revisional action of the PCIT whereby the Assessing Officer was directed to pass the assessment order denovo after making inquiries on the points set out revisional order. The assessee has challenged the assumption of jurisdiction by the PCIT under Section 263 of the Act on the ground that; (i) the initiation of revisional proceedings and consequential order under Section 263 of the Act is in the name of a deceased person is a nonest and unsustainable in the eyes of law

(ii) the assessment order under revision is neither erroneous nor prejudicial to the interest of the Revenue and thus revisional commissioner was not competent to exercise revisional powers.

3. Briefly stated, return of the assessee under Section 143(3) r.w. Section 147 was assessed at Rs.1,35,682/-. Thereafter, the PCIT called for the assessment records and opined that the assessment order so passed is erroneous in so far as prejudicial to the interest of the Revenue. A show cause notice dated 20.03.2021 was issued to the assessee seeking his response. It may be pertinent to reproduce the show cause notice issued by the PCIT for abbreviation of controversy.

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

INCOME TAX DEPARTMENT

OFFICE OF THE PRINCIPAL COMMISSIONER OF INCOME TAX

PCIT, Faridabad

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NOTICE FOR THE HEARING

M/s/Mr/Ms

Subject: Notice for Hearing in respect of Revision proceedings u/s 263 of the THE INCOME TAX ACT, 1961 - Assessment Year 2011-12. In this regard, a hearing in the matter is f ixed on 05/04/20^1 at 11:00 AM. You are requested to attend in person or through an authorized representative to submit your representation, i f any alongwith supporting documents/information in support of the issues involved (as mentioned below). I f you wish that the Revision proceeding be concluded on the basis of your writ ten submissions/representations f i led in this off ice, on or before the said due date, then your personal attendance is not required. You also have the option to f i le your submission from the e-f i l ing portal using the l ink:

incometaxindiaefi l ing.gov.in

The assessment in this case was completed u/s 143(3)/147 vide order dated 15.11.2018 by the Assessing Officer and returned Income of Rs.1,35,682/- was accepted.

2. On perusal of the assessment records of the aforesaid assessee for the A.Y. 2011-12, following discrepancies are noticed:

"The assessee had not f i led Income Tax Return for A.Y. 2011-12. Later on the case was selected for scrutiny under 148 as the assessee has deposited cash of Rs. 1,00,01,000/- on various dates in his bank accounts maintained with State Bank of Patiala. Subsequent to service of Notice u/s 148, the assessee f i led ITR declaring income of Rs. 1,35,682/- .

From the records, i t is observed that the assessee submitted bank statement which depicted cash deposits of Rs.50,01,000/- received against sale of land. The assessee submitted that the land in consideration was agricultural land and not a capital asset as population of Farrukhnagar MC in last census was only

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9521 which is less than defined in section 2(14). But the contention of assessee is not correct the municipal committee existed in Farrukhnagar as per sale deed and population of Farrukhnagar as per last census (www.censusindia.co.in) was 134848 instead of 9521. Hence, the land sold was capital asset and Capital Gain tax is applicable on sale of the same. "

3. On the basis of discrepancies, i t is observed that the assessment framed by the Assessing Officer u/s 143(3)/147 is prima facie erroneous in so far as i t is pre-judicial to the interest of revenue.

4. Keeping in view the above facts, you are provided an opportunity to show cause as to why the assessment order passed by the ITO, dated 15.11.2018 for the A.Y. 2011-12 in your case should not be revised u/s 263 of the Act. You are requested to present the case on 23.03.2021 in writ ing or produce or cause to be produced at the said t ime, any documents or any other evidence on which you rely in your support .

5. In case of no reply/non-attendance as per above, i t shall be assumed that you do not wish to say anything in the matter and the matter would be decided as per material available on record without any further notice/intimation to you. PCIT, Faridabad 4. A revision order was eventually passed by which the PCIT set aside the assessment so completed and remanded the matter back to the file of the Assessing Officer for fresh adjudication thereof on issues alleged in the show cause notice.

5. Aggrieved, the assessee preferred appeal before the Tribunal.

6. When the matter was called for hearing, two fold contentions

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were raised on behalf of the assessee.

