Ita/901/2007 Of The Commissioner Of Income Tax v. M P Jayaraj (Dead)

IN THB HIGH COURT OF KARNATAKA AT BANGALORE DATEKD THIS THE O08 DAY OF APRIL 2014. PRESENT THR HON'BLE MR.JUSTICE DILIP B.BHOSALE AN D THR HON'BLBE MR..JUSTICBK B.MANOHA ITA NO.901/2007 |BBRITWRE1. The Commissioner of Income-tax,C.R Building, Queens Road,Bangalore.2. The Deputy Commissioner of Income-Tax (Asst), special Range — 3,C.R Building, Queens Road,Bangalore.....Appellant(By Sri.K.V.Aravind, Advocate)AN):M.P.Jayaraj (Dead)Represented by Smt.Elizabeth,No.7, Arikempanahalli, Bangalore....Responden (By Sri.Somashekar Kashimath, Advocate) This ITA is filed under Section 260-A of I.T.Act,1961 arising out of Order dated 16-07-2007 passed inM.P.No.67/Bang/2007 (arising out of ITA.Nos.614 to616/Bang/1997) for the Assessment Year 1987-1988,praying that this Hon’ble Court may be pleased to 1.formulate the substantial questions of lawstated therein.stated therein. 11.Allow the appeal and set aside the Orderpassedby theITAT,Bangalore|in.MP.No.67/Bang/2007(arisingOUToT|passedby theITAT,Bangalore|in.MP.No.67/Bang/2007(arisingOUToT| ITA.Nos.614 to 616/Bang/1997) dated 16-O7-2007 and confirm the order ot the'|AppellateCommissionerconfirmingtheorder passed by the Deputy Commissioner ofIncomeTax|(Asst).,SpecialRange-3, Bangalore, in the interest of justice andequity.O7-2007 and confirm the order ot the'|AppellateCommissionerconfirmingtheorder passed by the Deputy Commissioner ofIncomeTax|(Asst).,SpecialRange-3, Bangalore, in the interest of justice andequity. This appeal coming on for Hearing this day,DilipB.Bhosale J, delivered the following: P.C. Heard the learned counsel for the appellants. 2.|None appears for the respondent though served. 3.|This income tax appeal is directed against theorder dated 16[.#]July 2007 whereby the Income TaxAppellate Tribunal (for short ‘the Tribunal’) dismissedorder dated 16[.#]July 2007 whereby the Income TaxAppellate Tribunal (for short ‘the Tribunal’) dismissed the M.P.No.67/Bang/2007. By that petition, the appellant sought disposal of ITA Nos.614-616/1997 on.merits in view of the directions issued by this Court videorder dated 28[.#]September 2006 in ITA No.260/2001.The relevant observations made in the order dated © 16-07-2007 read thus: The rival contentions in regard tothe above petition have been verycarefully considered. The finding of theTribunal in this case was that the HighCourt in its order had given a clearruling to the effect that the proceedingshave not been invalidated, but requiresto be re-examined. This was on thebasis that the person concerned is oneof the legal heirs and there are fewmore legal heirs in the property thatdevolves on any person, who could bemore than one. Principles of naturaljustice demand that each of those legalheirs receiwing the property or claimingto have a share in the property wouldhave necessarily to be heard. The civildispute with regard to who are the legalheirs are still to be resolved and Sinceall the legal heirs have to be brought onrecord and heard as heard. Thepurpose is that each of those personswould have to realize that the propertythat is received by them is subject to taxdemands of the Department that maybe raised consequent to the assessmenton the deceased. The Tribunal having remanded the issue to the file of theAssessing Officer to bring on record allthe legal heirs and await the conclusionof the cwil dispute was only theprobable course available. There beingno mistake apparent on the records, thepetition is dismissed.” 4It appears that the Revenue had filed ITANo.260/2001 under Section 260A of the Income TaxAct, 1956 against the order dated 20[.#]April, 2001—passed in ITA No.613/Bang/1997 for the assessmentyear 1989-90 and so also for setting aside the orderpassed by the Tribunal in ITA No.613/Bang/1997 dated20-04-2001.TheRevenuehadalsoprayedfor.confirming the assessment order passed by the DeputyCommissioner of Income Tax, Special Range, Bangalore. The appeal was disposed of by this Court vide orderdated 28[.#]september 2006. The relevant observations|in the said order read thus: 4It appears that the Revenue had filed ITANo.260/2001 under Section 260A of the Income TaxAct, 1956 against the order dated 20[.#]April, 2001—passed in ITA No.613/Bang/1997 for the assessmentyear 1989-90 and so also for setting aside the orderpassed by the Tribunal in ITA No.613/Bang/1997 dated20-04-2001.TheRevenuehadalsoprayedfor.confirming the assessment order passed by the DeputyCommissioner of Income Tax, Special Range, Bangalore. The appeal was disposed of by this Court vide orderdated 28[.#]september 2006. The relevant observations|in the said order read thus: 3. One sri.M.P.Jairaj is dead. ThePolice searched the house of Sri.M.P.Jatiraj. They noticed cash and jewelleryin addition to documents in the matter of assets. The same were handed overtothe|Department.Originally,oru.M.P.Jatraj had not filed a return ofincome. On the death of M.P.Jairaj, theDepartment issued a _ notice undesection 148 of the Income Tax Act (forShort, ‘the Act’). Proceedings wereinitiated. His wife filed a return ofincome.Thereafter,|severalnoticeshave been issued. Some of them havereturned|unserved.In|the|circumstances, an adverse order waspassed by the Assessing Officer. Thesame was challenged by way of anappeal. The Appellate Authority haspassed an order. Aggrieved by theorder of the Appellate Authority, thelegal representatives of the assesseefiled an appeal before the Tribunal. TheTribunal has allowed the appeal on thesolegroundthatallthe|legalrepresentativesof|thedeceasedassessee were not brought on record.The Tribunal did not go into the meritsof the matter. This order is challengedin this appeal by the revenue. 