Rajasthan H.C : Whether the learned Tribunal was right in law in not annulling assessment order and notice of demand for the asst. yr. 1972-73 when the assessment order and notice of demand were made in the name of a dead person ?

High Court Of Rajasthan : Jaipur Bench

Smt. Kesar Devi vs. CIT

Section 143, 148, 149

Asst. Year 1972-73

R.C. Gandhi, Actg. C.J. & M.N. Bhandari, J.

IT Ref. No. 95 of 1987

11th February, 2009

Counsel Appeared :

N.M. Ranka, for the Petitioner : Anuroop Singhvi, for the Respondent-Revenue

JUDGMENT

By the court :

This reference has been made by the Tribunal, Jaipur Bench, Jaipur in R.A. No. 46/Jp/1987 arising out of the ITA No. 1178/Jp/1985 pertaining to asst. yr. 1972-73 to this Court referring following questions of law for the opinion of this Court :

“1. Whether the learned Tribunal was right in law in not annulling assessment order and  for the asst. yr. 1972-73 when the assessment order and notice of demand were made in the name of a dead person ?

Whether the learned Tribunal was right in law in not followed decision of the Supreme Court reported in CIT vs. Amarchand N. Shroff (1963) 48 ITR 59 (SC) cited at the time of hearing ?

Whether the learned Tribunal was right in law in not annulling the assessment order and notice of demand on account of insertion of s. 292B in the IT Act, 1961 ?

Whether the learned Tribunal was right in law in not annulling the assessment order because of not bringing on records all the four legal representatives by the ITO particularly when the ITO was aware of there being four legal representatives of the deceased, Shri Jagannath Sharma ?

2. So far as question No. 4 is concerned, we have already deliberated question in D.B. IT Ref. No. 93 of 1987 titled as—Smt. Kesari Devi vs. CIT, Jaipur and three other connected references in the cases of the assessee pertaining to asst. yrs. 1975-76, 1976-77 and 1977-78 and to that extent the said judgment relating to these assessment years shall be applicable for the purpose of answer to this question. So far as question No. 3 is concerned, learned counsel for the assessee has submitted that the Tribunal in application of the law contained in s. 292B of the IT Act, 1961 was not correct, therefore, he does not press this question. Question Nos. 1 and 2 are inter-dependent questions. The authorities under the IT Act while deciding the assessment of the assessee pertaining to asst. yr. 1972-73, the judgment of the Supreme Court in para 2 has not been properly applied. Therefore, question Nos. 1 and 2 shall be answered conjointly. We have heard learned counsel for the parties and perused the record of the case. Assessee, Jagannath Sharma filed his IT return pertaining to the asst. yr. 1972-73. The AO passed final order on the assessment. The assessee thereafter died. On 1st July, 1978 notice under s. 148 of the IT Act was served for reopening the assessment to the assessee while he was dead on 30th March, 1981. Learned counsel for the petitioner has submitted that the assessment could be reopened only within a period of 8 years in terms of s. 149 of the IT Act by serving a notice under s. 148 of the IT Act. The notice was sent to the deceased Jagannath Sharma on 30th March, 1981 whereas notice on the legal representatives of the deceased was served certainly thereafter.

It is necessary to observe here that for the asst. yrs. 1975-76, 1976-77 and 1977-78, the notice was served upon Ramakant Sharma, son of the deceased, by the assessing authority and final assessment order was passed on 28th March, 1981. Widow of the assessee Smt. Kesar Devi filed an appeal before the Asstt. CIT(A), who decided the appeal vide his order dated 17th Feb., 1982 remanding the matter back to the AO. Against the order of the AO, again an appeal was filed by Smt. Kesar Devi, which came to be rejected observing that the appeal is not maintainable as the tax can be recovered from any of the legal representatives of the deceased assessee. Further appeal was preferred before the Tribunal against the order of the Asstt. CIT(A). The Tribunal vide its order dt. 17th Dec., 1986 while remanding the matter, set aside the order passed by the AO and directed him to decide the matter afresh after hearing all the legal representatives of the deceased, providing them opportunity of being heard and to the ITO as well. The point in issue, raised by learned counsel for the petitioner, is that the AO has no jurisdiction to reopen the assessment in terms of s. 148 of the IT Act as the period prescribed for reopening the assessment is only 8 years whereas notice on legal representatives of the deceased was issued after the expiry of statutory period for the asst. yr. 1972-73. For convenience ss. 148 and 149 are extracted below and reads as : “148. Issue of notice where income has escaped assessment—(1) Before making the assessment, reassessment or recomputation under s. 147, the ITO shall serve on the assessee a notice containing all or any of the requirements which may be included in a notice under sub-s. (2) of s. 139; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub-section. (2) The ITO shall, before issuing any notice under this section, record his reasons for doing so.” “149. Time-limit for notice—(1) No notice under s.

148 shall be issued—(a) in cases falling under cl. (a) of s. 147— (i) for the relevant assessment year, if eight years have elapsed from the end of that year, unless the case falls under sub-cl. (ii); (ii) for the relevant assessment year, where 8 years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more from that year; (b) in cases falling under cl. (b) of s. 147, at any time after the expiry of four years from the end of the relevant assessment year. (2) The provisions of sub-s. (1) as to the issue of notice shall be subject to the provisions of s. 151. (3) If the person on whom a notice under s. 148 is to be served is a person treated as the agent of a non-resident under s. 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such non-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year.”

It is not in dispute that the income chargeable to tax which escaped the assessment amounts to less than Rs. 50,000 for the relevant assessment year. Therefore, the period of limitation of eight years is relevant in the present case. We find that the notice could not be rebutted by the learned counsel for the respondent-Revenue by producing the record. We feel that it could (sic-not) be established from the record that the notice was issued within the statutory period of eight years to the legal representatives. The appeal was decided by the Tribunal vide order dt. 17th Dec., 1986 and pursuant to the same, notice was issued to the legal representatives. Therefore, this position is admitted by learned counsel for the respondent that the notice, if any, issued to the legal representatives has been issued after the judgment of the Tribunal. This factual position has not been rebutted. Taking into consideration the relevant provision of law and the facts of the case, we find that the AO has wrongly exercised the jurisdiction under ss. 148 and 149 of the IT Act in issuing the notice to the legal representatives, reopening the assessment after the expiry of limitation period. Accordingly, orders of the appellate authority and the Tribunal are set side and the assessment order passed by the AO on 27th Sept., 1972 holds the water and is maintained. So far as question framed that notice to the dead person has been issued, is concerned, notices have no doubt been issued to the dead person. It is settled principle of law that the case cannot be decided in the absence of the affected party. Therefore, notice to the dead person was illegal. For the aforesaid reasons, we answer the reference in favour of the assessee. The reference is accordingly disposed of.

[Citation : 321 ITR 344]