2024 (6) TMI 1393 - AT - Income Tax

Revision u/s 263 in the name of dead person/assessee - Addition on account of capital gains claimed as exempt u/s. 47(1) and rejection of assessee's claim of deduction u/s. 54/54F- HELD THAT - It was in the knowledge of CIT that Shri Nirmal Kant Saini had expired, still the CIT passed order u/s. 263 of the Act in the name of Nirmal Kant Saini . It is not the case of revenue that the Department was not informed about the death of Shri Nirmal Kant Saini in proceedings u/s 263 of the Act. The Hon'ble Apex Court in the case of PCIT vs Maruti Suzuki India Ltd 2019 (7) TMI 1449 - SUPREME COURT has held that assessment order passed in the name of non-existing entity would be without jurisdiction and was to be set aside. In the instant case, the CIT after having knowledge of death of Nirmal Kant Saini was mandatorily required to pass an order in the name of legal heir of the deceased, whereas, the order was passed in the name of Nirmal Kant Saini i.e. in the name of a dead person. The order passed in the name of a dead person is illegal and bad in law. Hence, any subsequent proceedings arising there from are non-est. Appeal of the assessee is allowed.

Summary

Issues:
1. Validity of order passed u/s. 263 of the Income Tax Act in the name of a deceased person.
2. Admissibility of additional ground challenging the validity of the order passed u/s. 263 of the Act.
3. Merits of the addition of Rs. 75,00,000/- on account of capital gains claimed as exempt u/s. 47(1) and rejection of deduction u/s. 54/s54F of the Act.

Issue 1: Validity of order passed u/s. 263 in the name of a deceased person

The appellant challenged the order passed by the Commissioner of Income Tax (CIT) under section 263 of the Income Tax Act, contending that it was issued in the name of a dead person, despite the CIT being informed of the death. The appellant argued that any order passed in the name of a deceased individual is non-existent. The Department opposed the admission of this challenge, stating that the appellant should have appealed the original order, and the subsequent assessment order was based on the CIT's decision. The Tribunal held that legal grounds questioning the validity of an order can be raised at any stage, especially if there is a jurisdictional defect. As the assessment proceedings stemmed from the flawed order, the subsequent proceedings were deemed vitiated. The Tribunal admitted the additional ground raised by the appellant and ruled in favor of the appellant on this issue.

Issue 2: Admissibility of additional ground challenging the validity of the order

The appellant raised an additional ground challenging the validity of the order passed u/s. 263 of the Act, arguing that it was issued in the name of a deceased person. The appellant informed the CIT of the death of the individual in several communications. The Tribunal noted that the CIT was aware of the death of the individual but still passed the order in the deceased person's name. Citing a Supreme Court ruling, the Tribunal held that an assessment order issued in the name of a non-existing entity is without jurisdiction. As the order was passed in the name of a dead person, the subsequent proceedings were deemed non-existent. Consequently, the Tribunal ruled in favor of the appellant on this ground.

Issue 3: Merits of the addition of Rs. 75,00,000/- on account of capital gains

Regarding the addition of Rs. 75,00,000/- on account of capital gains claimed as exempt u/s. 47(1) and rejection of deduction u/s. 54/s54F of the Act, the appellant argued that detailed submissions were made to the Assessing Officer and the CIT explaining the source of the amount received. The appellant provided evidence of the civil suits and transactions related to the receipt of the amount. The Department defended the addition, stating that the appellant did not appeal the CIT's order, and the assessment order was based on it. However, the Tribunal did not deliberate on this issue as it held the assessment order to be non-existent due to the jurisdictional defect in the original order.

In conclusion, the Tribunal allowed the appeal of the assessee based on the jurisdictional defect in the order passed u/s. 263 of the Income Tax Act, which was issued in the name of a deceased person. The Tribunal admitted the additional ground challenging the validity of the order and ruled that the subsequent assessment order and proceedings were vitiated. The merits of the addition were not deliberated upon due to the non-existence of the assessment order.