Shri Kirankant Shah Thru.L/H Shri Tejas ... vs Income Tax Officer Ward Sendhwa
2023 Latest Caselaw 19936 MP

Madhya Pradesh High Court

Shri Kirankant Shah Thru.L/H Shri Tejas ... vs Income Tax Officer Ward Sendhwa on 29 November, 2023

Author: Sushrut Arvind Dharmadhikari

Bench: Sushrut Arvind Dharmadhikari, Pranay Verma

                                                             1
                           IN     THE      HIGH COURT OF MADHYA PRADESH
                                                 AT INDORE
                                                  BEFORE
                           HON'BLE SHRI JUSTICE SUSHRUT ARVIND DHARMADHIKARI
                                                     &
                                   HON'BLE SHRI JUSTICE PRANAY VERMA
                                             ON THE 29 th OF NOVEMBER, 2023
                                             WRIT PETITION No. 10206 of 2023

                          BETWEEN:-
                          SHRI KIRANKANT SHAH THRU.L/H SHRI TEJAS
                          K.SHAH, AGED ABOUT 46 YEARS, OCCUPATION:
                          ADVOCATE 01 AGRAWAL COLONY, NIWALI ROAD,
                          SENDHWA, BARWANI (MADHYA PRADESH)

                                                                                         .....PETITIONER
                          (SHRI ASHISH GOYAL, LEARNED COUNSEL FOR THE PETITIONER)

                          AND
                          1.    INCOME TAX OFFICER WARD SENDHWA INCOME
                                TAX OFFICE, INCOME TAX BUILDING, AB ROAD
                                NEAR UNION BANK SENDHWA - TEHSIL
                                (MADHYA PRADESH)

                          2.    PR. COMMISSIONER OF INCOME TAX 1 AAYKAR
                                BHAWAN, INDORE (MADHYA PRADESH)

                                                                                      .....RESPONDENTS
                          (MS VEENA MANDLIK, LEARNED COUNSEL FOR THE RESPONDENT)



                                This petition coming on for admission this day, Justice Sushrut Arvind
                          Dharmadhikari passed the following:
                                                              ORDER

Heard finally with the consent of parties.

The present petition under Article 226 of the Constitution of India challenges the notice under Section 148A(b) of the Income Tax Act, 1961(referred to as 'the Act of 1961' hereinafter) for the assessment year 2019-

20 dated 27.03.2022 issued in case No. ITBA/AST/F/148A(SCN)/2022- 23/10514278(1) [Annexure P-3], as well as order u/S 148A(d) of the Act of 1961 dated 31.03.2022[Annexure P-5] for the assessment year 2019-20.

2. Brief facts of the case are that petitioner who was the legal heir of the original assessee received a notice DIN NO. ITBA/AST/F/148A(SCN)/2022- 23/1051427815 dated 27.03.2022 from the respondent no.1 under Section 148A(b) of the Act of 1961 disclosing that income chargeable to tax for the Assessment Year 2019-20 has escaped assessment within the meaning of Section 147 of the Act of 1961 and the petitioner is required to show cause as to why a notice u/S 148 of the Act of 1961 should not be issued and he was

directed to submit reply to the notice alongwith supporting documents. The petitioner filed a reply to the said notice informing that the original assessee Mr. Kirankant Shah had expired on 05.04.2021 and also annexed a copy of the death certificate. Subsequently, order u/S 148A(d) of the Act of 1961 dated 31.03.2022 was passed in the name of original assessee who is dead despite informing about his death alongwith his death certificate. It has been mentioned in the order that a search and seizure under Section 132 of the Act of 1961 was conducted in case of Rajyash Reeva Group. During the course of search and seizure, various incriminating evidences including loose paper Annexure -A was found relating to M/S Reeva Corporation engaged in the real estate business running Rajyash Reeva Scheme. The said loose paper contains list of customers who have made cash payments to M/S Reeva Corporation during the financial year 2018-19 relevant to the Assessment year 2019-20 in connection with the purchase of a Unit in Rajyash Reeva Scheme. As per the said document, the assessee paid Rs. 12,75,000/- in cash during the financial

year 2018-19 relevant to the Assessment Year 2019-20 while purchasing the Unit No. B-304 in Rajyash Reeva Scheme. For verification of the above purchase the respondent has taken accord of the competent authority and issued show cause notice u/S 148A(b) of the Act of 1961. In response to the said show cause notice, the legal heir of the assessee has filed death certificate of the original assessee. The reply of the legal heir has been considered but not found to be acceptable and the entire payment of On-Money in cash amounting to Rs. 12,75,000/- is treated as undisclosed income of the assessee for the Assessment Year 2019-20 which is also chargeable to tax and the same has escaped the assessment and therefore, case of the petitioner is considered to be fit for issuance of notice u/S 148 of the Act of 1961. Hence the present petition is filed.