6.1 Firstly, it was contended that the assessee, namely, Vas Dev expired on 04.12.2020 whereas the show cause dated 20.03.2021 has been issued and addressed to the deceased-assessee, namely, Vas Dev instead of legal heir. It was thus contended that the show cause notice issued in the name of a deceased person is nonest and thus liable to be quashed at the threshold. For this proposition, the ld. counsel for the assessee vehemently referred to the judgment rendered by the Hon'ble Delhi High Court in the case of Dharamraj vs. ITO, WP (C) 9227/2021 dated 17.10.2022 and Savita Kapila vs. ACIT WP (C) No.3258/2020 judgment dated 16.07.2020; (ii) secondly, show cause notice was issued initially on 20.03.2021 asking the assessee to appear on 05.04.2021, i .e., after the expiry of the limitation on 31.03.2021. However, the aforesaid show cause notice was later modified and the fresh notice dated 25.03.2021 was issued through e-mail and the matter was fixed for hearing on the immediate next date on 26.03.2021 in grave violation of principle of natural justice. There was no participation on behalf of the deceased-assessee in the proceedings and no further opportunity was given to the assessee/legal heir to defend his case. The revisional order was summarily passed on 28.03.2021 whereby the assessment order in question and the revision was set aside for fresh consideration. It was submitted by the ld. counsel for the assessee that the revisional order is not sustainable in law in the absence of mandatory requirement of opportunity enshrined in Section 263 itself. It was thus urged for cancellation of the revisional order passed under Section 263 of the Act in question.

7. Ld. Sr.DR, on the other hand, relied upon the contents of the revisional order.

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8. We have heard the rival submissions and perused the material placed before us and case laws cited. Firstly, we consider it expedient to address ourselves on legality of show cause notice and consequent revisional order passed under Section 263 of the Act. The issue of validity of a notice and proceedings held subsequent thereto against a dead person is no longer res integra. The Hon'ble Delhi High Court in the case of Dharamraj vs. ITO (supra) has examined the issue in length and held that the notice issued against a death person is null and void and all consequent proceedings/orders being equally tainted are liable to be set aside. The relevant operative paragraph in Dharamraj's case is reproduced herein for the sake of completeness of the point.

8. The issue of validity of a notice and proceedings held subsequent thereto against a dead person is no longer res integra. This Court in Savita Kapila vs. Assistant Commissioner of Income-Tax, in W.P. (C) No.3258/2020 has held as under:

"AN ALTERNATIVE STATUTORY REMEDY DOES NOT OPERATE

AS A BAR TO MAINTAINABILITY OF A WRIT PETITION WHERE

THE ORDER OR NOTICE OR PROCEEDINGS ARE WHOLLY

WITHOUT JURISDICTION. IF THE ASSESSING OFFICER HAD

NO JURISDICTION TO INITIATE ASSESSMENT PROCEEDINGS.

THE MERE FACT THAT SUBSEQUENT ORDERS HAVE BEEN

PASSED WOULD NOT RENDER THE CHALLENGE TO

JURISDICTION INFR UCTUOUS.

24. Further, the fact that an assessment order has been passed and i t i s open to cha llenge by way o f an appeal , does not denude the pe t i t ioner o f i t s r igh t to cha llenge the no tice for assessment i f i t is withou t jur isdic t ion. I f the assumption of jurisd ict ion is wrong, the assessment order passed subsequent would have no legs to s tand. I f the not ice goes, so does the order of assessment. I t i s t r i te law that i f the Assess ing Of f icer had no jurisd ic t ion to

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in i t ia te assessment proceeding , the mere fact that subsequen t orders have been passed would no t render the cha llenge to jur isdic t ion infructuous.

xxxxx

THE SINE QUA NON FOR ACQUIRING JURISDICTION TO

REOPEN AN ASSESSMENT IS THAT NOTICE UNDER SECTION

148 SHOULD BE ISSUED TO A CORRECT PERSON AND NOT TO

A DEAD PERSON. CONSEQUENTLY. THE JURISDICTIONAL

REQUIREMENT UNDER SECTION 148 OF THE ACT. 1961 OF

SERVICE OF NOTICE WAS NOT FULFILLED IN THE PRESENT

INSTANCE.

xxxxx

26. In the opin ion of th is Court the i ssuance o f a notice under Sect ion 148 of the Ac t is the foundation for reopening o f an assessment. Consequen tly , the sine qua non for acqu iring jur isdic t ion to reopen an assessment is tha t such notice should be issued in the name o f the correc t person. This requirement o f issu ing not ice to a correct person and not to a dead person i s no t merely a procedural requirement but is a condit ion preceden t to the impugned notice be ing valid in law. [See Sumit Ba lkrishna Gupta v . Asst Commiss ioner of Income Tax, Circle 16(2), Mumbai & Ors . , (2019) 2 TMI1209- Bombay High Court] ,

27. xxxxx Consequent ly , in view of the above, a reopening notice under Sect ion 148 of the Ac t , 1961 issued in the name o f a deceased assessee i s nul l and vo id .

