2024 (9) TMI 583 - AT - Income Tax

Validity of the notice u/s 148 against a deceased person - Responsibility of legal heir for assessment proceedings - HELD THAT - A perusal of the aforesaid provisions of section 159 would reveal that as per the provisions of section 159(2)(b) of the Act, any proceeding which could have been taken against the deceased, if he had survived, may be taken against the legal representative and further that as per sub section 159(3) the legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. As per the aforesaid provisions, the AO having come to know that the assessee Sri Arjun Dass Agarwal has died, was supposed to substitute the name of the legal heir who would have been liable in his own name as an assessee for tax liability of Sri Arjun Dass Agarwal, however, to be recovered only out of estate left by the deceased assessee. No such exercise has been done by the AO in this case. The assessment order framed by the AO is bad in law on two counts. The notice u/s 148 of the Act has been issued in the name of dead person and further the legal heir of the deceased assessee has not been impleaded and no notice u/s 148 of the Act has been issued in the name of any legal heir of the deceased assessee.The assessment has not been framed in the name of any specific person, rather, simply legal heir of late Arjun Dass Agarwal has been mentioned, without pointing out as to against whom the same is specifically enforceable - Appeal of the assessee stands allowed.

Summary

Issues:
1. Validity of notice u/s 148 issued in the name of a deceased person.
2. Determination of legal heir for assessment proceedings.
3. Applicability of section 159 of the Income Tax Act.

Analysis:
1. The appeal was filed against the order of the National Faceless Appeal Centre passed under section 250 of the Income Tax Act. The deceased assessee, Sri Arjun Dass Agarwal, had his return of income processed under section 143(1) of the Act. After his death, the Assessing Officer issued notices to the deceased and later to his legal heir without proper verification. The legal heir, Sri Vivek Agarwal, repeatedly informed the Assessing Officer of his status and lack of liability. Despite this, the assessment was finalized only in the name of 'The Legal Heir Late Arjun Dass Agarwal.'

2. The appeal before the CIT(A) was dismissed on the grounds that there was no determined legal heir of the deceased at that time. Subsequently, an order by the 8th Additional District Judge appointed Sri Vivek Agarwal as the administrator of the estate. The appeal was then filed by the Estate of Arjun Das Agarwal through Sri Vivek Agarwal, challenging the dismissal by the CIT(A) based on the appointment of the administrator.

3. The Tribunal considered the provisions of section 159 of the Income Tax Act, which state that the legal representative of a deceased person shall be liable to pay any sum the deceased would have been liable to pay. The Tribunal noted that the Assessing Officer did not follow the procedure outlined in section 159, which requires the substitution of the legal heir's name in place of the deceased for tax liability purposes. As a result, the assessment order was deemed void due to the notice being issued in the name of a dead person and the failure to properly identify and involve the legal heir in the proceedings. The Tribunal allowed the appeal, quashing the assessment order.

In conclusion, the Tribunal found that the assessment order was invalid due to procedural errors in identifying and involving the legal heir of the deceased assessee. The appeal was allowed, and the assessment order was quashed.