Reassessment under s147 issued in deceased taxpayer's name held void; set aside and remanded to assess legal heirs.

Reassessment framed u/s 147 r/w ss 144 and 144B in the name of a deceased assessee was challenged as void. Applying the principle that proceedings and orders issued against a dead person suffer from an incurable jurisdictional defect unless brought against the legal representatives, the Tribunal held that the AO could not validly pass an assessment order in the deceased's name after death. Consequently, the reassessment order was declared a nullity and set aside, and the matter was remanded to the AO to frame a fresh assessment only after impleading the legal heirs on record.

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ISSUES PRESENTED AND CONSIDERED

1. Whether an assessment order passed in the name of an assessee who had died during the pendency of reassessment proceedings, after the fact of death was brought to the Assessing Officer's notice, is legally sustainable or is a nullity.

2. If such assessment is a nullity, whether the proper course is to annul it outright or to remand the matter with directions to continue and complete assessment proceedings against the legal representatives in accordance with section 159.

ISSUE-WISE DETAILED ANALYSIS

Issue 1: Validity of assessment order passed in the name of a deceased assessee

Legal framework: The Court examined section 159 and applied its scheme to situations where an assessee dies during pendency of proceedings, recognising that proceedings taken before death are to be treated as taken against the legal representative and continued from the stage at which they stood on the date of death, and that the legal representative is deemed to be an assessee for purposes of the Act.

Interpretation and reasoning: The Court held that, as a settled principle, no order can be passed against a dead person. Although the reassessment notice had been issued and served during the assessee's lifetime, the assessee died during the pendency of proceedings and the legal heir informed the Assessing Officer of the death before completion of assessment. Despite this, the Assessing Officer passed the assessment order in the deceased assessee's name without impleading legal heirs. The Court treated this as a fundamental defect attracting section 159, requiring continuation of proceedings against legal representatives rather than completion against the deceased.

Conclusion: The assessment order passed in the name of the deceased assessee was held to be a nullity and unsustainable in law.

Issue 2: Appropriate relief-annulment with consequential remand under section 159

Legal framework: The Court applied section 159(2)(a) to require continuation of pending proceedings against legal representatives from the stage existing on the date of death, and treated compliance with section 159 as mandatory before a valid assessment can be made where death intervenes.

Interpretation and reasoning: Having held the assessment to be a nullity, the Court concluded that the proper consequential direction is to restore the matter to the Assessing Officer to pass a fresh assessment after bringing the legal heirs on record, rather than allowing the invalid order to stand or deciding the merits of additions/exemptions. The Court emphasised that the de-novo proceedings must be carried out by impleading the legal heirs and by granting them reasonable opportunity of being heard.

Conclusion: The Court set aside the impugned assessment as void and remanded the matter to the Assessing Officer to frame assessment afresh after impleading the legal heirs on record and affording reasonable opportunity of hearing; the appeal was allowed for statistical purposes on this ground.

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