2015 (3) TMI 1378

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....de by the AO for alleged reduction in the value of closing stock. The Id CIT (A) ought to have held that the method adopted by the appellant was more scientific in view of the circumstances pointed out to the Id AO and which was bonafidely followed subsequently ought to have been accepted .It be so held now and the addition of Rs. 19,93,518 erroneously made by the AO and confirmed by CIT(A) be deleted. 2. The Ld. CIT (A) has further erred in both law and on facts in not appreciating that in view of the detailed submissions made to the AO and before him regarding the SEBI directions and further ,when the accounts being not rejected on the ground of being found to be incorrect or incomplete,, addition of Rs. 19,93,518 was not justifi....

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....acts in not cancelling the assessment order passed without notice to legal heirs. 8. The Id CIT(A) failed to consider and appreciate the various submissions and explanations furnished which ought to have been considered while passing the order. The Id. CIT(A) ought to have allowed the appeal in toto. 3. At the outset, the AR of the assessee submitted that the assessee, Shri Vasudev Gordhandas Dapki expired on 23.12.2007. This fact was brought to the notice of the AO vide letter dated 1.9.2009 and copy of death certificate was also filed before him. The AO has framed the assessment under section 143(3) of the Act on 30.9.2009 on the assessee, Shri Vasudev Gordhandas Dapki who had already expired. The assessee filed an ap....

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....of the assessee, Shri Vasudev Gordhandas Dapki. The AO, thereafter, instead of taking steps to bring the legal heirs on record, proceeded to frame the assessment of a dead person. Thus, this issue is covered by the decision of this Bench of the Tribunal in the case of ITO Vs. Shri Akhter Nooruddinahmed Saiyed (supra) wherein the Tribunal held as under: "This is an appeal filed by the assessee against the order of the CIT(A), Valsad dated 27.12.2012 by taking the following grounds of appeal: 1. On the facts and circumstances of the case, and in law, the learned CIT(A) has erred in restricting the addition from Rs. 18,34,600/- to Rs. 1,66,949/- as G.P. @ 9.10% made on account of the undisclosed income. 2. On the fac....

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....as much before the date of passing of the assessment order. 5. It may be recalled that in the case of Ellis C. Reid v. CIT 5 ITC 100 the Bombay High Court had held that where a person died after the commencement of the assessment year but before his income of the previous year was assessed, his executor was not liable to pay the tax and that if the death occurred while assessment proceedings were pending, the proceedings could not be continued and the assessment could not be made after the person's death: This view of the Bombay High Court led the Legislature to introduce Section 24B in the1922 Act in 1933. Section 24B corresponds to Section 159 of the present Act. The relevant part of Section 159 reads as under:- 159.....

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....section (3) of Section 159 are, by such legal fiction, deemed to be the assessees. Sub-section (2) of Section 159 lays down the conditions of applicability of the provisions of Section 159. Clause (a) of Sub-section (2) says that any proceedings taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased. For the applicability of this clause the proceedings for making an assessment or for the purpose of levying any sum should have been taken against the deceased in his lifetime and these would be such proceedings which may be continued against the legal representa....

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....n created Under Section 159 of the Act, their Lordships of the Supreme Court referring to their earlier decision in the case of Bengal Immunity Co. Ltd. v. State of Bihar (sic.) observed that legal fictions are only for a definite purpose for which they are created and should not be extended beyond that limited field. The same principle was reiterated by the Supreme Court in the case of First Addl. ITO v. Mrs. Suseela Sadanandan [1965] 57 ITR 168 where it was held that on the death of a person the Income-tax Officer has to proceed against the executor and/or legal representative of the deceased. The proposition laid down by the Supreme Court in the above cases was followed by the Calcutta High Court in the case of CIT v. Shantilal C. Mehta ....