2016 (9) TMI 1549 - AT - Income Tax

Reopening of assessment u/s 147 - issuance of the notice in the name of a deceased person - HELD THAT - No decision to the contrary has been cited before us. Therefore respectfully following the decision in the case of ITO Vs Sikandar Lal Jain 2010 (12) TMI 623 - ITAT AGRA And ITO Vs Somnath Malhotra 2015 (7) TMI 1257 - ITAT DELHI BENCH G NEW DELHI the assessment framed in the present case is also quashed as having been initiated and framed on a dead person. Decided in favour of assessee.

Summary

Issues:
1. Validity of assessment order passed in the name of deceased assessee without impleading legal heirs.
2. Legality of initiating proceedings and completing assessment against a deceased person.
3. Consideration of property sale in previous assessment year for initiating proceedings in the current year.

Issue 1:
The appellant challenged the assessment order passed in the name of the deceased assessee without involving the legal heirs. The contention was that the order lacked authority of law as it was not impleaded with the legal heirs. The Assessing Officer (AO) had completed the assessment in the name of the deceased assessee, which the CIT(A) upheld. However, it was argued that the deceased assessee had expired before the relevant assessment year, and no legal proceedings could be initiated against a deceased person. The Tribunal referred to previous cases, including 'ITO Vs Sikandar Lal Jain', where it was held that issuing a notice to a dead person renders the reassessment proceedings void.

Issue 2:
The issue revolved around initiating proceedings and completing the assessment against a deceased person. The AO had initiated proceedings under Section 147 of the Income Tax Act against the deceased assessee, claiming capital gain liability. The legal heir was brought into the record, and the assessment was carried out in his name. The appellant argued that the assessment was invalid as it was conducted on a deceased person. The Tribunal, citing the case of 'ITO Vs Somnath Malhotra', emphasized that issuing a notice in the name of a deceased person renders the assessment order null and void, even if passed in the name of legal heirs. The Tribunal quashed the assessment, following the precedents mentioned.

Issue 3:
The third issue pertained to the consideration of property sale in the previous assessment year for initiating proceedings in the current year. The appellant contended that the property in question had been sold in the preceding assessment year, and no action under Section 148 could be taken in the current year. Supporting documents were submitted during assessment proceedings to prove the sale in the previous year. The Tribunal found merit in this argument and annulled the order passed for the impugned assessment year, directing the deletion of the addition made in the hands of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, quashing the assessment order initiated and framed on a deceased person. The judgment emphasized the importance of following legal procedures and impleading legal heirs in cases involving deceased individuals to ensure the validity of assessment proceedings.