Citation Codes

Equivalent Citations

citation codes

Case Number

W.P (C) 8273/2015 & CM No. 17434/2015 (for stay)

Disposition

allowed

Attorney(S)

Mr. S. Krishnan, Advocate.
Mr. Zoheb Hossain, Advocate.

Judges

Justice Dr. S. Muralidhar
Justice Vibhu Bakhru

Acts

SECTION 148 INCOME TAX ACT 1961
provisions of sub-section (1), (a)
148 of the Income Tax Act, 1961
u/s 148 of the Income Tax Act, 1961
provisions of sub-section (2) of section 161, section 162, and section 167,
provisions of sub-section (4) and sub- section (5),

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Smart Summary

Structured Summary of the Opinion — Vipin Walia v. Income Tax Officer (Delhi High Court, 15.02.2016)

Factual and Procedural Background

A notice under Section 148 of the Income Tax Act, 1961, dated 27 March 2015, was issued by the Income Tax Officer (ITO), Ward-72(3), Delhi, addressed to Mr. Inder Pal Singh Walia seeking to reopen assessment for Assessment Year 2008-09. The postal authority returned that notice to the Department with the endorsement "Addressee expired." The record shows that Mr. Inder Pal Singh Walia had indeed died on 14 March 2015, i.e. prior to issuance of the 27 March 2015 notice.

On 15 June 2015 the ITO wrote to the petitioner (Mr. Vipin Walia, the son), enclosing a copy of the 27 March 2015 notice and requesting details of legal heirs/successors by 6 July 2015. The petitioner replied on 6 July 2015 pointing out his father's death on 14 March 2015 and contending that the proceedings under Section 148 were barred by limitation; he also stated he was unaware of his late father's financial affairs.

By a letter dated 18 July 2015 the ITO took the position that because the Department had not received intimation of the death, the original notice was not issued to a dead person, and treated the postal endorsement "addressee expired" as a refusal by family members to accept the notice. The Department persisted with proceedings under Sections 147/148. The petitioner challenged these actions by filing Writ Petition (Civil) No. 8273/2015; this Court issued notice and stayed further proceedings on 28 August 2015. No counter-affidavit had been filed by the Revenue by the time of the decision.

Legal Issues Presented

Whether a notice under Section 148/147 of the Income Tax Act issued to a person who had already died at the time of issuance (i.e., a notice addressed to a deceased assessee) is valid.
Whether proceedings under Section 147/148 can validly be initiated or continued against the legal representatives (LRs) of a deceased assessee when the notice required to be issued to the LRs was not issued within the statutory period of limitation.
Whether the postal endorsement "addressee expired" can be treated as a refusal by family members to accept service of the notice addressed to the deceased.

Arguments of the Parties

Petitioner (Mr. Vipin Walia)

Notified the ITO that his father, Inder Pal Singh Walia, had died on 14 March 2015.
Contended that proceedings under Section 148 were barred by limitation because the limitation date for issuing a notice under Section 147/148 for the relevant assessment year was 31 March 2015 and the notice issued on 27 March 2015 had been addressed to a person already deceased.
Stated he was unaware of the financial affairs or transactions of his late father.

Revenue / Income Tax Department

Asserted in a letter dated 18 July 2015 that because intimation of the death had not been received by the office, the notice issued on 27 March 2015 was not issued to a dead person.
Treated the postal endorsement "addressee expired" as if it were a refusal by the family members of the assessee to accept the notice.
Through learned counsel, relied on judicial authorities — notably Commissioner of Income Tax, Shillong v. Jai Prakash Singh (1996) 3 SCC 525 and Kamlesh Kumar Mehta v. Commissioner of Income-Tax, West Bengal-III (1977) 106 ITR 855 (Cal) — to support continuation of proceedings or the validity of proceedings taken against LRs in the circumstances argued by the Revenue.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Commissioner Of Income Tax, Shillong v. Jai Prakash Singh (1996) 3 SCC 525	Held that non-issuance of notice to all legal representatives, where proceedings at the instance of a legal representative were already in progress (the son had filed returns), would be an irregularity and not an illegality.	The Court found this decision distinguishable on facts and not helpful to the Revenue: in the cited case proceedings were already in progress at the instance of the LR, whereas in the present case the initial notice was issued to a person already deceased and no valid notice had been issued to the LRs within the period of limitation. Thus the Court treated the situation here as a plain illegality rather than a mere irregularity.
Kamlesh Kumar Mehta v. Commissioner of Income-Tax, West Bengal-III (1977) 106 ITR 855 (Calcutta)	Authority relied upon concerning service of notice where the assessee died; facts showed the initial notice under Section 148 was served on the assessee while he was alive and he died after service.	The Court held this decision distinguishable on facts because in that case the notice had been validly served while the assessee was still alive; therefore it did not support the Revenue's position here.
Braham Prakash v. Income-Tax Officer (2005) 275 ITR 242 (Delhi High Court)	Held in similar circumstances that "notice could have been served upon a deceased Assessee"; in that case there was nothing on record to show that the notice under Section 148 had been served on the LR within the prescribed time.	The Court acknowledged this decision as being in similar circumstances but noted that even in that case there was no evidence that notice had been served on the LR within time. The present Court nonetheless concluded that the Revenue's actions were misconceived on facts and on merits and therefore quashed the notice and proceedings.

