2023 (1) TMI 1455 - AT - Income Tax

Completion of the assessment in the name of the deceased assessee without bringing on record his legal heirs - HELD THAT - Scrutiny proceedings in the case of the assessee were initiated vide notice dated 01/08/2012 issued under section 143(2) of the Act. Thereafter notice under section 142(1) of the Act was issued along with the questionnaire. In response thereto assessee s wife vide letter dated 26/06/2013 informed the AO that the assessee expired on 17/04/2013 due to renal failure. Assessee s wife also expressed her inability to respond to queries and produce the documents as required vide aforesaid notice. It is evident from the record that thereafter neither the legal heir of the assessee was brought on record nor the AO issued statutory notices on the legal heir seeking any information. The above aspect becomes more evident from the fact that the assessment was concluded ex parte under section 144 of the Act and in column 11 at page 1 of the assessment order no attendance is mentioned against the date(s) of hearing. AO also proceeded to pass the assessment order dated 14/03/2014 under section 144 of the Act in the name of the deceased assessee despite being informed vide letter dated 26/06/2013 about the fact that the assessee expired on 17/04/2013. Thus the very fact that the assessment has been concluded in the name of a deceased person renders the assessment order to be null and void - It cannot be disputed that the assessee died before the proceedings for assessment were completed. Therefore it was incumbent u/s 159(2) of the Act on the AO to bring the legal heir of the deceased assessee on record and proceed further. Since the same was not done by the AO therefore the assessment order is void ab initio. Accordingly the assessment order passed in the name of the deceased assessee is set aside.

Summary

Issues:
Challenge of completion of assessment in the name of deceased assessee without bringing legal heirs on record.

Analysis:
The appeal was filed challenging the assessment completed in the name of the deceased assessee without involving legal heirs. The assessee's wife informed about the death of the assessee during the assessment proceedings. The AO proceeded ex parte and concluded the assessment in the deceased assessee's name, adding capital gains to the total income. The legal heir challenged the assessment order before the CIT(A), who dismissed the appeal. The CIT(A) held that the notice issued by the AO when the assessee was alive was valid, and subsequent proceedings were legal. The legal heir contended that proper opportunities of being heard were not provided during assessment proceedings. The CIT(A) found no fault on the AO's part in allowing an opportunity to be heard. The legal heir then appealed the decision.

During the hearing, the legal representative argued that the assessment was completed without involving legal heirs despite being informed of the assessee's demise. The Departmental Representative supported the lower authorities' orders. The Tribunal noted that the AO initiated scrutiny proceedings and issued notices, but after being informed of the assessee's death, did not involve the legal heir or issue statutory notices to them. The assessment was concluded ex parte in the deceased assessee's name. The Tribunal held that the assessment in the deceased person's name rendered the order null and void. The AO failed to bring the legal heir on record as required by law. Thus, the assessment order was set aside. Other issues raised in the appeal were deemed academic and infructuous.

In conclusion, the Tribunal allowed the appeal, setting aside the assessment order completed in the deceased assessee's name due to the failure to involve legal heirs as required by law. The judgment emphasized the importance of following legal procedures and involving legal heirs in such cases to ensure a valid assessment process.