XXXX.XX

AS IN THE PRESENT CASE PROCEEDINGS WERE NOT

INITIATED/PENDING AGAINST THE ASSESSEE WHEN HE WAS

ALIVE AND AFTER HIS DEATH THE LEGAL REPRESENTATIVE

DID NOT STEP INTO THE SHOES OF THE DECEASED

ASSESSEE. SECTION 159 OF THE ACT. 1961 DOES NOT APPLY

TO THE PRESENT CASE.

30. Sect ion 159 of the Act , 1961 applies to a s i tua tion where proceedings are in i t ia ted/pending against the assessee when he is

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alive and af ter his dea th the legal represen tat ive steps in to the shoes of the deceased assessee. S ince tha t i s not the present factua l scenario , Sec t ion 159 of the Act , 1961 does no t apply to the presen t case.

31. xxxxx

THERE IS NO STATUTORY REQUIREMENT IMPOSING AN

OBLIGATION UPON LEGAL HEIRS TO INTIMATE THE DEATH

OF THE ASSESSEE.

32. This Court i s o f the view tha t in the absence of a sta tutory prov is ion i t i s d i f f icul t to cast a duty upon the legal represen tat ives to in t imate the factum of death of an assessee to the income tax department . A fter al l , there may be cases where the legal representa t ives are es tranged from the deceased assessee or the deceased assessee may have bequeathed his ent i re wea lth to a chari ty . Consequent ly , whether PAN record was updated or not or whether the Department was made aware by the lega l represen tat ives or not i s irre levan t . In A lamelu Veerappan (supra) [2018 (6 ) TMI 760 - Madras High Court] i t has been he ld"nothing has been placed be fore th is Court by the Revenue to show that there i s a s tatu tory obligat ion on the part o f the legal represen tat ives of the deceased assessee to immedia te ly in t imate the dea th of the assessee or take s teps to cancel the PAN reg is t rat ion. "

xxxxx

34. Consequent ly , the legal heirs are under no sta tutory obligat ion to in t imate the death o f the assessee to the Revenue.

SECTION 292B OF THE ACT. 1961 HAS BEEN HELD TO BE

INAPPLICABLE. VIS-A- VIS. NOTICE ISSUED TO A DEAD

PERSON IN RAJENDER KUMAR SEHGAL 12018 (12) TMI 697

(DELHI)] . CHANDRESHBHAI JAYANTIBHAIPATEL 12019 (I )

TMI353 - GUJARAT HIGH COURT1 AND ALAMELU VEERAPPAN f2018 (6 ) TMI 760 - MADRAS HIGH COURT1.

35. This Court is o f the opinion that i ssuance of no tice upon a dead person and non-serv ice of not ice does not come under the

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ambi t o f mis take, de fect or omission. Consequently , Sect ion 292B of the Ac t , 1961 does no t apply to the presen t case.

IN RAJINDER KUMAR SEHGAL (SUPRA) A COORDINATE

BENCH OF THIS COURT HAS HELD THAT SECTION 292BB OF

THE ACT 1961 IS APPLICABLE TO AN ASSESSEE AND NOT TO

A LEGAL REPRESENTATIVE.

xxxxx

38. Th is Court i s a lso of the v iew tha t Sect ion 292BB o f the Act , 1961 is appl icable to an assessee and not to a legal represen tat ive . Further , in the presen t case one of the lega l he irs of the deceased assessee, i . e . the pet i t ioner, had ne i ther coopera ted in the assessment proceed ings nor f i led return or waived the requirement of Sect ion 148 of the Ac t , 1961 or submit ted to jur isdic t ion of the Assessing Of f icer. She had mere ly uploaded the dea th cer t i f ica te o f the deceased assessee. xxxxxx

40. Consequent ly , the applicab il i ty o f Sec t ion 292BB of the Ac t , 1961 has been he ld to be at t rac ted to an assessee and not to legal represen tat ives. "

9 . The above judgment was fo l lowed by th is Court in W.P. (C) No.2678/2020 t i t led Mrs. Sripa thi Subbaraya Manohara L/H Late Sr ipathi Subbaraya Gupta vs. Principa l Commiss ioner of Income Tax 22, N.Delhi & Anr.

