TaxTMI 
TaxTMI 
2026 (10) TMI 411
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.... u/s.144 r.w.s. 147 of the Act was passed on 10.12.2018. The assessee alone initially pursued the proceedings before the Assessing Officer and thereafter filed an appeal before the CIT(A)-NFAC, who, vide order dated 29.01.2025, remanded the matter to the file of the AO. It is submitted that, thereafter, disputes arose amongst the legal heirs regarding sharing of the responsibility and financial burden of pursuing the proceedings. Despite the assessee's efforts, the other legal heirs did not extend the necessary cooperation or support. Further, the deceased appellant had left no estate from which any liability, if ultimately crystallised, could be discharged. In these circumstances, the assessee was initially hopeful of securing the cooperation of the other legal heirs, but such efforts did not yield any result. Ultimately, the assessee took upon himself the responsibility of pursuing the matter and filed the present appeal, resulting in the delay of 237 days. Accordingly, it is prayed that the delay may kindly be condoned and the appeal be admitted for adjudication on merits. On perusal of the reasons stated, we are of the view that no latches can be attributed to the assessee as t....
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....erits, more particularly, on the legal issues raised by the appellant qua the validity of the order under section 144 r.w. 147 of the Act dated 10.12.2018. 3. The Learned CIT(A)-NFAPC erred in passing the impugned order dated 29.01.2025 remanding the matter back to the file of the assessing officer when infact, the CIT(A)-NFAPC ought to have decided the appeal on the issue relating to validity of notice under section 148 dated 28.03.2018 in the name of the dead person late T. Arumaikannu ["deceased appellant"| as it was purely a legal issue which did not involve any factual verification warranting a remand and therefore, the impugned order of the CIT(A)-NFAPC deserves to be set aside 4. The Learned CIT(A)-NFAPC erred in passing the impugned order dated 29.01 2025 remanding the matter back to the file of the assessing officer without adjudicating on the validity of the order under section 144 r.w. 147 of the Act dated 10.12.2018 when infact, the said order is invalid as the notice under section 148 of the Act dated 28.03.2018 is not valid as the same was issued in the name of the dead person and it is a settled law that the entire proceeding under section 147 is in....
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.... in ITA No. 228/Chny/2026 (order dated 02.06.2026), the Ld. AR submitted that the notice issued in the name of the deceased was invalid and the consequent reassessment proceedings were liable to be quashed. Accordingly, it was pleaded that, instead of remanding the matter to the AO, the FAA ought to have adjudicated the legal ground and quashed the assessment order. Without prejudice to the above legal contention, the Ld. AR submitted that the AO had also erred on merits in treating the property sold by the deceased assessee as a capital asset and bringing the resultant gain to tax. It was contended that the property sold was agricultural land and, therefore, did not fall within the definition of "capital asset" u/s.2(14) of the Act. Accordingly, the Ld. AR prayed that the impugned assessment order be quashed on the legal ground and, in the alternative, the addition made towards Long-Term Capital Gain be deleted. 7. The Ld.DR submitted that the assessee having sold the property ought to have filed her return of income for the relevant assessment year namely 2011-12 and having failed to file the return of income, the Department is justified in issuing notice and bringing to tax t....
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.... legal heir(s), proceeded to issue notices proposing best judgment assessment u/s.144 of the Act in the name of the deceased assessee, with the name of the appellant merely mentioned below it. The AO thereafter completed the assessment by treating the property sold by the deceased assessee as a capital asset and brought the resultant Long-Term Capital Gain to tax. Further, invoking the provisions of section 50C of the Act, the AO adopted the value of the property for stamp duty purposes at Rs. 17,69,000/- and, after allowing the indexed cost of acquisition, determined the Long-Term Capital Gain at Rs. 16,11,843/-. 11. As noted above, on the date of issuance of the notice under section 148 of the Act, i.e., on 28.03.2018, the assessee had already expired. Therefore, the notice issued under section 148 of the Act in the name of a deceased person was invalid in law, as such notice could have been issued only against a living person or, in accordance with law, upon the legal heir(s) of the deceased assessee. Consequently, the very assumption of jurisdiction pursuant to the said notice under section 148 of the Act is vitiated in law and, therefore, the assessment order passed under s....
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....ner - his spouse to participate in the proceedings. This notice was well beyond the period of limitation, as it has been issued after 31.3.2017. If we approach the problem sans complicated facts, a notice issued beyond the period of limitation i.e. 31.3.2017 is a nullity, unenforceable in law and without jurisdiction. Thus, merely because the Department was not intimated about the death of the assessee, that cannot, by itself, extend the period of limitation prescribed under the Statute. Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration. 18. In such circumstances, the question would be as to whether Section 159 of the Act would get attracted. The answer to this question would be in the negative, as the proceedings under Section 159 of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being o....
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....t are attracted, in that case also, the notice was required to be issued against and in the name of the heirs of the deceased assessee and under the said circumstances, Section 159 of the Act shall not be of any assistance to the Revenue. 23. In the decision of the Delhi High Court in the case of Spice Entertainment Ltd. (supra) one of the questions, which fell for consideration, is as to whether such framing of assessment against a non-existing entity or a dead person could be brought within the ambit of Section 292B of the Act and after referring to the decisions on the point including the decision of the Allahabad High Court in the case of Sri Nath Suresh Chand Ram Naresh v. CIT [2006] 280 ITR 396/145 Taxman 186 it has been held that the provisions of Section 292B of the Act are not applicable and that framing of assessment against a non-existing entity/person goes to the root of the matter, which is not a procedural irregularity, but a jurisdictional defect, as there cannot be any assessment against a dead person. 24. The learned Senior Standing Counsel for the Revenue has sought to distinguish the decision in the case of Spice Entertainment Ltd. (supra) by re....