Court's Reasoning and Analysis

The Court proceeded by establishing the chronological and legal facts exposed by the record:

The notice under Section 148 was dated 27 March 2015. The assessee, Inder Pal Singh Walia, had died on 14 March 2015. The postal endorsement "Addressee expired" reflected this and the death certificate confirming 14 March 2015 was on record.
The Court analysed Section 159 of the Income Tax Act, which governs proceedings where an assessee has died. The opinion highlights two relevant sub-provisions:
- Section 159(2)(a) — a proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued from the stage it stood at death;
- Section 159(2)(b) — a proceeding which could have been taken against the deceased had he survived may be taken against the legal representative.
The Court emphasised that Section 159(2)(b) permits initiation of proceedings against LRs even if they were not initiated while the assessee was alive, but subject to any applicable limitation period.
The Court then considered limitation. The limitation for issuance of notice under Section 147/148 for the relevant assessment year expired on 31 March 2015. Because the assessee was already dead on 27 March 2015, the Department could have issued a notice to the legal representatives before 31 March 2015; but having failed to do so, after 31 March 2015 the Department could not validly commence proceedings against the LRs by issuing the notice to the deceased (i.e., the Department could not cure the defect by later attempts once the limitation period had passed).
The Court examined the authorities relied upon by the Revenue and found them factually distinguishable:
- Jai Prakash Singh (1996) involved proceedings already instituted at the instance of the LR (the son) and addressed the effect of not issuing notice to all LRs; there non-issuance was characterised as an irregularity and not an illegality. The Court found this materially different because in the present case no valid notice was issued to LRs within the limitation period — the notice was addressed to a dead person.
- Kamlesh Kumar Mehta (1977) was distinguishable because the notice there had been served while the assessee was still alive; death occurred subsequently.
- Braham Prakash (2005) was noted as a decision that, in similar circumstances, treated service on a deceased assessee as possible, but in that case too there was no evidence that notice had been served on the LR within time. The present Court nevertheless reached the conclusion that the Revenue's persistence in the reassessment was misconceived.
For these reasons — the uncontroverted fact of death prior to issuance of the notice, the statutory mechanism in Section 159, and the limitation date having expired without valid notice to the LRs — the Court concluded that continuing proceedings under Sections 147/148 based on the 27 March 2015 notice was legally untenable.

Holding and Implications

Holding:

The Court's final decision was to quash the impugned notice dated 27 March 2015 and all proceedings consequent thereto. The writ petition was allowed and the application disposed of, with no order as to costs. The core ruling is:

QUASHED — The notice dated 27 March 2015 and all consequent proceedings under Sections 147/148 of the Income Tax Act were quashed.

Implications:

Direct effect: The petitioner (legal representative/son) is relieved of the reassessment proceedings initiated pursuant to the 27 March 2015 notice; those proceedings stand quashed.
Limitations on broader application: The Court's decision is founded on the specific facts that the assessee had died before the notice was issued and that the limitation period (31 March 2015) had expired without a notice having been validly issued to the legal representatives. The opinion treats the Revenue's actions as a plain illegality rather than a mere procedural irregularity. The Court did not purport to lay down any sweeping new legal principle beyond applying Section 159 and the limitation constraints to the facts before it.
No costs were awarded, and the petition was allowed; the application is disposed of.

