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2020 (10) TMI 355 - AT - Income TaxValidity of notice issued u/s 148 in the name of the deceased assessee - AO has shifted the blame on the Legal Heir of the assessee regarding the information of death of the assessee instead of conducting the enquiry to find out the fact - HELD THAT - Since it is not a case of pending assessment proceedings but the AO proposed to assess the income u/s 147/148 then it is incumbent upon the AO to issue the notice u/s 148 to the right person. The subsequent participation of the Legal Heir in the assessment proceedings would not render the proceedings valid when the initiation of the proceedings itself are invalid for want of a valid notice under section 148. Tribunal after considering the decision in case of Vipin Walia vs. ITO 2016 (2) TMI 524 - DELHI HIGH COURT as in case of Alamelu Veerappan vs. ITO 2018 (6) TMI 760 - MADRAS HIGH COURT has held that notice issued under section 148 in the name of the deceased assessee is a nullity in the eyes of law. Consequently, the proceedings initiated under section 147/148 are vitiated and liable to be quashed. Accordingly in the facts and circumstances of the case and following the decisions as discussed above, we hold that the notice issued u/s 148 in the name of the deceased assessee is invalid. The same is liable to be quashed. Since the initiation of reassessment proceedings itself are held to be invalid, the reassessment order passed by the AO would not survive and liable to be set aside. - Decided in favour of assessee.
Issues Involved:
1. Validity of notice issued under section 148 in the name of the deceased assessee. 2. Estimation of agricultural income by the AO. 3. Addition of unexplained deposit in the bank account. Issue-wise Detailed Analysis: 1. Validity of Notice Issued Under Section 148 in the Name of the Deceased Assessee: The primary issue in this appeal is the validity of the notice issued under section 148 in the name of the deceased assessee. The deceased assessee, who passed away on 12.06.2012, was issued a notice under section 148 on 28th March 2018. The legal representative of the deceased raised an objection to the validity of this notice, arguing that it was issued after the assessee had already passed away, making it invalid and a nullity in the eyes of the law. The Tribunal considered the submissions and relevant material, noting that the AO had indeed issued the notice in the name of the deceased and later brought the legal heir on record. However, this action did not validate the initially invalid notice. The Tribunal referenced several judgments, including Vipin Walia vs. ITO, Rajender Kumar Sehgal vs. ITO, and Tribunal’s Order in ITA No. 989/JP/2015, all of which supported the view that a notice issued to a deceased person is invalid. The Tribunal concluded that the AO's failure to issue a fresh notice to the legal representative within the limitation period rendered the proceedings invalid. Consequently, the reassessment proceedings initiated under section 147/148 were quashed. 2. Estimation of Agricultural Income by the AO: The second issue pertains to the estimation of agricultural income. The AO had estimated the agricultural income of the deceased assessee at ?100,000, as opposed to the ?2,50,000 declared by the assessee in the return of income. The CIT (Appeals) confirmed this estimation. However, since the primary issue of the validity of the notice under section 148 was resolved in favor of the assessee, the Tribunal did not delve into the merits of this estimation. The invalidity of the notice rendered the reassessment proceedings and all subsequent actions, including the estimation of agricultural income, void. 3. Addition of Unexplained Deposit in the Bank Account: The third issue involves the addition of ?5,92,000 as unexplained deposits in the bank account of the deceased assessee. The AO made this addition during the reassessment proceedings, which was subsequently upheld by the CIT (Appeals). However, similar to the second issue, the Tribunal did not address the merits of this addition due to the invalidity of the notice under section 148. The quashing of the reassessment proceedings meant that the addition of unexplained deposits could not be sustained. Conclusion: The Tribunal allowed the appeal, quashing the notice issued under section 148 and setting aside the reassessment order. The Tribunal's decision was based on the principle that a notice issued to a deceased person is invalid and cannot be cured by subsequent actions. Consequently, the Tribunal did not address the other grounds of appeal on the merits, as they became infructuous. The order was pronounced in the open court on 05/10/2020.
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