officer had validly assumed the jurisdiction under Section 147 of the Income Tax Act, 1961 by recording the reasons for issuingthe notice under Section 148 of the Income Tax Act, 1961? (111)Whether on the facts and in the circumstances of the case the Id.ITAT was right in law in quashing the Assessment order passed by theAssessing Officer under Section 143(3) read with Section 147 of theIncome Tax Act, 1961 on the ground that the legal heirs representativesof the deceased Assessee were not impleaded as necessary party? (iv)Whether on the facts and in the circumstances of the case the Id.ITAT was right in law in holding that since notice under Section 148 ofthe Income Tax Act, 1961 was not served on the Assessee or the legalheirs which is essential to make re-assessment in accordance with law,thus, the re-assessment made consequent thereto was withoutjurisdiction and liable to be quashed? *",Whether on the facts and in the circumstances of the case the Id.ITAT was right in law in giving same meaning to words "issue" and"serve' aS jurisdictional aspect, whereas both operate in different fields1.e. Former is jurisdictional and later is procedural and any mistake,defect or omission in return of income, Assessment, notice, summons orother proceedings is procedural irregularity and curable under Section292B read with section 292BB of the Income Tax Act, 1961 2" 3)The brief facts necessary for adjudication of the present appeal are that Yoginder Singh filed the income tax return for the assessment year 2006-07on 31.07.2006, declaring the total income of Rs. 42,96,825/-. The return wasprocessed under Section 143(1) of the Act. The Assessing Officer framed theassessment for the assessment year 2006-07 under Section 143(3) of the Actand noticed that the assessee had received enhanced compensation amounting toRs.7,24,46,572/- from the Land Acquisition Officer on 11.10.2005 and alsoreceived interest on enhanced compensation amounting to Rs.7,53,20,932/- on08.04.2006 and while framing the assessment under Section 143 (3) of the Actfor the assessment year 2007-08, the Assessing Officer (A.O.) noticed thatcapital gains accrued to the assessee on account of enhanced compensationreceived for the land acquired which was treated as non-cultivable land by the TEVeENUE. TEVeENUE. proceedings for the assessment year 2007-08 his legal heirs were brought onrecord and assessment was framed vide order dated 30.12.2009. Since, theamount of enhanced compensation and interest on enhanced compensation wasreceived by Mr. Yoginder Singh relating to the assessment year 2006-07, theprovisions of Section 147 of the Act were invoked to re-open the assessment forthe assessment year 2006-07. The re-opening was done after recording thereasons. Notice under Section 148 of the Act was issued on 25.03.2013 todeceased Yoginder Singh through legal heirs. Notice was sent on the addressgiven in the return filed and was sent through speed post. However, the envelopewas returned with remarks that Yoginder Singh had died 6-7 years ago and letterbe sent back to the sender. The A.O. issued another notice under Section 143(2)of the Act on 25.09.2013. Thereafter, notice under Section 142(1) of the Act wasissued. One of the legal heir filed a reply dated 16.01.2014 and raised the issuethat notice under Section 143(2) was time barred. Another show cause notice tothe deceased through legal heirs was issued on 29.01.2014. Thereafter, theproceedings were attended by Chartered Accountant, who raised an objectionthat no notice under Section 148 of the Act has been served for the assessmentyear 2006-07 till date. The A.O. rejected the objections stating that the noticewas sent through speed post well within time. The assessment was framed undersection 143(3) read with Section 147 of the Act vide order dated 28.02.2014. 5 The order of assessment was assailed by filing an appeal before theCommissioner of Income Tax, (Appeals) Panchkula ( hereinafter referred to as'CIT(A)'). The CIT(A) partly allowed the appeal vide order dated 27.02.2015 butrejected the contentions that proceedings under Section 143(3) read with Section147 of the Act were not validly invoked. section 148 of the Act was invalid as the same was not served either upon thedeceased-assessee or on his legal heirs. Hence, the present appeal. vaLearned counsel for the appellant argued that notice under Section148 of the Act, was issued within limitation. It was sent to Yoginder Singhthrough his legal heirs. One of the legal heir filed reply to the notice and eventhe assessment proceedings were attended. The Tribunal erred in accepting theappeal of the assessee. § Learned counsel for the assessee contended that statutoryrequirements to serve notice under Section 148 of the Act, has not beencomplied with. The initiation of proceedings itself is without jurisdiction andthe Tribunal was justified in accepting the appeal of the assessee. QOBefore dealing with the contentions raised, it would be pertinent to reproduce Section 159 of the Act; “159. Legal representatives (1) Where a person dies, his legal representatives shall be liable to payany sum which the deceased would have been liable to pay if he had notdied, 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 thedeceased and for the purpose of levying anysum in the hands of thelegal representative in accordance with the provisions of subsection (1),- (a) any proceeding taken against the deceased before his deathshall be deemed to have been taken against the legalrepresentative