3 . Learned counsel for the petitioner submitted that an essential condition to issue notice u/S 148 of the Act of 1961 is that the notice be issued to the person who is alive and the same cannot be issued to a dead person. In the instant case, when the initial notice u/S 148A(b) of the Act of 1961 was issued on 27.03.2023, it was clearly brought to the notice of the respondent vide letter dated 29.03.2023 that Shri Kirankant Shah is not alive and his death certificate was also annexed. It was further mentioned that Shri Tejas K. Shah may be treated as legal heir of Shri Kirankant Shah. Hence, the respondents

have to initiate proceedings against the legal heir by issuing fresh notice. Despite being aware that Shri Kirankant Shah is no more , the order u/S 148A(d) was addressed to deceased assessee. However, the fact remains that the order u/S 148A(d) was issued and addressed to Kirankant Singh.

4 . It is further submitted that where petitioner-legal heir of assessee- deceased had supplied death certificate of assessee to concerned officer within

a short period after his/her demise, impugned reopening notice issued subsequently under Section 148 of the Act of 1961 in the name of the deceased was illegal and thus liable to be set aside as held in the case of Smt. Madhuben Kantilal Patel Vs. Union of India reported in [2023]148 taxmann.com 202(Gujarat).

5 . He further placed reliance on the case of J. Kishorekumar V. Income Tax Officer reported in [2022] 139 taxmann.com 47 (Madras) wherein it has been held as under:

"Where petitioner, legal representative challenged impugned notice issued under Section 148 on the ground that notice had been issued in name of his deceased father, revenue was to be directed to issue appropriate notice to petitioner under Section 148 of the Act of 1961 as a legal representative."

6. He also placed reliance on the case of Krishnaawtar Kabra Vs. Income Tax Officer reported in [2022] 140 taxmann.com 432(Gujarat) [29.03.2023] where it has been held that reopening notice u/S 148 issued upon deceased assessee was void ab intio and therefore consequential proceedings and orders passed thereon were without any jurisdiction and where to be quashed and set aside.

7. It is also submitted that if respondents rely upon Section 159 of the Act of 1961, the same would be of no avail as the same applies only to a situation where proceedings are initiated/pending against the assessee when he/she is alive and after his/her death, proceedings are permitted to be continued as against the legal heirs. While passing the order u/S 148A(d) of the Act of 1961, provisions of Section 159 of the Act of 1961 were quoted. Clause (a) of

sub-section(2) of Section 159 of the Act of 1961 provides for the eventuality where a proceeding has already been initiated against the deceased before his death and in such a case, proceedings 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 started on the date of death of the deceased. In the present case, the proceedings u/S 147 of the Act of 1961 had not been initiated against the deceased prior to his death. Hence, clause (a) would not be applicable to the case of petitioner. Rather, the case of petitioner falls within the ambit of caluse (b) of sub-section (2) of Section 159 of the Act of 1961. Hence, the proceedings can be undertaken against the legal representative.

8. Moreover, the order issued under Section 148A(d) of the Act of 1961 only gives mere reference of the petitioner as legal heir of the deceased that too by reproducing the reply of show cause notice given by the petitioner. However, the same was issued in the name of deceased asessee. In the order passed u/S 148A(d), it has been categorically mentioned that payment of on- money in case amounting to Rs. 12,75,000/- is treated as undisclosed income of the asessee for the Assessment Year 2019-20 and the same escaped assessment in the year 2019-20. Being the legal heir, he was not bound to put forth explanation since the original assessee has died before initiation of proceedings. The order was issued without application of mind and without giving any reasons. Hence, writ of certiorari/or a writ of mandamus or writ or direction be issued to quash the notice dated 27.03.2022 under Section 148A(b) of the Act of 1961 as well as the order dated 31.03.2022 under Section 148A(d) of the Act of 1961 and the respondents be directed to withdraw or cancel the aforesaid

notice as well as order.