10. In the presen t case also , as the notice under Sect ion 148 of the Act was i ssued against a dead person, the same is nul l and void and al l consequent proceedings/orders, inc luding the assessment order and the subsequen t not ices, being equally ta inted, are l iable to be se t aside .

11. Consequen tly , the impugned not ice dated 30 .03.2019 i ssued under Sect ion 148 of the Act i s se t as ide along with al l consequentia l proceedings/notices/assessment orders.

12. The pet i t ion i s a l lowed. There sha ll be no order as to costs ." 9. In terms of the explicit observations made in the judgment of

9

the Hon'ble Delhi High Court, we find considerable merit in the plea on behalf of the legal heir for the assessee that the entire proceedings beginning from issue of show cause notice and culminating in revisional order under Section 263 of the Act is a nonest exercise and cannot be given effect in law regardless of the fact whether the revenue was privy to death or otherwise.

10. We also advert to the second plank on behalf of the assessee that the show cause notice dated 20.03.2021 originally issued fixing the date of hearing beyond the limitation period is bad in law and is not a curable defect. We see no merit in such plea. The show cause notice was admittedly revised and a fresh notice dated 25.03.2021 was issued fixing the date of hearing within the limitation period. The revisional authority was entitled in law to rectify such error.

11. We also simultaneously advert to another plank on behalf of the assessee alleging total lack of opportunity while concluding the proceedings under Section 263 of the Act. It is apparent from the records that solitary show cause notice issued to the assessee was for attendance on the very next date, i .e. , 26.03.2021 in substitution of the first show cause notice fixing the hearing beyond limitation period. No other opportunity was given to the assessee. We are constraint to observe that such a casual approach of a very senior functionary of the Department does not augur well in the eyes of public and cannot be countenanced on the touchstone of sacrosanct principle of natural justice explicit in 263 itself. A question would arise as to whether a failure to give a reasonable opportunity to the assessee of being heard was only a procedural irregularity in such gross circumstances and thus curable and did not render the order passed by PCIT void ab initio and nonest in law per se.

12. In the case of Tata Chemicals Limited vs. DCIT, ITA

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No.3127/Mum/2010, order dated 30.06.2011, the co-ordinate bench after making reference to the decision in the judgment in Maneka Gandhi vs. Union of India, AIR 1978 SC 597, and other judgments observed that the order which infringes the fundamental principle, passed in violation of audi alteram partem rule, is a nullity. When a competent Court or authority holds such an order as invalid or sets it aside, the impugned order becomes null and void. Once it is concluded that the order in question is null and void, it is not for the adjudicating authority to advise the Commissioner as to what should he do. He is always at liberty to do whatever action he can take in accordance with the law, but a life to null and void order by remitting it back to the Commissioner for giving a fresh opportunity of passing the order, after giving the assessee an opportunity of hearing, cannot be given. In a case, where it is possible for the Commissioner to pass a fresh order at this stage in accordance with the scheme of the Act, he can very well do so but in case the time limit for passing such order has already expired, such time limit cannot be extended by directing him to pass the order after giving an opportunity of hearing to the assessee. Otherwise, this would tantamount to giving premium to the authority committing default. The finality of the assessment cannot be disturbed for the failure of the PCIT to obdurately adhere to the explicitly prescribed requirement of opportunity to assessee.

13. Hence,

in the absence of any opportunity to the assessee, for which the fault is attributable squarely to the PCIT is fatal and such defect being incurable, the revisionary order passed under Section 263 of the Act is also required to be quashed independently on this ground also.

14. Hence, looking from any angle, the impugned revisional order

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passed under Section 263 of the Act is set aside and quashed.

15. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 03/03/2022.

Sd/- Sd/-

[AMIT SHUKLA] [PRADIP KUMAR KEDIA]

JUDICIAL MEMBER ACCOUNTANT MEMBER

DATED: 03/03/2022

Prabhat

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