2024 (2) TMI 1578 - HC - Income Tax

Assessment order issued after assessee's death during pending appeal is null and void ab initio

HC held that the assessment order issued after the assessee's death during pendency of an appeal is null and void ab initio. The undisputed fact that the ... Assessment order passed against dead person - HELD THAT:- Undisputed fact that the original assessee expired on 02.12.2021 during the pendency of the appeal filed by him, in which, an amendment application filed for additional grounds by bringing to the notice of the appellate authority, the orders passed by the AO in respect of the previous assessment years and subsequent assessment years was pending consideration. Under these circumstances, in the light of the undisputed fact that the impugned order passed was against a dead person being a nullity, nonest and void ab initio. ISSUES PRESENTED AND CONSIDERED 1. Whether an appellate order passed against an original assessee who died during the pendency of the appeal is a nullity, non est and void ab initio. 2. Whether the appellate authority was obliged to consider an amendment application (raising additional grounds) filed by the original assessee before his death and, on reconsideration, to permit the legal representative/heir to press those grounds. 3. Whether, on remand, the appellate authority must take into account assessment orders passed by the Assessing Officer in respect of previous and subsequent assessment years when adjudicating the appeal/aforesaid additional grounds. 4. Consequential reliefs: the effect of setting aside the impugned appellate order on related assessment proceedings and the scope of relief on remand (including leave to file additional pleadings/documents). ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of appellate order passed against a deceased appellant Legal framework: When an appellant dies during the pendency of an appeal, legal principles concerning succession and representation require that proceedings continue, if at all, by or against the legal representative; an order formally recorded against a dead person raises questions of jurisdiction and vires. Precedent treatment: The judgment does not cite or distinguish specific precedents; the Court proceeded on undisputed factual and legal principles concerning death of an appellant and the nullity of proceedings taken against a dead person. Interpretation and reasoning: The Court found it undisputed that the original assessee died while the appeal and an amendment application were pending. The appellate authority nevertheless proceeded to dismiss the appeal 'as against the dead person.' The Court held that an order passed against a dead person is a nullity and void ab initio, because the subject-matter before the authority (i.e., the living appellant) ceased to exist and the authority did not properly consider continuation by the legal representative. Ratio vs. Obiter: The determination that an order passed against a dead appellant is null and void is ratio decidendi for setting aside the impugned appellate order and remitting the matter for fresh consideration. Conclusion: The impugned appellate order is set aside as a nullity and cannot stand; remand for fresh consideration is required. Issue 2 - Obligation to consider pending amendment application and representation by heir/legal representative Legal framework: An amendment application filed before disposal of an appeal, and events occurring during pendency (including the death of an appellant), must be considered by the appellate authority; the heir/legal representative is entitled to have such applications and grounds considered in accordance with law. Precedent treatment: No specific precedents are referenced; the Court applied established procedural fairness principles and the requirement to consider active applications and grounds pending before the authority. Interpretation and reasoning: The original assessee had filed an amendment application raising additional grounds on 13.01.2020; that application remained pending when he died. The appellate authority did not consider the amendment application and proceeded to dismiss the appeal. The Court reasoned that the appellate authority must reconsider the appeal afresh, bearing in mind the amendment application and allowing the legal representative/heir to prosecute the appeal and press the additional grounds. Ratio vs. Obiter: The requirement that the appellate authority consider the pending amendment application and permit the legal representative to pursue the appeal is ratio for remand and further adjudication. Conclusion: On remand the appellate authority must consider the amendment application dated 13.01.2020 and permit the legal representative/heir to file or press additional grounds in accordance with law. Issue 3 - Relevance of assessment orders in previous and subsequent assessment years Legal framework: Consistency in tax adjudication and the relevance of assessments in surrounding years can be material; appellate authorities may take into account orders in previous and subsequent assessment years insofar as they bear on identical or connected issues. Precedent treatment: The Court did not cite precedents but directed consideration of assessment orders for specified assessment years by reference to their relevance to the issues raised on appeal and in the amendment application. Interpretation and reasoning: The petitioner pointed to orders passed in favour of the assessee for assessment years 2008-09 to 2011-12 and 2013-14 to 2015-16 pursuant to remand orders, which were relevant to the grounds raised in the pending amendment. The Court directed the appellate authority on remand to bear these assessment-year orders in mind and to consider the appeal afresh in light of them, implying that such contemporaneous and proximate determinations may be material to the question before the appellate authority. Ratio vs. Obiter: The directive to consider previous and subsequent years' assessment orders is operationally binding within the remit of the remand (ratio for the decision to remit); any broader pronouncement about automatic preclusive effect of such orders would be obiter, as the Court confined itself to directing consideration in accordance with law. Conclusion: The appellate authority, on remand, must take into consideration the assessment orders for the specified previous and subsequent years when adjudicating the appeal and the additional grounds. Issue 4 - Consequential reliefs, setting aside related proceedings and scope of remand Legal framework: Where an appellate order is set aside as void, consequential orders that derive from or depend on the void order may also be liable to be set aside; remand allows fresh consideration but preserves parties' rights to file further materials subject to law and procedural rules. Precedent treatment: Not addressed by citation; the Court applied equitable and remedial jurisdiction to set aside impugned proceedings and remit for fresh adjudication. Interpretation and reasoning: The Court set aside the impugned appellate order and, consequentially, set aside related proceedings issued by the assessing authority which emanated from or were linked to the impugned order. The Court expressly remitted the matter for fresh consideration by the appellate authority, directed it to consider the pending amendment application and specified previous/subsequent assessment-year orders, and granted liberty to the petitioner to file additional pleadings and documents to be considered in accordance with law. Ratio vs. Obiter: The remedial directions-setting aside the impugned orders, remitting for fresh consideration, and granting liberty to file further materials-constitute the operative ratio for disposal of the petition. Conclusion: The impugned appellate order and identified consequential proceedings are set aside; matter remitted for fresh consideration in conformity with the directions to consider the amendment application, relevant assessment-year orders, and any further pleadings/documents that may be filed in accordance with law. Cross-references The conclusions on Issues 1-4 are interdependent: the finding that the appellate order is a nullity (Issue 1) leads to the remedial directions to reconsider pending amendment grounds (Issue 2) and to take into account assessment orders of surrounding years (Issue 3), with the consequential setting aside of related proceedings and grant of liberty to file additional material (Issue 4).