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of <h1>Court affirms annulment of assessment order for failure to notify legal heir. Rejected reference application under Income-tax Act.</h1> The court affirmed the Tribunal's decision to annul the assessment order due to the failure to serve notice on the legal heir before finalizing the ... Assessment Proceedings, Legal Representative, Question Of Law, Rectification Of Mistakes Issues:1. Application under section 256(2) of the Income-tax Act, 1961 to direct the Tribunal to state the case and refer questions of law.2. Validity of the assessment order due to failure to notice legal heir before completion of assessment.3. Whether the order under section 154 could cure the invalidity in the assessment order.4. Annulment of the assessment order and the possibility of fresh assessment after notice to the legal heir.Analysis:The applicant filed an application under section 256(2) of the Income-tax Act, 1961, seeking the Tribunal to refer questions of law for the court's opinion. The questions pertained to the Tribunal's justification in not considering the information about the execution of a will by the deceased during her lifetime, which was brought to the Income-tax Officer's notice after the assessment was completed. Additionally, the applicant questioned the legality of the Tribunal's decision that the order passed under section 154 could not validate the already invalid assessment order due to different circumstances. Furthermore, the applicant raised concerns about the Tribunal not considering the mistake apparent from the record, which was liable for rectification under section 154, as the facts of the will were not disclosed during the assessment proceedings.The facts of the case revealed that the deceased taxpayer had filed her income tax return during her lifetime, and the assessment was completed after her demise. The Income-tax Officer was informed of the death but failed to notice the legal heir before finalizing the assessment. Despite being aware of the legal heir's identity, no notice was served on them, leading to the invalidity of the assessment order. The Income-tax Officer rectified the mistake under section 154 by acknowledging the proper legal heir, but this action did not cure the fundamental flaw in the assessment process. Consequently, the Appellate Commissioner directed the Income-tax Officer to pass a fresh order, which was challenged by the assessee before the Tribunal.The Tribunal, upon review, concluded that the invalidity in the assessment order could not be rectified under section 154 and directed the annulment of the assessment order. The Tribunal's decision was based on the principle that in case of the assessee's death, it is imperative for the Income-tax Officer to identify the legal heirs and serve notices on them before finalizing the assessment. The Tribunal held that the failure to follow this procedure rendered the assessment order invalid and not curable through rectification under section 154. As a result, the Tribunal allowed the appeal, annulling the assessment order.The court, after considering the arguments presented, affirmed the Tribunal's decision and rejected the reference application under section 256(1) of the Act. The court concurred with the Tribunal's view that the questions of law proposed by the applicant did not arise from the Tribunal's order. Consequently, the court dismissed the reference application, emphasizing that the recourse to section 256(2) of the Act was futile in this instance. The judgment highlighted the importance of following due process in identifying legal heirs in cases of the assessee's demise to ensure a valid assessment process.
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