2023 (10) TMI 439 - AT - Income Tax

Reopening of assessment u/s 147 against dead assessee - legal representative of the deceased assessee preferred appeal before ld. CIT (A) which was dismissed - HELD THAT - It is an admitted fact that during the assessment proceedings notice was issued by the AO which was received back unserved with the postal remarks that the said assessee, the recipient of the said notice has already died. Therefore, in our view, when once the AO had come to know about the death of appellant during the proceedings, therefore, AO was under obligation to verify or to investigate about the legal heirs of the said deceased. We are conscious of the fact that it is a settled law that no order of assessment can be passed against the deceased. Since as per the facts of the present case, amended Form 36 has been filed by the legal heirs of the deceased before us and are contesting the appeal and have already been taken on record. Thus in the fitness of circumstances, since the AO has passed assessment order against a dead person without specifying names of legal heirs, which is not legally sustainable, thus we have no other option except to quash the impugned order. However, taking into consideration the peculiar facts and since provisions of section 159 of the Act has not been complied with by the AO and also the assessment order has been passed ex parte under section 144/147 of the Act, therefore, considering the interest of justice, equity and fair play, we restore the matter back to the file of the AO to initiate proceeding against the legal representatives already taken on record before us, in accordance with the provisions of section 159 of the Act from the stage it has come to the knowledge of the AO regarding the death of the deceased. Appeal of the assessee is allowed for statistical purposes.

Issues involved:
The issues involved in this case are:
1. Validity of reassessment based on sale consideration discrepancy.
2. Jurisdiction for reassessment based on presumption.
3. Validity of notice u/s 148 based on AIR information.
4. Sanction requirement u/s 151 before issuing notice u/s 148.
5. Service of notice u/s 148 on the appellant.
6. Validity of order passed on a deceased person.
7. Reopening based on stamp valuation by Sub-Registrar.
8. Addition of long-term capital gain in a family settlement.
9. Deduction of cost of acquisition from sale consideration.
10. Referral to DVO for valuation of capital asset.
11. Adequate opportunity of hearing to the appellant.
12. Disputed additions without serving show cause notice.

Issue 1:
The appeal challenges the initiation of action u/s 147 based on a sale consideration discrepancy. The appellant contests the adoption of a higher sale consideration for stamp duty purposes compared to the one considered by the AO.

Issue 2:
The appellant questions the jurisdiction for reassessment, claiming it was based on presumption and suspicion. The validity of initiating reassessment proceedings without sufficient grounds is challenged.

Issue 3:
The appeal challenges the issuance of notice u/s 148 based on AIR information without verifying its correctness. The appellant argues that the reassessment was without jurisdiction and lacked the necessary satisfaction from the AO.

Issue 4:
The appellant contests the failure to obtain sanction u/s 151 before issuing notice u/s 148. The requirement for the sanction to be meaningful and not mechanical is emphasized.

Issue 5:
The appellant challenges the reassessment conducted without serving notice u/s 148. The right of the appellant to receive such notice is highlighted.

Issue 6:
The validity of passing an order on a deceased person is disputed. The appellant argues that no order can be passed against a deceased individual.

Issue 7:
The reopening of the case based on stamp valuation by the Sub-Registrar is contested. The appellant argues that such a basis is not permissible in law.

Issue 8:
The addition of long-term capital gain is challenged, claiming it was part of a family settlement and not a sale by the father to sons.

Issue 9:
The failure to deduct the cost of acquisition and improvement from the sale consideration of the capital asset is contested. The appellant argues for the proper computation of capital gains.

Issue 10:
The appellant questions the failure to refer the matter to the DVO for the valuation of the capital asset. The necessity for a proper valuation is emphasized.

Issue 11:
The appellant challenges the lack of adequate opportunity for hearing and the failure to appreciate the replies and evidence presented. The importance of providing a fair hearing is highlighted.

Issue 12:
The disputed additions made without serving a show cause notice are contested. The mandatory requirement of a show cause notice as per CBDT Circular is emphasized.

This judgment emphasizes the importance of procedural compliance and fair treatment in tax assessment proceedings, particularly in cases involving discrepancies in sale consideration, jurisdiction for reassessment, and the treatment of deceased individuals in legal proceedings.

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