This summary is based exclusively on the content of the provided opinion and does not add or infer facts beyond those recorded in the decision.

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Vipin Walia Petitioner v. Income Tax Officer

$~ * IN THE HIGH COURT OF DELHI AT NEW DELHI

17.

+ W.P.(C) 8273/2015 & CM No. 17434/2015 (for stay)

VIPIN WALIA ..... Petitioner Through: Mr. S. Krishnan, Advocate. versus

INCOME TAX OFFICER ..... Respondent Through: Mr. Zoheb Hossain, Advocate.

CORAM:

JUSTICE S. MURALIDHAR

JUSTICE VIBHU BAKHRU

O R D E R

% 15.02.2016 Dr. S. Muralidhar, J.:

1. There are certain instances where the facts speak for themselves and this is one such.

2. A notice under Section 148 of the Income Tax Act, 1961 ('Act') dated 27^thMarch 2015 was addressed by the Income Tax Officer (ITO) of Ward- 72(3), Delhi to one Mr. Inder Pal Singh Walia, 128 RPS, DDA Flats, Sheikh Sarai Phase-I, Delhi seeking to reopen the assessment for Assessment Year (AY) 2008-09.

3. The above notice was returned unserved to the Department with the postal authorities endorsing on it the remarks "Addressee expired". That was a correct statement by the postal authority since indeed Mr. Inder Pal Singh Walia had expired on 14^thMarch 2015. In other words, the notice dated 27^th March 2015 had been addressed to a dead person.

4. The ITO, obviously unmindful of the requirement of law as far as Section 147 of the Act was concerned, issued a letter dated 15^thJune 2015 to the Petitioner as under:

"Sir, Sub: Notice u/s 148 of the Income Tax Act, 1961 in the case of Sh. Inder Pal Singh Walia PAN - AAKPW8463F for the AY 2008-09 - reg.

Kindly refer to the subject mentioned above. In this connection, this is to inform you that a notice u/S 148 of the Income Tax Act, 1961 in the case of Sh. Inder Pal Singh Walia PAN - AAKPW8463F for the AY 2008-09 was issued by this office on 27^thMarch 2015. This notice has been received back in this office with the postal remarks 'addresses expired.'

On this basis of information received from the records, the undersigned spoke to you on your mobile No. 9818200740 on 15^thJune 2015. Kindly find enclosed the copy of notice u/S 148 of the Income Tax Act issued on 27^thMarch 2015 for the AY 2008-09 in the name of Sh. Inder Pal Singh Walia. You are further requested to kindly provide details of legal heirs/successor of the deceased Assessee to complete the assessment proceedings for the AY 2008-09. The required details should be submitted to the office of the undersigned on the above mentioned address on or before 6^th

July 2015."

5. On 6^thJuly 2015, the Petitioner wrote to the ITO pointing out that his father Shri Inder Pal Singh Walia had expired on 14^thMarch 2015 and that the proceedings initiated under Section 148 of the Act were barred by limitation. Additionally, it was stated that he was unaware of the financial affairs or transactions carried on by his late father.

6. On 18^thJuly 2015, the ITO took the stand that since the intimation of the death of Shri Inder Pal Singh Walia on 14^thMarch 2015 was not received by her office "therefore the notice was not issued on a dead person". To say the least this was a strange stand to take since the death certificate of Shri Inder Pal Singh Walia confirming the date of his death as 14th March 2015 is on record. With the Department having not been able to counter this basic fact, the stand taken by it that the notice was not issued to a dead person on 27^th March 2015 was plainly untenable.

7. Another stand taken in the letter dated 18^thJuly 2015 is treating the endorsement made by the postal authority ( 'addressee expired') as a refusal by the family members of the Assessee to accept the notice. This was again plainly erroneous. The notices were not addressed to the family members. Therefor, there was no occasion for them to refuse such notice. The postal authority had correctly noted that the person to whom the notice was addressed had indeed expired by then.

8. Proceeding on the above two erroneous stands, the Department

compounded its errors by insisting on continuing with the proceedings under Section 147/148 of the Act. It is at that stage that the Petitioner approached this Court.

9. While issuing notice in the petition on 28^thAugust 2015, this Court stayed further proceedings. No counter affidavit has been filed till date. Learned counsel for the Revenue sought some more time for that purpose. With the facts being evident and the question being purely one of law, the Court declines the request.

