Assessment order in name of deceased is not valid and void ab initio [Read order]
The above judgement was passed vide order Dt. 16.10.2023 in case of Late Shri Motilal Hastimaji Bothra Through Legal Heir Smt. Bhanwari Devi V/s Income Tax Officer Ward–19(2)(3), Mumbai
Summary of judgement is as under:
Reassessment initiated in the name of deceased person and since no response was received from assessee Ld. AO passed order in the name of deceased. Aggrieved by the order of AO and CIT(A), legal heir of assessee preferred an appeal before Tribunal and Hon’ble Tribunal held that since no notice or order was passed in name of Legal heir of assessee, hence such assessment was non-est in law and hence was to be quashed.
Full Text of order is as under:
The present appeal has been filed by the legal heir of the assessee challenging the impugned order dated 12/05/2023, passed under section 250 of the Income Tax Act, 1961 (“the Act”) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Center, Delhi, [“learned CIT(A)”], for the assessment year 2010–11.
2. When this appeal was called for hearing neither anyone appeared on behalf of the assessee nor was any application seeking adjournment filed despite service of notice. Therefore, in view of the above, we proceed to dispose off the present appeal ex–parte, qua the assessee after hearing the learned Departmental Representative (“learned DR”) and on the basis of material available on record.
3. In the appeal, the assessee has raised the following grounds:–
“1. (a) That the Ld. CIT(A) has grossly erred in passing the order against the deceased person, who had died on 06.08.2015 and, as such, the order as passed by the Ld. CIT (A) null and void and, thus, it is impugned order.
(b). That since the above assessee had died even before the assessment was framed by the Ld. Assessing Officer on 08.06.2015 and, as such, the completion of assessment by the Ld. Assessing Officer in the name of deceased person is void abinitio and, thus, the assessment as framed deserves to be quashed.
(c). That even, the Ld. CIT(A) has not brought on record the legal heir, which he was bound to do since in the order of Hon’ble ITAT, Mumbai in ITA No. 2766/Mumbai/2019 vide order, dated 12.11.2020, there has been clearly mentioned the name of legal heir i.e. wife of assessee Mrs. Bhanwari Devi and, thus, the order as passed by the Ld. CIT(A) in the name of deceased person deserves to be quashed in view of various judgements as under:-
i). Shaikh Abdul Kadar Vs ITO (1958) 34 ITR 451 (MP High Court);
ii). CIT Vs Kumari Prabhawati Gupta, 231 ITR 188 (Allahabad High Court);
iii). CIT Vs. Suresh Chandra Jaiswal 325 ITR 563 (All).
2. Notwithstanding the above said facts, it is submitted that no notice of hearing was received by the Legal heir due to deactivation of PAN of the assessee and, as such, no notice was even served through speed post and in the order of Hon’ble ITAT, it has been taken note of by the Ld. CIT(A), that there is clear and complete address of the legal heir and, as such, the CIT(A) has erred in passing the exparte order.
3. That the Ld. CIT (A) has erred in passing ex-parte order as no notice of hearing was received by the assessee as legal heir being the lady not conversant with the portal system of communicating the date and neither the Advocate intimated her and, as such, the passing of ex- parte order is against the facts and circumstances of the case.
4. That even the Ld. Assessing Officer had passed the original order on 24.02.2016 against the dead person as the assessee had died on 06.08.2015 and, as such, the whole proceedings starting from Assessment order to the order passed by the CIT(A) against the dead person is void ab initio.
5. That the Ld. CIT(A) has failed to appreciate that in the order of Hon’ble ITAT, dated 12.11.2020, there is clear mention of legal heir of the deceased person and, as such, the passing or order in the name of deceased person is bad in law and, thus, the same deserves to be quashed.
6. Notwithstanding the above said ground of appeal, the Ld. CIT (A) has grossly erred in upholding the validity of notice u/s 147/148 issued by the Ld. Assessing Officer and further, there was only mechanical approval by the Ld. PCIT u/s 151 of the Act, without any application of mind and, as such, the proceedings u/s 148 are void abinitio.
7. Notwithstanding the above said facts, the Ld. CIT(A) has erred in sustaining the addition of Rs. 1,12,06,190/- on account of non- genuine purchases.
8. That the addition as sustained by the Ld. CIT(A) is against the facts and circumstances of the case.
9. That the appellant craves leave to add or amend the grounds of appeal before the appeal is finally heard or disposed off.”
4. The main grievance raised in the present appeal is against the completion of the assessment in the name of the deceased assessee.
5. We have considered the submissions of the learned DR and perused the material available on record. The assessee was an individual and for the year under consideration, filed his return of income on 05/09/2010 declaring a total income of Rs. 4,00,726. The return filed by the assessee was processed under section 143(1) of the Act. Subsequently, upon receipt of the information from the DGIT(Investigation) Wing, Mumbai about having received vital information initially from the Sales Tax Department of Maharashtra that some dealers are indulged in the practice of providing accommodation entries in the form of bogus sales/purchase bills without supplying any goods and the assessee is one of the beneficiary of such bogus transaction, proceedings under section 147 of the Act were initiated and notice dated 15/09/2014 under section 148 of the Act was issued to the assessee. Thereafter, notice under section 142(1) of the Act was issued to the assessee on 24/06/2015 calling for various details. Further, notice under section 142(1) was also issued on 04/09/2015, 02/11/2015, 24/11/2015, and 22/01/2016. In the absence of any response from the assessee, the Assessing Officer (“AO”) proceeded to complete the best judgement assessment on the basis of material available on record. Vide order dated 24/02/2016 passed under section 144 read with section 147 of the Act, the AO treated the entire purchases from the accommodation entry providers as non-genuine and made an addition of Rs. 1,12,06,190 to the total income of the assessee.
6. We find that in the statement of facts filed before the learned CIT(A), the legal heir of the assessee specifically submitted that the assessee succumbed to cancer on 06/08/2015. We find that in this regard the Death Certificate of the assessee and the medical report were also furnished alongwith the appeal before the learned CIT(A). Thus, it is evident that the assessee expired much before the passing of the assessment order on 24/02/2016 and even all the notices except dated 24/06/2015 were issued after the death of the assessee on 06/08/2015. During the hearing, the learned DR submitted that there was no intimation to the AO by the legal heirs regarding the demise of the assessee. We find that while rejecting similar arguments, the Hon’ble Delhi High Court in Savita Kapila v/s ACIT, [2020] 273 Taxman 148 (Del) observed as under:-
“32. This Court is of the view that 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. After all, there may be cases where the legal representatives are estranged from the deceased assessee or the deceased assessee may have bequeathed his entire wealth to a charity. Consequently, whether PAN record was updated or not or whether the Department was made aware by the legal representatives or not is irrelevant. In Alamelu Veerappan (supra) it has been held “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 or take steps to cancel the PAN registration.”
(emphasis supplied by us)
7. Undoubtedly as per section 159 of the Act, 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. However, undisputedly in the present case, after the death of the assessee, his legal heir was not brought on the record and no notice was issued in the name of the legal heir. Therefore, the assessment order framed in the name of the deceased assessee is non-est in law and hence is quashed. Since the relief is granted on this short issue, the other grounds raised in the present appeal are rendered academic and thus are kept open.
8. In the result, the appeal by the assessee is allowed.
Order pronounced in the open Court on 16/10/2023.
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