Appellate Tribunal emphasizes notice requirement for deceased assessee's legal heir.

The Appellate Tribunal upheld the decision to annul the assessment due to the failure to issue notice under section 143(2) to the legal heir of the deceased assessee. The Tribunal emphasized the mandatory nature of serving notice under section 143(2) before completing assessment under section 143(3) and highlighted the importance of involving the legal representative in assessment proceedings when the assessee has passed away. The failure to serve notice to the legal heir could not be rectified under other provisions of the Income-tax Act, leading to the dismissal of the Revenue's appeal.

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Issues:
1. Failure to issue notice under section 143(2) of the Income-tax Act, 1961 to the legal heir of the deceased assessee.
2. Validity of the assessment completed without serving notice under section 143(2) to the legal heir.

Issue 1: Failure to issue notice under section 143(2) to the legal heir

The main grievance of the Revenue in this case was against the order of the ld. CIT(A) annulling the assessment due to the non-issuance of notice 143(2) of the Income-tax Act, 1961 to the legal heir of the deceased assessee. The search operation under section 132 of the Act was conducted at the premises of the deceased assessee, who had passed away before the statutory notices were served. Despite the legal heir informing the Assessing Officer of the demise of the assessee, notices under section 143(2) were repeatedly issued in the name of the deceased, leading to the completion of the assessment in the deceased's name.

Issue 2: Validity of the assessment completed without serving notice under section 143(2) to the legal heir

The ld. CIT(A) upheld the contention of the assessee regarding the non-issuance and service of notice under section 143(2) to the legal heir, leading to the annulment of the assessment. The legislative history was examined, citing the provisions of section 159 of the Act that deal with situations where the assessee dies during assessment proceedings. The legal representative, as per section 159, becomes liable to pay any sum the deceased would have been liable to pay, and the assessment is to be made as if the legal representative were the assessee. The Hon'ble Supreme Court's ruling in CIT & Another vs. M/s Hotel Blue Moon emphasized the mandatory nature of serving notice under section 143(2) before completing assessment under section 143(3). The failure of the Assessing Officer to issue and serve notice to the legal heir, as per section 159, could not be cured under other sections of the Act, leading to the dismissal of the Revenue's appeal.

In conclusion, the Appellate Tribunal upheld the decision of the ld. CIT(A) to annul the assessment due to the failure to issue notice under section 143(2) to the legal heir of the deceased assessee. The Tribunal emphasized the importance of following the statutory provisions, especially in cases where the assessee has passed away during the assessment proceedings, ensuring that the legal representative is duly informed and involved in the assessment process.

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