4. Heard Sri.M.V.Seshachala, learnedCounselforthe|TeEvenueandsru.S.Parthasarathi, learned Counselfor the legal representatives of thedeceased asseSsee. oO. In the course of arguments, it 1sbroughttoOUT|noticethelatest Judgmentof|the|oupremeCourtreported in 219 ITR 737. The Supreme Court would say in the said Judgmentthat non-service of notice to the legalrepresentatives of the assessee wouldnot invalidate the assessment orderpassed by the Income Tax Officer. TheSupreme Court ruled that it was at bestan irregularity for which the AppellateAssistant Commissioner was justifiedin setting aside the assessments and itwas not a case fit for cancellation ofthe assessments. The said Judgment isequally applicable to the facts of theCAaASC 6. In the circumstances, we acceptthe appeal. The order of the Tribunal tsset aside. All questions of law areanswered in favour of the revenue. TheTribunal is to decide the matter onmerits. Parties are to appear before theTribunal, without waiting for any noticeon O2.11.2006. The Tribunal is toconsiderthematerialfactsandthereafter proceed to apply correct lawlaid down in the case on hand, withoutin any way being influenced by itsearlier order or by this order. TheTribunal is to complete the proceedingswithin five months thereafter. 5Thereatter|theRevenlUEfiled|anotherITANo.601/2007|inthisCourtagainstoneomt.Puttathayamma arising from the orders dated 16-02-2007.and16-07-2007|passedin.ITA No.613/Bang/2007 and M.P.No.64/Bang/2007. Inthat appeal, this Court after perusing the order dated28-09-2006 (of this court) passed in ITA No.260/2001,. disposed of the same by making following observations: “We are of the opinion that unless|there 1s proper adjudication by the cwilCOUTT withregardtothelegalrepresentatives of late late M.P.Jatray,nothing can be done further in thematter. Thus the Tribunal was Justifiedin directing the Assessing Officer toawait the outcome of adjudication withregard to L.Rs of late M.P.Jatiraj by thecivil court. We find that there is nosubstance in this appeal. 6.|After the order of this court, the Tribunal disposedof the appeal bearing ITA Nos.614-616/1997 vide order dated 31-01-2007. The concluding paragraph of theorder dated 31-01-2007 read thus: 4. Rival contentions heard. On a carefulconsiderationof|factsand.circumstances of the case, we are of theconsidered opinion that the issue inquestion should be set aside to the fileof|AssessingOfficerforfresh “We are of the opinion that unless|there 1s proper adjudication by the cwilCOUTT withregardtothelegalrepresentatives of late late M.P.Jatray,nothing can be done further in thematter. Thus the Tribunal was Justifiedin directing the Assessing Officer toawait the outcome of adjudication withregard to L.Rs of late M.P.Jatiraj by thecivil court. We find that there is nosubstance in this appeal. 6.|After the order of this court, the Tribunal disposedof the appeal bearing ITA Nos.614-616/1997 vide order dated 31-01-2007. The concluding paragraph of theorder dated 31-01-2007 read thus: 4. Rival contentions heard. On a carefulconsiderationof|factsand.circumstances of the case, we are of theconsidered opinion that the issue inquestion should be set aside to the fileof|AssessingOfficerforfresh adjudication. The Hon’ble High Courthas accepted the appeal of revenue anddirected the Tribunal to decide the|matter on merits. Neither the AssessingOfficer nor the CIT (A) has given aspeaking order on the issue of thesources of funds for acquisition of theproperty at 7, Arekempana Halll in1988 by Smt.Elizabeth. It is well settledthat the burden of proof lies on thepartywhichallegesbenaml1.TheAssessing Officer has to discharge thisburden. 5. We have also observed that theHon’ble High Court has not specificallydecidedthe.1SSuUuas|towhetheromt.Elizabeth can be considered a legalheir of Mr.M.P.Jayaraj. The revenuehas claimed in Question No.2 framedbefore the Hon'ble High Court that ithadstatements and documents in its!possession which exclusively prove thatSmt. Elizabeth1S (Olegalhetr|of|Mr.M.P.Jayaraj. The Assessing Officeris directed to furnish to the assessee allsuch statements and documents seized,whichShowhertobe|the|legalrepresentative and dispose off thematter in accordance with the law afterrecelvingexplanationsfromtheaSsSSCSSCENeedless|To Sayproperopportunity has to be provided beforedisposing the issue defendant nova.Thus all these appeals of the assesseeare allowed for statistical purposes. [|Having considered the background facts, againstwhich the aforementioned orders have been passed bythis Court and the Tribunal, we are not inclined to)interfere with the same unless the issue of heirship isfinally concluded. 8.|In our opinion, the Tribunal vide its order dated16[.#]July 2007 has rightly refused to interfere with itsorder dated 31-01-2007. In the circumstances, wedispose of this appeal. All contentions of the parties are kept open. It is needless to mention that the Assessing Officershall comply with the directions issued by the Tribunalvide its orders dated 31-01-2007 in ITA Nos.614-6160/1997 and 16-07-2007 in Misc. Petition No.67/2007expeditiously, but in any case after the adjudication bythe Civil Court with regard to the legal representatives of Late M.P.Jairaj as observed by this Court in the orderdated 1[(.]February 2008.| The appeal is accordingly disposed of. No costs. Sd/-.JUDGE|Sd/-|JUDGE| “x mpk/