Income Tax Appellate Tribunal (ITAT), New Delhi: The Coram of Amit Shukla (Judicial Member) and Pradip Kumar Kedia (Accountant Member) allowed an appeal against a revisional order passed under Section 263 of the Income Tax Act, 1961.
The appeal had been filed led at the instance of the legal heir and wife of the deceased-assessee (Vas Dev) against the revisional order of the Principal Commissioner of Income Tax, Faridabad whereby the assessment order passed by the Assessing Officer under Section 143(3) read with Sect ion 147 of the Act was sought to be set aside for reframing the assessment in terms of supervisory jurisdiction.
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 Sect ion 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.
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. Thus the instant appeal was filed.
Firstly, it was contended that the assessee, namely, Vas Dev expired on 04-12-2020 whereas the show cause dated 20-03-2021 had been issued and addressed to the deceased-assessee, namely, Vas Dev instead of legal heir. 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.
The Tribunal held that the issue of validity of a notice and proceedings held subsequent thereto against a dead person was no longer res integra as the Delhi High Court in Dharamraj v. ITO, WP (C) 9227 of 2021 dated 17-10-2022 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 Tribunal while reiterating the relevant parts of the above judgment found 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 Sect ion 263 of the Act was a nonest exercise and cannot be given effect in law regardless of the fact whether the revenue was privy to death or otherwise. The Tribunal further held that fixing the date of hearing beyond the limitation period was bad in law and was not a curable defect.
The Tribunal also noted that no other opportunity was given to the assessee while concluding the proceedings under Section 263 of the Act.
“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 . “
Hence, in the absence of any opportunity to the assessee, for which the fault was attributable squarely to the PCIT was fatal and such defect being incurable, the revisionary order passed under Section 263 of the Act was also quashed independently on this ground.
The appeal was allowed and revisional order was set aside.
[Sheela Devi v. Principal Commr. of Income Tax, 2022 SCC OnLine ITAT 75, decided on 03-03-2022]
Appellant by: Ms Swati Talwar
Respondent by: Shri Ajay Kumar