2021 (8) TMI 283 - AT - Income Tax

Reopening of assessment u/s 147 - invalid notice - assessee died before notice was issued - HELD THAT - It is undisputed fact that assessee had died on 01.07.2012 which fact is noted by the Assessing Officer himself at page 2 in para 2 of his order. The notice was issued on 26.03.2015 and which was served by affixture on 31.03.2015 - when the notice was issued the assessee was not in existence and was already dead and therefore such notice cannot be said to be a legal and valid notice. Revenue was also not able to demonstrate that fresh notice was served u/s. 148 of the Act to the legal heir of the assessee and neither this fact of issuing fresh notice u/s. 148 of the Act is coming out from the material on record. The coordinate Bench of Chandigarh in the case of Shri Balbir Singh vs. ITO 2019 (6) TMI 913 - ITAT CHANDIGARH has decided similar issue in favour of the assessee. Thus any notice issued in the name of dead person cannot empower the Assessing Officer to pass a valid assessment order - decided in favour of assessee.

Summary

Issues Involved:
Appeal against order of ld. CIT(A) - Validity of assessment order - Service of notice u/s. 148 - Reassessment proceeding without serving notice u/s. 148 on legal representatives - Notice issued on deceased person - Validity of assessment - Deduction of cost of acquisition for capital gain - Liability of legal heir - Jurisdiction of assessment - Compliance with notice u/s. 143(2).

Analysis:
The appeal was filed against the order of ld. CIT(A) challenging the assessment order. The primary contention raised by the assessee was the legality and validity of the assessment order. The assessee argued that the notice u/s. 148 of the Income Tax Act was not served on them, rendering the assessment illegal and void ab initio. Additionally, it was claimed that the reassessment proceeding was initiated without serving notice u/s. 148 on all legal representatives of the deceased assessee, further questioning the validity of the assessment.

The core issue revolved around the notice being issued on a deceased person, which the assessee contended as invalid and unenforceable in law. The assessee highlighted that the notice was served through affixture on the deceased person, and no further notice u/s. 148 was issued to the legal heirs. The argument was supported by legal precedents, including judgments in cases such as Shri Balbir Singh vs. ITO, Sumit Balkrishna Gupta vs. ACIT, Rajendra Kumar Sehgal vs. ITO, and Alamelu Veerappan vs. ITO. The judgments emphasized the importance of issuing notices in the correct person's name for the validity of reassessment proceedings.

The Tribunal, after hearing both parties and examining the facts, concluded that the notice issued on the deceased assessee was not legally valid. It was noted that no fresh notice was served to the legal heir of the assessee, thereby questioning the jurisdiction of the assessment. Citing the judgment in the case of Shri Balbir Singh vs. ITO, the Tribunal held that the foundational requirement for reopening assessment is issuing a notice to the correct person, and a notice issued on a dead person is not protected by relevant provisions of the Act. Consequently, the Tribunal ruled in favor of the assessee, quashing the assessment order.

The Tribunal also dismissed the argument that the legal representatives should have promptly informed the Assessing Officer about the death of the assessee, highlighting that the notice was not served through regular mode but through affixture. The Tribunal emphasized the importance of correct service of notice and the need for jurisdictional requirements to be met for valid assessment proceedings. Based on the legal principles and precedents cited, the Tribunal allowed Grounds No. 1 to 4 of the appeal, while the remaining grounds were not pressed and hence dismissed.

In conclusion, the Tribunal partly allowed the appeal of the assessee, emphasizing the significance of proper service of notice and adherence to legal procedures in assessment proceedings.