2023 (12) TMI 1124 - AT - Income Tax

Assessment against deceased/non existent assessee - Whether any proceedings which could have been taken against the deceased if he had survived may be taken against the legal representative in terms of section 159(2)(b)? - HELD THAT - As seen that the AO despite having knowledge of the deceased assessee, except mentioning in the show cause notice, the name of the Legal Heir has not incorporated the deceased assessee either in the Assessment Order or in the subsequent demand notice or show cause notice for imposing/ proposing to impose penalty u/s 271AAC(1) of the Act. In the decision of Hon ble Punjab And Haryana High Court in the case of Swaran Kanta 1988 (11) TMI 91 - PUNJAB AND HARYANA HIGH COURT AO therein has acknowledged the Legal Heir of the deceased assessee and, therefore High Court has held that the title of the Assessment Order which was not correctly worded would not make the Assessment Order invalid as was sought to be declared by the Revenue Authorities and the Tribunal was fully justified in restoring the order of assessment in exercising power under Section 292B of the Act. But in the present case, the Assessing Officer, despite having knowledge, has not recognised the Legal Heir while passing the final order as well as the subsequent demand order/notice and notices relied to imposing of penalty. From the perusal of records, it can be seen that the AO has passed the Assessment Order in the name of deceased person which is non-existent person and when the order passed on the non-existent person despite represented by the Legal Heir, the same cannot be curable under Section 292B. AO has consciously chose the name of the deceased assessee. In the eyes of law, if the assessee is deceased and Assessing Officer is very well aware about the same, then order has to be passed in the name of the Legal Heir of the deceased assessee. But the AO chose otherwise and, therefore, this defect is not curable as later on notices for demand as well as for imposing of penalty was issued in the name of the deceased assessee and thus the Assessment Order itself becomes void-ab-initio. CIT(A) has taken proper cognisance of the same and allowed the plea of the assessee and held the Assessment Order invalid. Appeal filed by the Revenue is dismissed.

Summary

Issues Involved:
The issues involved in the judgment include the validity of an assessment order issued in the name of a deceased assessee, the recognition of the legal heir for assessment proceedings, and the applicability of Section 292B of the Income Tax Act.

Validity of Assessment Order:
The Revenue appealed against an order passed by the CIT(A) for the Assessment Year 2018-19, questioning the validity of the assessment order issued in the name of a deceased assessee. The Revenue argued that the system automatically fetched the name of the assessee from the PAN Database, leading to the deceased assessee's name appearing on the assessment order. The Revenue contended that proceedings against a deceased assessee can be taken against the legal representative as per Section 159(2)(b) of the Act. However, the appellant pointed out discrepancies in the assessment process, highlighting the failure to grant a hearing to the legal heir and the issuance of subsequent notices in the name of the deceased assessee. The appellant cited precedents where assessment orders in the name of deceased or non-existent persons were deemed invalid and non-curable under Section 292B of the Act.

Recognition of Legal Heir:
The Legal Heir of the deceased assessee participated in the assessment proceedings following the demise of the original assessee. The appellant argued that the Assessing Officer did not acknowledge the Legal Heir during the assessment process, leading to procedural irregularities. The appellant emphasized that the Assessing Officer's actions did not align with the requirements of Section 159 of the Act, as the Legal Heir was not properly recognized throughout the proceedings. The appellant highlighted instances where notices and orders were issued in the name of the deceased assessee, further underscoring the failure to acknowledge the Legal Heir in a timely and appropriate manner.

Applicability of Section 292B:
The judgment deliberated on the applicability of Section 292B of the Act in rectifying errors in the assessment order. While the Revenue argued that the mentioning of the deceased assessee in the order could be rectified under Section 292B, the appellant contended that the Assessing Officer's failure to recognize the Legal Heir resulted in the assessment order being void ab initio. The CIT(A) upheld the plea of the assessee, emphasizing that the defect in the assessment order was not curable under Section 292B due to the conscious choice of the Assessing Officer to issue the order in the name of the deceased assessee. The judgment concluded that the assessment order was invalid, and the appeal of the Revenue was dismissed.