2018 (4) TMI 89 - HC - Income Tax

Deceased taxpayer's assessment order set aside, legal representative liable for denovo assessment under Income Tax Act.

The Tribunal set aside the assessment order made in the name of a deceased person, directing a denovo assessment order on the right legal representative ... Assessment order made in the name of deceased person - assessment against legal representative of the deceased - Held that:- Tribunal allowing cross-objection directed the assessing authority to redo denovo assessment, it is the apprehension of the appellant that by virtue of the order of the Tribunal, the authorities may proceed to substitute the name of the appellant while passing the orders, which would be contrary to the provisions of the Act. It is trite law that the Revenue cannot collect taxes against the provisions of law. The basis of tax demand is the assessment order. The assessment order which is passed in the name of a deceased person is wholly unjustifiable and is non-est in the eye of law. Section 159(1) and (2) of the Act provides about the liability of legal representatives in special cases. It is not in dispute that any proceeding which could have been taken against the deceased if he had survived may be taken against the legal representative, in terms of Section 159(2)(b) of the Act. The legal representative of the deceased was for the purpose of the Act, deemed to be an assessee as per Section 15 9(3) of the Act. This being the position, the Tribunal is justified in setting aside the order of CIT (Appeal's) and of the Assessing Officer and remanding the matter to the Assessing Officer for denovo assessment order on the legal representative of the deceased. Issues:1. Validity of assessment order made in the name of a deceased person.2. Jurisdiction of the Tribunal to direct a denovo assessment order in the name of the right person.Issue 1: Validity of assessment order made in the name of a deceased person:The case involved an appeal against an assessment order made by the Income Tax Appellate Tribunal in relation to the assessment year 2010-11 for a deceased individual who was carrying on a mining business. The legal representative of the deceased filed the return of income electronically after the death of the individual. The Assessing Officer passed the assessment order in the name of the deceased, leading to an appeal before the Commissioner of Income Tax (Appeals). The Tribunal set aside the orders of the CIT (Appeals) and the Assessing Officer, directing a denovo assessment order on the right person. The legal representative argued that the Tribunal's direction for a denovo assessment might be misinterpreted by the Revenue, affecting the legal representative's rights under the law. The Revenue contended that any order passed in the name of a deceased person is a nullity, justifying the Tribunal's decision to set aside the assessment order. The Tribunal's decision was based on the provisions of Section 159(2)(b) and Section 159(3) of the Income Tax Act, which provide for the liability of legal representatives in special cases and deem the legal representative to be an assessee for the purpose of the Act.Issue 2: Jurisdiction of the Tribunal to direct a denovo assessment order in the name of the right person:The Tribunal's direction for a denovo assessment order on the legal representative of the deceased was challenged by the appellant, arguing that it might lead to the substitution of the legal representative's name, contrary to the law. The Tribunal's decision was based on the legal provisions allowing proceedings against the legal representative as if taken against the deceased, ensuring the legal representative's liability. The High Court clarified that the Tribunal's decision to set aside the assessment order rendered the first substantial question of law irrelevant. However, the second substantial question of law was answered against the appellant and in favor of the Revenue, emphasizing the necessity for the Assessing Officer to pass a denovo assessment order on the legal representatives of the deceased assessee in accordance with the law. Consequently, the appeal filed by the assessee was dismissed with this clarification.This detailed analysis of the judgment highlights the key issues involved, the arguments presented by both parties, and the legal reasoning behind the Tribunal's decision and the High Court's clarification, ensuring a comprehensive understanding of the case.