and may be continued against the legalrepresentative from the stage at which it stood on the date of thedeath of the deceased; (b) any proceeding which could have been taken against thedeceased 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 ofthis Act, be deemed to be an assessee. (1),- (a) any proceeding taken against the deceased before his deathshall be deemed to have been taken against the legalrepresentative and may be continued against the legalrepresentative from the stage at which it stood on the date of thedeath of the deceased; (b) any proceeding which could have been taken against thedeceased 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 ofthis Act, be deemed to be an assessee. (4) Every legal representative shall be personally liable for any taxpayable by him in his capacity as legal representative if, while hisliability for tax remains undischarged, he creates a charge on ordisposes of or parts with any assets of the estate of the deceased, whichare in, or may come into, his possession, but such liability shall belimited 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 andsection 167 shall, so far as may be and to the extent to which they arenot inconsistent with the provisions of this section, apply in relation to alegal representative. (6) The liability of a legal representative under this section shall, subjectto the provisions of subsection (4) and sub- section (5), be limited to theextent to which the estate is capable of meeting the liability.” According to Section 159(2)(b) of the Act, any proceeding which could have been taken against the deceased if he was alive, could be takenagainst the legal representative. The said legal representative of the deceasedShall be deemed to be an assessee for all purposes of the Act. 10.There is no dispute that respondents in appeal are the legal heirs ofthe deceased. Once it is so, the legal heirs cannot absolve themselves from theliability. Moreso, when they participated in assessment proceedings. 11.Further Section 292B of the Act relates to validity of the return ofincome etc. on certain grounds and the same is reproduce below: -“292B. Return of income, etc., not to be invalid on certain grounds No return of income, assessment, notice, summons or other proceeding,furnished or made or issued or taken or purported to have beenfurnished or made or issued or taken in pursuance of any of theprovisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return ofincome, assessment, notice, summons or other proceeding if such returnof income, assessment, notice, summons or other proceeding is insubstance and effect in conformity with or according to the intent andpurpose of this Act.” A perusal of the above provision shows that no return of income,assessment, notice, summons or other proceedings in pursuance of any of theprovisions of the Act shall be invalid or deemed to be invalid merely by reasonof any mistake, defect or omission therein if the same are in substance and effectin conformity with the intent and purpose of the Acct 12)In the present case as noticed above, notice for re-opening underSection 148 of the Act was issued on 25.03.2013, i.e. within time to thedeceased-assessee through his legal heirs. The notice was sent through speedpost. The same was returned by stating that the assessee had died about 6-7years ago. It is not disputed that the address was correct. The act of returningthe notice was deliberate inspite of the fact that notice was not in the name ofYoginder Singh but Yoginder Singh through his legal heirs. 12)In the present case as noticed above, notice for re-opening underSection 148 of the Act was issued on 25.03.2013, i.e. within time to thedeceased-assessee through his legal heirs. The notice was sent through speedpost. The same was returned by stating that the assessee had died about 6-7years ago. It is not disputed that the address was correct. The act of returningthe notice was deliberate inspite of the fact that notice was not in the name ofYoginder Singh but Yoginder Singh through his legal heirs. 13,It is pertinent to note that the legal heirs of the assessee filed a replydated 16.01.2014 stating that notice under Section 143(2) of the Act was timebarred. The assessment proceedings were attended by Neeraj Jain, CharteredAccountant and he submitted that no notice had been served under Section 148of the Act for the assessment year 2006-07. The finding recorded has not beendisputed that after issuance of notice under Section 148 of the Act, notice underSection 143(2) of the Act alongwith questionnaire was issued and the same wasserved. The final show cause notice was issued which was served throughaffixation on 04.02.2014. The legal heirs participated in the assessmentproceedings but never filed any reply on the merits of the issue. 148 of the Act was rightly rejected by the A.O. 15)The order passed by the Tribunal allowing the appeal on the groundthat re-assessment order had no validity being passed in the name of dead person and that notice under Section 148 of the Act was not served upon the deceased-assessee or legal heirs, is not-sustainable, 16.Consequently, the impugned order dated 21.10.2016 is hereby setaside and the matter is remanded back to the Tribunal to decide the appeal onmerits. The substantial questions of law as claimed are answered accordingly. 17)Hence, the appeal is allowed. (AJAY KUMAR MITTAL)JUDGE 23.10.2018reema (AVNEESH JHINGAN)JUDGE Whether speaking/reasonedYes/NoWhether Reportable;Yes/No}