10. As far as Assessees who have expired, Section 159 of the Act sets out how the Department should go about proceeding against the legal representatives ('LRs') of such Assessee. The said provision reads as under:

"159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.

(2) For the purpose of making an assessment (including an assessment, reassessment or re-computation 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

(3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.

(4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undischarged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of or parted with.

(5) The provisions of sub-section (2) of section 161, section 162, and section 167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative.

(6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub- section (5), be limited to the extent to which the estate is capable of meeting the liability."

11. Section 159(2) of the Act makes a specific reference to a reassessment proceeding under Section 147 of the Act. While Section 159(2)(a) of the Act talks of a proceeding already taken against an Assessee 'before his death'. Section 159(2)(b) of the Act envisages any proceeding which could have been taken against the deceased if he had survived. It permits such a proceeding to be taken against the LRs of the deceased Assessee even if it had not taken while the Assessee was alive. Section 159(2)(b) is relevant as far as the present case is concerned.

12. What was sought to be done by the ITO was to initiate proceedings under Section 147 of the Act against the deceased Assessee for AY 2008-09. The limitation for issuance of the notice under Section 147/148 of the Act was 31^stMarch 2015. On 27^thMarch 2015, when the notice was issued, the Assessee was already dead. If the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31^stMarch 2015 by issuing a notice to the LRs of the deceased. Beyond that date it could not have proceeded in the matter even by issuing notice to the LRs of the Assessee.

13. Learned counsel for the Revenue sought to place reliance on the decision of the Supreme Court in Commissioner Of Income Tax, Shillong v. Jai Prakash Singh . (1996) 3 SCC 525 in support of his contention that the ITO was justified in initiating proceeding under Section 147 of the Act even against the Petitioner who admittedly was the LR of the deceased Assessee in this case.

14. A perusal of the said judgment reveals that it is clearly distinguishable on facts. Para 2 of the said decision shows that the son of the deceased Assessee there had filed returns for the three Assessment Years ('AYs') for which the deceased Assessee had failed to file the returns. In other words, the proceedings at the instance of the LR of the deceased Assessee were already in progress when the question arose about the notice being issued only to the LR who filed the returns or to all the LRs. The question was whether the failure to issue notice to all the LRs would render the proceedings invalid. It is in those circumstances it was held that the non-

issuance of notice to all the LRs would be only an irregularity and not an illegality.

15. The Court fails to understand how the above decision in Commissioner of Income Tax, Shillong v. Jai Prakash Singh (supra) is of any help to the Revenue in the present case where the initial notice under Section 147/148 of the Act was issued to a dead person. The Revenue was unable to issue a notice to the LR of the deceased Assessee under Section 147/148 of the Act within the period of limitation. That would be a plain illegality and not a mere irregularity.

16. Learned counsel for the Revenue then relied on the decision of the Calcutta High Court in Kamlesh Kumar Mehta v. Commissioner of Income-Tax, West Bengal-III (1977) 106 ITR 855 (Cal). The facts of that case show that the initial notice under Section 148 of the Act was served to the Assessee who was still alive. He died after the service of such notice under Section 148 of the Act. This makes the decision distinguishable on facts.

17. On the other hand, we have a decision of this Court in Braham Prakash

v. Income-Tax Officer (2005) 275 ITR 242 which in similar circumstances has held that "notice could have been served upon a deceased Assessee".

Even in that case there was nothing on record to show that notice under Section 148 of the Act was served on the LR of the deceased within the time prescribed.

18. Consequently, the Court has no hesitation in holding that the actions of the Revenue in this case in persisting with the proceedings under Section 147/148 of the Act against the Petitioner were wholly misconceived both on facts as well as on merits. Accordingly, the impugned notice dated 27^th March 2015 and all proceedings consequent thereto are hereby quashed.

19. The writ petition is allowed but in the circumstances with no order as to costs. The application is disposed of.

S. MURALIDHAR, J

VIBHU BAKHRU, J

FEBRUARY 15, 2016

Vipin Walia Petitioner v. Income Tax Officer

Structured Summary of the Opinion — Vipin Walia v. Income Tax Officer (Delhi High Court, 15.02.2016)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner (Mr. Vipin Walia)

Revenue / Income Tax Department

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

Vipin Walia Petitioner v. Income Tax Officer

Comments