C.naveen Kumar v. The Income Tax Officer,Ward-3, Officers Line

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED :08.07.2019 CORAM THE HON'BLE MR.JUSTICE M.SUNDAR W.P.No.6547 of 2019andW.M.P.No.7365 of 2019 C.Naveen Kumar ..Petitioner vs The Income Tax Officer,Ward-3, Officers Line,No.3, Barracks Road,Vellore. ..Respondent Prayer: Writ Petition filed under Article 226 of theConstitution of India praying to issue a Writ of CertiorarifiedMandamus, calling for the records relating to impugned orderdated 26.12.2018 passed by the Respondent, quash the sameconsequently direct the respondent not to initiate any penaltyproceedings under Section 27/(1)(c) of Income Tax Act, 1961 orany other provision of law under Income Tax Act, 1961 and passsuch further or other orders as this Hon'ble Court may deem fitand proper in the circumstances of the case and thus renderjustice.For Petitioner : Mr.N.PoovanalingamFor Respondent : Mr.J.Narayanaswamy Senior standing counselO R D E R Mr.N.Poovanalingam, learned counsel on record for writpetitioner and Mr.J.Narayanaswamy, learned Senior standingcounsel for Income Tax on behalf of the lone official respondentare before this Court. 2. With consent of learned counsel on both sides, main writpetition is taken up, heard out and is being disposed of. 3. This is an unfortunate case, where fate has overtakennormal time lines and normal life trajectories. https://hcservices.ecourts.gov.in/hcservices/ 4. The writ petitioner before this Court is 24 years of ageand he is pursuing his Master's degree(M.Tech). 5. Subject matter of this writ petition arises under the'Income Tax Act, 1961' [hereinafter 'IT ACT' for brevity]. Thiswrit petition pertains to Assessment Year 2010-2011 [hereinafter'said AY' for brevity]. 6. There is no disputation or disagreement before this Courtthat qua said AY, writ petitioner was a minor and he was barely16 years of age. 7. As mentioned in the prefatory paragraph of this order,this is a case where fate has overtaken the normal time linesand life trajectories of Nature. 8. This is a case where writ petitioner's father diedsuddenly on 06.06.2018 at the age of 47. 9. Prior to writ petitioner's father's untimely demise on06.06.2018, writ petitioner's father Mr.S.Chandrasekar wasvisited with a notice from the respondent under Section 148 ofIT Act regarding said AY. 10. Thereafter, post untimely demise of writ petitioner'sfather on 06.06.2018, the department issued a notice to the writpetitioner on 30.10.2018 under Section 147 of IT Act qua said AYstating that there is a scrutiny assessment proceedings underSection 143(2) read with Section 147 of IT Act and calling uponhim to produce certain documents. On receipt of this notice,writ petitioner was all at sea as according to him, he had noclue whatsoever about the business activities of his father andwas completely in the dark other than knowing that he wasdealing in edible oil in the name and style of 'Gajalakshmi OilTraders'. 11. Writ petitioner, having been visited with the aforesaid30.10.2018 notice under Section 147 of IT Act, sent a replydated 23.11.2018, explaining his predicament, which has beencaptured and adumbrated as 8 points. This Court deems itappropriate to extract and reproduce relevant portion of thereply from the writ petitioner and the same reads as follows:'In regard to the same I wish to admit the followingfacts for your kind perusal.i) The Scrutiny Assessment initiated for theAssessment year 2011-2012 pertains to my Father, who haddied on 6[th] June 2018 due to massive cardiac attack.ii)I am responding to this notice, since the same wasaddressed on my name. iii) During the Assessment Year 2011-12, I was doingmy schooling and presently persuing my M.Tech degree. iv) My mother is a renal failure patient since morethan a year and taking treatment at our native with thesupport of our grandparents. iii) During the Assessment Year 2011-12, I was doingmy schooling and presently persuing my M.Tech degree. iv) My mother is a renal failure patient since morethan a year and taking treatment at our native with thesupport of our grandparents. v) In general my father never used to discuss anybusiness information neither to me nor to my mother beingme a school going child and my mother is already withillness. vi) He was not so open to discuss any of his personaland business activities with us; but we were able to see,so often few of his business suppliers used to pressure himfor payments for their business activities. vii) Even on the few days later to the funeral fewpeople took over the available materials lying at ourfather's shop claiming that it is of them. The owner of thepremises, where my father was doing his oil tradingbusiness taken away the waste materials and furniture andhad his own vacant possession. Since we doesn't know whatis happening around us while we were so depressed on ourfather's sudden demise. Viii) My father expired at his age of 47 years wholeft us with Blank life environment, either my Father,mother or myself don't possess any property and even todayme and my mother are struggling for our day to daysurvival.In order to explain these facts I came in person and metyour good self in person, the ITO was not able to accept mypresence for not bringing any financial papers. At thisjuncture I don't know how to proceed further in thisregard.' 