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2020 (5) TMI 254 - AT - Income TaxReopening of assessment - notice issued upon the dead person - notice to Legal representatives - AO never had any clue about the death of the assessee as well as there was no intimation from the side of the legal representative of the assessee about such fact - whether AO has available time limit to issue fresh notice under section 148 when he comes to know the fact that the assessee is deceased? - HELD THAT - On perusal of the provision of the clause (b) of sub-section 1 of the section 149, we note that the AO has available time of six years from the end of relevant assessment year i.e. 31.03.2013 which ends as on 31.03.2019. Admittedly, the assessee died dated 03-11-2013 and the notice was issued upon him under section 148 dated 28.01.2015. AO was not aware about the death of the assessee at the relevant time when he issued notice under section 148 of the Act. Therefore, notice issued by the AO under section 148 of the Act cannot be held as invalid in view of the fact that the AO during the relevant time was unaware of such vital fact. Therefore, the AO cannot be faulted for issuing notice in the name of the deceased assessee under section 148 in the present given facts and circumstances. AO during the proceedings became aware of the fact about the death of the assessee, hence he framed the assessment in the name of legal representative but without issuing the notice under section 148 to them (legal representatives) despite having the time for doing so. However, the pertinent fact is that the legal representative never raised any question about the issuance of notice to the other legal representatives during the assessment proceedings but raised 1st time before the 1st appellate authority. Therefore, non-implication of all the legal heirs can amount to a procedural defect which will not make the assessment invalid. See JAI PRAKASH SINGH 1996 (3) TMI 7 - SUPREME COURT . - No merits in the ground of appeal raised by the assessee. Hence we dismiss the same. As provisions of section 159 of the Act require to implicate all the legal heirs in the proceedings initiated under section 147 of the Act we set aside the entire assessment framed under section 147 of the Act to the AO to frame the same afresh in the name of all the legal heirs as per the provisions of law - Appeal of the assessee is allowed for the statistical purposes.
Issues Involved:
1. Validity of the assessment framed under section 147 of the Income Tax Act due to the notice issued under section 148 being addressed to a deceased person. 2. Determination of the Fair Market Value (FMV) of the property sold and the method used for valuation. 3. Consideration of the appellant's claims regarding the imperfect ownership and various adversities affecting the property. 4. The appellant's claim of distress sale due to personal circumstances. Issue-wise Detailed Analysis: 1. Validity of the Assessment under Section 147: The primary issue raised by the appellant was the validity of the assessment framed under section 147 of the Act, arguing that the notice under section 148 was issued in the name of a deceased person. The Tribunal noted that the notice under section 148 was indeed issued to the deceased assessee, making it defective and not curable as it goes to the root of the matter. The Tribunal referenced the Hon’ble Gujarat High Court decision in Chandreshbhai Jayantibhai Patel vs. ITO, which held that a notice issued in the name of a deceased person is invalid and not curable under section 292B. However, the Tribunal also acknowledged that the AO was unaware of the death of the assessee at the time of issuing the notice and framed the assessment in the name of the legal representative once aware. The Tribunal concluded that the AO should have issued a fresh notice under section 148 to the legal representatives, as there was still time available under section 149(1) of the Act. Consequently, the Tribunal set aside the entire assessment to the AO to frame it afresh in the name of all legal heirs. 2. Determination of FMV and Valuation Method: The appellant contested the FMV determined by the AO, who adopted the value used for stamp duty purposes, which was significantly higher than the sale consideration reported by the assessee. The appellant argued for the use of the "Rent capitalization method" for valuation, citing various adversities and imperfections associated with the property. The Tribunal did not delve into the merits of the valuation methods used, as the assessment was set aside on procedural grounds. Thus, the issue of the appropriate valuation method remained unresolved and was to be reconsidered by the AO in the fresh assessment. 3. Imperfect Ownership and Adversities: The appellant highlighted several issues affecting the property, including long-term occupation by tenants, encroachments, pending civil suits, and other adversities. These factors, according to the appellant, should have warranted a higher deduction in the valuation. The Tribunal acknowledged these claims but did not make a determination on their impact on the valuation due to the procedural setting aside of the assessment. The AO was directed to consider these issues afresh in the reassessment process. 4. Distress Sale Claim: The appellant claimed that the sale was made under distress due to personal circumstances, including advanced age and stress. This claim was presented to justify the lower sale consideration. The Tribunal did not specifically address this claim in detail, as the procedural issue of the notice's validity took precedence. The AO was instructed to consider all relevant facts, including the appellant's personal circumstances, in the fresh assessment. Conclusion: The Tribunal set aside the assessment framed under section 147 of the Act due to the procedural defect of issuing a notice under section 148 to a deceased person. The AO was directed to issue a fresh notice to all legal heirs and reassess the case, considering all relevant issues, including the valuation method, property adversities, and the appellant's personal circumstances. The appeal was allowed for statistical purposes, and the case was remanded to the AO for fresh consideration.
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