2024 (2) TMI 836 - AT - Income Tax

Validity of Revision u/s 263 against invalid assessment - original assessment order has been framed in the name of a deceased person - whether the legal heir of the deceased person is under legal obligation to inform the Tax Department about the demise of the assessee? - HELD THAT - In absence of any specific statutory provision under the Income Tax law which requires the legal heirs to intimate the Income Tax Department about the death of the assessee, we are of the view that the assessment order cannot be to be held to be valid in the eyes of law only for the reason that the legal heirs of the deceased assessee has not informed the Income Tax Department about the death of the assessee. It is a well established law that no assessment can be framed in the name of a person who has since expired. Any assessment order framed in the name of a deceased person without bringing the legal heirs of such person on record, is invalid in the eyes of law. As in the case of Pravinchandra A Shah 2023 (8) TMI 385 - GUJARAT HIGH COURT held that reopening notice under section 148 issued upon deceased assessee was a nullity, therefore, consequential proceedings and orders passed thereon were to be quashed and set aside. Thus we are of the considered view that the order passed under section 263 of the Act is not valid in the eyes of law, since the original assessment order having been framed in the name of a deceased person is not valid in the eyes of law - Decided in favour of assessee.

Summary

Issues:
The judgment involves issues related to the jurisdiction of the Principal Commissioner of Income Tax, validity of assessment order in the name of a deceased person, and the legal obligation of the legal heir to inform the Tax Department about the demise of the assessee.

Jurisdiction of Principal Commissioner of Income Tax:
The appeal was filed against the order passed by the Principal Commissioner of Income Tax-2, Rajkot, for Assessment Year 2007-08. The PCIT observed that the assessment order made by the Assessing Officer was erroneous and prejudicial to the interest of the Revenue as the cost and year of acquisition of the capital asset were not ascertained. The PCIT directed a fresh assessment de-novo to determine the capital gain on transfer of the asset after proper inquiry. The PCIT considered evidence produced during 263 proceedings, which were not submitted during the original assessment. The PCIT set aside the assessment order and directed the AO to ascertain the year and cost of acquisition of the capital asset.

Validity of Assessment Order in the Name of a Deceased Person:
The Counsel for the assessee argued that the original assessment order was framed in the name of a deceased person, making it void ab initio according to established law. The Counsel relied on the case of Chandresh Bhai vs. ITO to support this argument. The Department, however, claimed that no legal heir informed them of the assessee's demise despite multiple notices. The Tribunal noted that the assessee had passed away before the assessment order was made. Referring to the case law of Savita Kapila v. ACIT, it was established that in the absence of a statutory provision requiring legal heirs to inform the Tax Department about the death of the assessee, the assessment order framed in the name of a deceased person is not valid in the eyes of the law.

Legal Obligation of Legal Heir to Inform Tax Department:
The Tribunal deliberated on whether legal heirs are legally obligated to inform the Tax Department about the death of the assessee. Citing case law, including Savita Kapila v. ACIT and Pravinchandra A Shah, it was concluded that no assessment can be validly framed in the name of a deceased person without bringing the legal heirs on record. The Tribunal highlighted that the absence of a specific statutory provision under the Income Tax law mandating legal heirs to inform the Department about the death of the assessee renders the assessment order invalid. Rulings such as 'Pr. CIT v. Maruti Suzuki India Ltd.' and 'Krishnaawatar Kabra v. ITO' supported the view that assessments on deceased persons without legal heir involvement are null and void.

Conclusion:
In light of the legal principles and precedents discussed, the Tribunal found that the order passed under section 263 of the Act was not valid as the original assessment order was made in the name of a deceased person. Therefore, the Tribunal set aside the order passed under section 263, allowing the appeal of the assessee.