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....ces, may be saved. Such a situation is also contemplated in civil proceedings and a provision is made in the Civil Procedure Code itself under Order XXII Rule 4. Therefore, the cases where the very proceedings are initiated against a dead person stand apart from those proceedings where they are initiated against a live person, but continued after his death against the legal heirs. Hence, the first contention is rejected. 13. The second contention revolves around section 292BB of the Act, which reads as follows : ......................... ......................... 14. A cursory look at section 292BB would show that the same would apply only to two types of proceedings namely (i) proceedings, in which, the assessee had appeared and (ii) any inquiry, in which, the assessee had cooperated. 15. In the case on hand, the assessee was dead. It was the assessee's son, who appeared and perhaps cooperated. Therefore, the primary condition for the invocation of section 292BB is absent in the case on hand. 16. Section 292BB is in place to take care of contingencies where an assessee is put on notice of the initiation of proceedings, but ....
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....s only those circumstances that can be said to be taken care of under clause (b). 21. In any case, in the case on hand, the Department was made aware of the fact that the assessee was dead. The Income Tax Officer's letter dated 23.9.2013 informing his superior that the notice under section 263 returned with the endorsement of the Postal Department to the effect that the addressee was dead, clinches the fact. Despite being put on notice that the noticee was dead, the Department chose to pursue the very same notice. In such circumstances, Clause (b) of sub-section (2) of section 159 cannot be taken advantage of by the Department. 22. Sub-section (3) of section 159 contains a deeming fiction. It states that the legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. Therefore, it is contended by Mr.M. Swaminathan, learned Standing Counsel for the Department that the respondent should be deemed to be an assessee and the service of notice on him should be deemed to be sufficient service. 23. In other words, the contention of the learned Standing Counsel is that the respondent herein automatically becomes a dee....
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....not go by the ratio decidendi in Kaushalyabai (supra). The first is that in response to the notices, the assessee's legal heirs filed returns of income. In other words, they submitted to the jurisdiction. Moreover, what was sought to be done was actually to include the income of the wife under section 64. 29. The second reason is that with great respect to the Madhya Pradesh High Court, the principle of law that they had mentioned therein does not appear to be correct. A notice sent to a dead person is actually a nullity. There is only one exception in so far as civil proceedings are concerned, which could be traced to Order XXII Rule 4. Section 159 of the Income Tax Act also carves out an exception. Since service of notice on the legal heir of a dead person falls under the category of an exception to the general rule, the same cannot overtake the rule in the absence of a specific provision. 30. A Bench of this Court, to which, one of us (VRSJ) was a party, had pointed out in Gopalakrishnan G.S. v. State of Tamil Nadu [2006 (4) CTC 757], that a distinction has always to be maintained between judicial/ quasi-judicial proceedings and other proceedings. In Savith....
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....ny steps to cancel the PAN registration in the name of the assessee and that therefore, the Department was justified in directing the petitioner to cooperate in the proceedings pursuant to the impugned notice. 16. The settled legal principle being that a notice issued in the name of the dead person is unenforceable in law. If such is the legal position, would the Revenue be justified in contending that they, having no knowledge about the death of the assessee, are entitled to plead that the notice is not Defective. In my considered view, the answer to the question should be definitely against the Revenue. 17. This Court supports such a conclusion with the following reasons: Admittedly, the limitation period for issuance of notice for reopening expired on 31.3.2017. The impugned notice was issued on 30.3.2017 in the name of the dead person. On being intimated about the death, the Department sent the notice to the petitioner - his spouse to participate in the proceedings. This notice was well beyond the period of limitation, as it has been issued after 31.3.2017. If we approach the problem sans complicated facts, a notice issued beyond the period of limitation i.e. ....
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....sed assessee for the assessment year 2008-09, for which, the limitation for issuance of notice under Section 147/148 of the Act was 31.3.2015 and on 02.7.2015 when the notice was issued, the assessee was already dead and if the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31.3.2015 by issuing the notice to the legal heirs of the deceased and beyond that date, it could not have proceeded in the matter even by issuing notice to the legal representatives of the assessee. The decision in Vipin Walia fully supports the case of the petitioner herein. 22. The decision in the case of Vipin Walia was followed in the decision of the High Court of Gujarat in the case of Rasid Lala, in which, the re-assessment proceedings were initiated against the dead person, that too, after a long delay. The Court pointed out that even if the provisions of Section 159 of the Act are attracted, in that case also, the notice was required to be issued against and in the name of the heirs of the deceased assessee and under the said circumstances, Section 159 of the Act shall not be of any assistance to the Revenue. 23. In the decision of the Delhi....
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....tment regarding the death of the assessee and, therefore, the Assessing Officer was justified in issuing the notice in the name of the assessee. We are unable to accept the said contention. 8. The issue is no longer res integra and stands squarely covered by the decision of the Hon'ble Jurisdictional High Court in AlameluVeerappan v. ITO [2018] 95 taxmann.com 155 (Madras). The Hon'ble High Court has categorically held that a notice issued in the name of a dead person is unenforceable in law and that the absence of intimation regarding the death of the assessee would not validate such a notice. The Hon'ble Court further held that there is no statutory obligation cast upon the legal representatives to immediately intimate the Department regarding the death of the assessee or to cancel the PAN registration. It was also held that section 159 of the Act would apply only where proceedings had already been initiated during the lifetime of the assessee and thereafter continued against the legal representatives. Where the very initiation of proceedings is against a deceased person, section 159 has no application. 9. The Hon'ble High Court further held that ....