2015 (7) TMI 1257 - AT - Income Tax

Validity of assessment - notice u/s 148 of the act - notice on deceased person - Held that - the assessee had already expired on 06.12.2002 and the legal heir Smt. Raj Rani Malhotra wife of the deceased assessee informed the AO on 03.05.2010 that the assessee had expired on 06.12.2002 and the return in the name of deceased assessee was filed by the legal heir on 29.08.2003. Thereafter also the AO did not issue any notice u/s 148 of the Act or 143(2) of the Act in the name of the legal heir, therefore, the assessment framed by the AO on the basis of the notice issued u/s 148 of the Act in the name of the deceased assessee was invalid. The notice issued u/s 148 was invalid and the assessment framed on the basis of the said invalid notice was void ab initio - appeal dismissed.

Summary

Issues:
Validity of assessment based on notice issued to deceased assessee.

Analysis:
The department appealed against the order of the ld. CIT(A) challenging the validity of the assessment held by the ld. CIT(A) as invalid. The AO issued a notice u/s 148 of the Income Tax Act based on information regarding an alleged accommodation entry. The legal heir of the deceased assessee informed the AO about the death of the assessee and provided necessary documents. The ld. CIT(A) noted that the AO was aware of the death of the assessee and that the return for the relevant assessment year had been filed by the legal heir. Despite this, the AO proceeded with the assessment and made additions. The ld. CIT(A) held that the assessment and additions made were not valid as the proceedings were conducted in the name of the deceased assessee. The department appealed, but the ld. DR could not refute the findings of the ld. CIT(A). The Tribunal observed that the notice issued in the name of the deceased assessee was invalid, citing a similar case from the Hon'ble Allahabad High Court. Therefore, the assessment based on the invalid notice was deemed void ab initio, leading to the dismissal of the department's appeal.

This judgment highlights the importance of conducting assessments in the correct name and following proper procedures, especially in cases involving deceased taxpayers. The legal heir's communication to the AO about the death of the assessee and the filing of the return on behalf of the deceased were crucial in determining the invalidity of the assessment. The Tribunal's reliance on precedent from the Hon'ble Allahabad High Court further strengthened the decision to dismiss the department's appeal. Ultimately, the Tribunal's ruling emphasized the necessity of adhering to legal requirements and ensuring the validity of assessment proceedings to maintain the integrity of tax administration.