9. Learned counsel for the respondent/Income Tax Department by placing reliance on the various judgments of the Apex Court as well as the High Court submitted that petition against order u/S 148A(d)/Notice u/S 148 of the Act of 1961 for initiation of reassessment proceedings is not tenable as all such objection have to be raised before the Assessing Officer as it is not a final adjudication of the matter where no further statutory remedy against the adjudication order is available.[Salil Gulati Vs. ACIT(2023(455 ITR 29 (SC) , Ajay Gupta Vs. ITO 454 ITR 794 (SC) (2023), Seema Gupta Vs ITO 455 ITR 504 2023(SC) , Anshul Jain Vs. PCIT Specal Leave to Appeal(C) No. 14823/2022, Harinder Singh Bedi Vs. UOI(MP) W.P. NO.

                          22734/2022,      and       Amit   Homes    Pvt.   Ltd.    V/S    DCIT      W.P.
                          NO.15244/2023(M.P.)]

10. She further submits that the question of going into the veracity and genuineness of material/evidence forming the opinion of the Assessing Officer

suggesting that income of petitioner has escaped assessment ought not be gone into while exercising writ jurisdiction under Article 226 or Supervisory jurisdiction under Article 227 of the Constitution of India. On all these grounds the present petition deserves to be dismissed at the admission stage itself. However, petitioner would be at liberty to avail the statutory remedy under the Income Tax Act in accordance with law.

11. We have heard learned counsel for the parties and perused the record.

12. The issue which falls for consideration of this Court is as to whether the impugned notice under Section 148 of the Act of 1961 is issued in the name of dead person i.e. Mr Kirankant Shah is enforceable in law. The fact that Mr.

Kirankant Shah died on 05.04.2021 is not disputed. The notice issued in the name of the dead person is unenforceable in the eyes of law.

13. It has been observed by the Delhi High Court in the case of Savita Kapila Vs. Asstt. CIT reported in [2020]118taxmann.com46/273 Taxman 148/426 IRT 502/108 CCH 0049 DelHC] as under:

"In the absence of a statutory provision it is difficult to cast a duty upon the legal representatives to intimate the factum of death of an assessee to the income tax department."

"Consequently, the legal heirs are under no statutory obligation to intimate the death of the assessee to the revenue."

14. The Madras High Court in the case of Alamelu Verappan(supra) has observed as under:

"Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee to take steps to cancel the PAN registration."

15. Similar view has been taken by the High Court of Mumbai in Sumit Balkrishna Gupta Vs. Asstt. CIT[2019] 103 taxmann.com 188/262 Taxman 61/414 ITR 292/104 CCH 0379 MumHC] wherein it has been observed as under:

"7. The issue of a notice under Section 148 of the Act is a foundation for reopening of assessment. The sine qua non for acquiring jurisdiction to reopen an assessment is that such notice

should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not a merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. Thus, a notice which has been issued in the name of the dead person is also not protected either by provisions of Section 292B or 292BB of the Act. This is so as the requirement of issuing a notice in the name of correct person is the foundational requirement to acquire jurisdiction to reopen the assessment. This is evident from Section 148 of the Act, which requires that before a proceeding can be taken up for reassessment, a notice must be served upon the assessee. The assessee on whom the notice must be sent must be a living person i.e. legal heir of the deceased assessee, for the same to be responded. This in fact is the intent and purpose of the Act. Therefore, Section 292B of the Act cannot be invoked to correct a foundational/substantial error as it is meant so as to meet the jurisdictional requirement."

16. In view of the above, reopening notice under Section 148 of the Act, 1961 issued in the name of a dead assessee is null and void being without jurisdiction. Recently, this Court in the order dated 23.11.2023 passed in W.P. No. 9697/2022 has also held that notice and all consequential proceedings arising therefrom in the name of deceased assessee are not sustainable.

17. In view of the above and that various High Courts as well this Court has recently observed that the notice issued to a dead person for reopening of assessment of a dead person is null and void, this Court holds that the notice

and all consequential proceedings arising therefrom in the name of the deceased assessee are not sustainable.

18. Consequently, the impugned notice dated 27.03.2023 passed in case No. ITBA/AST/F/148A(SCN)2022-23/1051427815(1) as well as order u/S 148A(d) of the Act of 1961 dated 31.03.2022 for the assessment year 2019- 2020 are quashed and all actions in furtherance thereto are prohibited. However, liberty is given to the respondent to reinitiate proceedings against the petitioner/legal heir of deceased Shri Kirankant Shah, if so advised.

19. Petition is therefore allowed. No order as to cost.

                               (S. A. DHARMADHIKARI)                                   (PRANAY VERMA)
                                        JUDGE                                              JUDGE
                          sh