2023 (6) TMI 1131 - AT - Income Tax

Revision u/s 263 in the case of deceased person - HELD THAT - As no power has been vested on the PCIT u/s 263 of the Act for passing order in the hands of the L/R after the death of the person assessee as there is no reference to section 263 in the afore-mentioned provisions of the Act. Thus, in light of the decision of the Hon'ble Gujarat High Court in the case of Late Bhupendra Bhikalal Desai, through his L/H Shri Raju Bhupendra Desai 2021 (3) TMI 892 - GUJARAT HIGH COURT it can be said that the action of the PCIT by passing order u/s 263 of the Act in the hands of the deceased is outside the scope of law provided u/s 159 of the Act. We set aside the order framed u/s 263 by the PCIT in the name of a deceased person as bad in law. Appeal of assessee allowed.

Summary

Issues Involved:
The issues involved in the judgment are the validity of the order passed under section 263 of the Income-tax Act, 1961 in the case of a deceased person without involving the legal heir, the applicability of section 159 of the Act in such cases, and the legal obligations of legal representatives in informing the tax department about the death of the assessee.

Validity of Order u/s 263 without Involving Legal Heir:
The appeal challenged the order passed under section 263 of the Act in the case of a deceased person without issuing any notice to the legal heir. The PCIT framed the order without giving an opportunity of being heard to the legal heir, ignoring the provisions of section 159 of the Act. The PCIT's order was based on assumptions regarding the AO's inquiry into the claim of exempt LTCG u/s 10(38) of the Act.

Applicability of Section 159 of the Act:
The judgment referred to the provisions of section 159(1) and 159(2) of the Act, highlighting that no power is granted to the PCIT under section 263 for passing orders in the hands of the legal representative after the death of the assessee. The decision of the Hon'ble Gujarat High Court emphasized that actions taken by the PCIT in the hands of the deceased are beyond the scope of law provided under section 159 of the Act.

Legal Obligations of Legal Representatives:
The judgment discussed the duty of legal representatives to inform the tax department about the death of the assessee. Citing previous judicial decisions, it was concluded that there is no statutory obligation on legal representatives to immediately intimate the death of the assessee or cancel the PAN registration. The judgment highlighted that in the absence of a statutory provision, it is challenging to impose a duty on legal representatives to inform the tax department about the death of the assessee.

Conclusion:
Considering the facts and legal precedents, the order passed under section 263 of the Act by the PCIT in the name of a deceased person was deemed as bad in law. The judgment set aside the order and restored the assessment order framed by the Assessing Officer. Consequently, the appeal of the assessee was allowed, and the assessment order dated 20.07.2016 was reinstated.