12. It is submitted that after this reply, the writpetitioner was called upon to go over the office of therespondent on 17.12.2018. This is vide notice dated 10.12.2018.As the trail of ill luck would have it, this Court is informedthat the writ petitioner's mother died on 16.12.2018, cremationwas on 17.12.2018 and therefore, the writ petitioner could notattend the hearing on 17.12.2018. Under the aforesaidcircumstances, writ petitioner has now been visited with a 'ShowCause Notice' ['SCN' for brevity] dated 26.12.2018 bearingreference PAN. /2018-19, which shall hereinafter bereferred to as 'impugned SCN' for clarity and convenience.Annexures to the impugned SCN is an Assessment Order also dated26.12.2018 qua said assessment year, wherein income tax wasassessed at Rs.25,62,337/-. Income Determined under Section 144of the IT Act at Rs.90,27,790/-. Added to it, is Education cessbesides interests under Sections 234A and 234B, and the totalpayable amount is at Rs.73,89,770/-. 13. What is of utmost importance is the positive andemphatic assertion of the writ petitioner that he has notinherited any property, cash deposits or movables from hisfather. This is articulated in ground (f) of the affidavit filedin support of the writ petition and the relevant portion ofground (f) reads as follows: 'f. The respondent failed to note that thepetitioner has not inherited any property, cashdeposits or movables from his deceased fatherMr.S.Chandrasekar.' 14. Though not articulated in the counter affidavit beingcounter affidavit dated 31.05.2019, learned Revenue counselsubmitted that there were certain transactions in the BankAccount held by the writ petitioner's father, which was thetrigger for the aforesaid proceedings qua said AY. 15. As there is no mention about the Bank Account in thecounter affidavit, learned Revenue counsel took instructions andsubmitted that details of the aforementioned Bank Account of thewrit petitioner's father are as follows:'A/c No:12451930001835HDFC Bank22, 7[th] East Cross, Gandhi Nagar,Katpadi, VelloreIFSC : HDFC0001245' 16. It is submitted that there was a sudden spurt indeposits and large sums of money were deposited by writpetitioner's father during the said AY, which was the triggerfor the entire proceedings. 15. As there is no mention about the Bank Account in thecounter affidavit, learned Revenue counsel took instructions andsubmitted that details of the aforementioned Bank Account of thewrit petitioner's father are as follows:'A/c No:12451930001835HDFC Bank22, 7[th] East Cross, Gandhi Nagar,Katpadi, VelloreIFSC : HDFC0001245' 16. It is submitted that there was a sudden spurt indeposits and large sums of money were deposited by writpetitioner's father during the said AY, which was the triggerfor the entire proceedings. 17. This takes us to the impugned SCN. To be noted, impugnedSCN has been impugned along with the annexed assessment order,which has been adverted to supra. 18. This in turn takes us to the question as to the extentto which a legal representative of an assessee can be proceededagainst and the limitations if any, in this regard. Liability oflegal representatives in such situations is adumbrated inSection 159 of the IT Act which in turn is under Chapter XVcaptioned 'LIABILITY IN SPECIAL CASES' and A thereunder iscaptioned 'Legal Representatives'. https://hcservices.ecourts.gov.in/hcservices/ Legal representatives.159. (1)................(2)................(3)................(4)................(5).................(6)The liability of a legal representative underthis section shall, subject to the provisions of sub-section (4) and sub-section(5), be limited to theextent to which the estate is capable of meeting theliability.' 20. There is no disputation or disagreement that theliability of a legal representative under the IT Act is limitedto the extent to which the estate is capable of meeting theliability. To be noted, writ petitioner has not inheritedanything from his father and he has/had nothing to do with hisfather's aforementioned bank account is learned counsel's say. 21. Owing to the peculiar facts and circumstances of thiscase, with a rider that this case shall not be cited as aprecedent, the following order is passed:a) Impugned SCN dated 26.12.2018 bearing referencePAN. ALPPC0202L/2018-19 and the impugned assessmentorder also dated 26.12.2018 are set aside.b) The statement made on oath i.e ., affidavitfiled in support of the writ petition by the writpetitioner that he has not inherited any assets anddeposits from his father(assessee) particularly ground(f), which has been extracted and reproduced supra isrecorded.c) It is open to the respondent to proceed againsttheaforesaidBankAccountbearingA/cNo:12451930001835, HDFC Bank, 22, 7[th] East Cross, GandhiNagar,Katpadi, Vellore, IFSC : and any otherassets of the assessee (writ petitioner's father), ifunearthed and if it comes to light or surfaces infuture. 22. This writ petition is disposed of with the above saiddirections. There shall be no order as to costs. Consequently,connected miscellaneous petition is closed.-s/d- Assistant Registrar(CCC) To The Income Tax Officer,Ward-3, Officers Line,No.3, Barracks Road,Vellore. +1 CC to Mr.J.Narayanaswamy, Advocate sr 58204. +2 Ccs to Mr.N.Poovanalingam, Advocate sr 57276. W.P.No.6547 of 2019andW.M.P.No.7365 of 2019NRL(CO)SP(08/08/2019)