Clearly, The Notice And The Proceedings Pursuant There To, Are After The Death Of The Assessee v. Assistant

Digitallysigned by VKRISHNALocation: HighCourt ofKarnataka IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 19 DAY OF JUNE, 2024 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV -WRIT PETITION NO. 12537 OF 2024 (TIT)BETWEEN: SMT. PREETHI V., AGED 23 YEARS, LEGAL REPRESENTATIVE OF DECEASED SMT. RAMANATHAN GURULAKSHMI, R/AT NO.422, 14TH CROSS, 3RD MAIN, 2ND PHASE STAGE, WEST OF CHORD ROAD, MAHALAKSHMIPURAM, BANGALORE - 560 086, KARNATAKA. …PETITIONER (BY SRI. SANDEEPANI NEGLUR, ADVOCATE FOR SRI. SANDEEP HUILGOL, ADVOCATE) AND: 1. INCOME TAX OFFICER, WARD 6(2)(1), BANGALORE BMTC BUILDING, 80FT ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. WARD 6(2)(1), BANGALORE BMTC BUILDING, 80FT ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. 2. ADDITIONAL COMMISSIONER OF INCOME-TAX, RANGE 6(1), BANGALORE, BMTC BUILDING, 80FT ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. OF INCOME-TAX, RANGE 6(1), BANGALORE, BMTC BUILDING, 80FT ROAD, 6TH BLOCK, KORAMANGALA, BENGALURU - 560 095. …RESPONDENTS (BY SRI. E.I. SANMATHI, SENIOR STANDING COUNSEL) THIS WP IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO QUASH THE IMPUGNED ASSESSMENT ORDER DATED 29/03/2024 BEARING DIN AND ORDER NO. DIN ITBA/AST/S/147/2023-24/1063659303(1) PASSED BY R1 UNDER SECTION 147 READ WITH SECTION 144 OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2016-17 (ANNEXURE-A1) AND ETC., THIS PETITION, COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The present petition has been filed calling in question the correctness of the order passed under Section 147 read with Section 144 of the Income Tax Act, 1961 (for short 'the Act') at Annexure-'A1', computation sheet at Annexure-'A2', notice of demand at Annexure-'A3', penalty notices at Annexures-'G', 'H' and 'J'. 2. It is the case of the petitioner that the assessee has passed away on 14.10.2022 as is evidenced from the copy of Death Certificate enclosed at Annexure-'B'. It is further submitted that as regards the assessment year 2016-17, notice under Section 148 of the Act was issued on 13.03.2023. Reference to the same is made in the assessment order. - 3 - 3. Clearly, the notice and the proceedings pursuant there to, are after the death of the assessee. 4. It is submitted that while notice is issued under section 148 of the Act against a dead person, such notice being invalid, all consequential proceedings including the assessment order under Section 147 read with Section 144 of the Act and proceedings for penalty are required to be set aside. Reliance is placed on the order of this Court in the case of Smt. Vanitha Gopal Shetty Vs. Assistant Commissioner of Income Taxpassed in W.P.No.19840/2019. 5. Learned counsel for the petitioner submits that the procedure to be followed under Section 159(2)(b) of the Act is as regards an assessee who has died before the initiation of proceedings and in terms of the same, proceedings are permissible as regards the legal representative, if it is permissible as against the deceased. 6. Learned counsel for the revenue submits that unless there is an intimation, department would be unaware of such factum of death. 7. Heard both sides. 8. The admitted fact being that the notice is issued against a dead person and the assessee has died on 14.10.2022, the notice is invalid in law. In the event the assessee had died even before the issuance of notice under Section 148 of the Act, only procedure making it permissible to initiate proceedings is the satisfaction of the test under Section 159(2)(b) of the Act. Section 159 clause (2) of the Act reads as hereunder: "Section 159. (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),- 7. Heard both sides. 8. The admitted fact being that the notice is issued against a dead person and the assessee has died on 14.10.2022, the notice is invalid in law. In the event the assessee had died even before the issuance of notice under Section 148 of the Act, only procedure making it permissible to initiate proceedings is the satisfaction of the test under Section 159(2)(b) of the Act. Section 159 clause (2) of the Act reads as hereunder: "Section 159. (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 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." (emphasis supplied) 9. In light of the above, question of continuing with fresh proceedings against the deceased which liberty is sought for by the learned counsel for the revenue would be permissible only if proceedings could have been taken against the deceased if he had survived. 10. The present proceedings under Section 148 of the Act are as regards the assessment year 2016-17, the time limit for the proceedings under Section 148 would be in terms of Section 149(1)(b) proviso. In terms of the proviso there is a bar for issuance of notice under Section - 6 - 148 in a case for a relevant assessment year before 01.04.2021 and in the present case as the assessment year 2016-17 falls within the applicability of the proviso, and proceedings would have been initiated within 31.03.2023 within the outer limit of 6 years from the end of assessment year 2016-17 as against the legal representative. 11. Accordingly, at this stage while setting aside the notice under Section 148 of the Act, question of granting liberty would be contrary to the mandate of time prescribed under Section 149(1)(b) proviso. 12. No doubt it is the contention of learned counsel for the revenue that intimation if given within time, the revenue would have initiated fresh proceedings against the legal representatives. However, taking note of the order in the case of Alamelu Veerappan v. ITO - (2018) 257 Taxman 72 as well as Savitha Kapila v. Assistant Commissioner of Income Tax - (2020) 118 Taxmann.com 46, we find that there is no support for the contention that there is a statutory obligation on the deceased assessee to intimate the department. The observation made at paragraph No.32 in the case of Savitha Kapila v. Assistant Commissioner of Income Tax, requires endorsement in the present case also. 13. Accordingly, by setting aside the notice issued under Section 148 of the Act and the orders pursuant there to including the order at Annexure-'A1' and computation sheet at Annexure-'A2', demand notice at Annexure-'A3' and penalty notices at Annexures-'G', 'H' and 'J' are set aside. The consequential proceedings if any, raising demand are also set aside. Accordingly, petition is disposed off. Sd/- JUDGE MCR