Assessment order under Section 147 against deceased assessee without legal representatives declared void nullity

ITAT Raipur held that an assessment order passed under Section 147 against a deceased assessee without impleading legal representatives was a nullity. The AO was informed of the assessee's death but failed to comply with Section 159(2) requirements before framing the assessment. Following the precedent in DALUMAL SHYAMUMAL, the Tribunal declared the assessment void and remanded the matter to the AO to properly notice the legal representatives and pass appropriate assessment orders in compliance with Section 159(2) of the Income Tax Act.

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Issues Involved:
The issues involved in the judgment are:
1. Denial of exemption u/s. 10(38) and addition u/s. 68 on long term capital gain on sale of equity shares.
2. Validity of assessment made u/s. 147 on a deceased person.

Issue 1: Denial of Exemption u/s. 10(38) and Addition u/s. 68:
The assessee filed a return for A.Y. 2015-16 with an exempt income of Rs. 8,67,760/- from long term capital gain (LTCG) on sale of shares. The Assessing Officer (A.O) reopened the case under Sec. 147 based on suspicions of a bogus LTCG claim. The A.O, in the assessment order dated 28.03.2022, denied the exemption u/s. 10(38) and added Rs. 8,61,760/- u/s. 68 of the Act. The Commissioner of Income Tax (Appeals) upheld this addition, stating that the appellant failed to provide any evidence to support the claim of genuine LTCG. The CIT(A) relied on various findings and case laws to support the decision, ultimately dismissing the appeal.

Issue 2: Validity of Assessment on a Deceased Person:
The legal heir of the deceased assessee challenged the assessment made u/s. 147 on the deceased person's name. The authorized representative argued that as the assessee had passed away during the assessment proceedings and the A.O was duly informed about this, the assessment on a deceased person was invalid. The legal representative cited legal precedents and Section 159(2) of the Act, emphasizing that no order can be passed against a dead person, and any proceedings should continue against the legal representative. The A.O, despite being aware of the death of the assessee, failed to involve the legal heir in the assessment process. The representative's contentions were supported by the judgment of the Hon'ble High Court of Madhya Pradesh in a similar case. Following the legal provisions and precedents, the Tribunal held the assessment order passed on the deceased person as nullity and remanded the matter to the A.O for proper assessment after notifying the legal representative of the deceased assessee.

This judgment addresses the denial of exemption on LTCG and the addition under Sec. 68, as well as the validity of an assessment made on a deceased person, emphasizing the importance of involving legal representatives in such cases to ensure due process and compliance with the law.

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