2025 (7) TMI 1373 - AT - Income Tax

Reopening of assessment u/s 147 against dead assessee - duty cast upon legal representatives to intimate factum of death of assessee to department - HELD THAT - We note that during the course of assessment proceedings the legal heir of the assessee had produced necessary certificate to show that the assessee had expired. We note that though the assessee had expired on 10.11.2011 the assessment order was passed by the AO on 30.10.2019 almost after a gap of eight years from the date when the assessee had deceased. The fact that the assessee had expired was also placed on record during the course of assessment proceedings and this fact is also coming out clearly from the contents of the assessment order itself. However despite this AO continued the assessment proceedings in the name of the deceased assessee and no effort was made to bring the legal heir of the assessee on record. Even the assessment order was framed by the Assessing Officer in the name of the deceased assessee on 30.10.2019 almost eight years from the date when the assessee had expired. It is a well settled law that no assessment can be validly framed in the name of the deceased assessee especially when the fact of the death of the assessee has been brought to the knowledge of the Assessing Officer during the course of assessment proceedings itself. In the case of Pravinchandra A Shah vs. Union of India 2023 (8) TMI 385 - GUJARAT HIGH COURT held that reopening notice u/s 148 issued upon deceased assessee was a nullity therefore consequential proceedings and orders passed thereon were to be quashed and set aside. Thus we are of the view that the assessment order having been passed in the name of the deceased assessee is void-ab-initio and hence liable to be set-aside. Assessee appeal allowed.

Summary

ISSUES:

Whether reopening of assessment under Section 147 and issuance of notice under Section 148 of the Income Tax Act, 1961, in the name of a deceased assessee is valid.Whether addition of long-term capital gain on sale of immovable property to the deceased assessee's income is justified without bringing the legal heir on record.Whether penalty proceedings under Section 271(1)(c) of the Income Tax Act can be initiated against a deceased assessee.Whether interest levied under Sections 234A, 234B, 234C, and 234D of the Income Tax Act is sustainable in the circumstances of assessment against a deceased assessee.

RULINGS / HOLDINGS:

The reopening notice issued under Section 148 and the assessment order passed under Section 147 in the name of the deceased assessee are held to be nullity and void-ab-initio as the fact of death was brought to the notice of the Assessing Officer during proceedings and no legal heir was brought on record.The addition of Rs. 65,02,000/- as long-term capital gain in the name of the deceased assessee is not sustainable since the assessment was not validly framed against the legal heir, who should have been made a party to the proceedings.Penalty proceedings under Section 271(1)(c) initiated against the deceased assessee are invalid as the assessment itself is void for non-joinder of the legal heir.Interest levied under Sections 234A, 234B, 234C, and 234D cannot be sustained where the assessment order is void for being framed against a deceased assessee without involving the legal heir.

RATIONALE:

The legal framework applied includes Sections 133(6), 147, 148, and 271(1)(c) of the Income Tax Act, 1961, and the principle that no assessment can be validly framed against a deceased assessee once the fact of death is known to the department.Judicial precedents from various High Courts were relied upon, notably rulings holding that reopening notices and assessment orders issued in the name of a deceased assessee are nullity, and that the legal heir must be brought on record for valid proceedings.The tribunal emphasized the settled legal principle that in absence of statutory provision imposing a duty on legal heirs to intimate death, the department must itself bring the legal heir on record once the death is known, failing which the proceedings are invalid.There was no dissent or doctrinal shift; the tribunal followed established case law confirming that assessment proceedings against a deceased assessee without involving legal heirs are void-ab-initio.