DY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3(3), CENTRAL RANGE-3, MUMBAI vs. SHRI NAVNITLAL RATANJI SHAH, MUMBAI

Per Kavitha Rajagopal, J M:

This appeal has been filed by the Revenue, challenging the order of the learned Commissioner of Income Tax (Appeals)-51, Mumbai (‘ld.CIT(A) for short), passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2013-14.

2 ITA No. 1919/Mum/2022 (A.Y. 2013-14) Dy. CIT vs. Shri Navnitlal Ratanji Shah 3. The brief facts are that the assessee filed its return of income on 18.09.2013,

declaring the total income at Rs.52,91,210/- and the return was processed u/s. 143(1) of

the Act. The assessee’s case was selected for scrutiny and the notice u/s. 143(3) of the

Act was issued on 15.09.2014 and duly served upon the assessee. The assessee received

income from salary, house property, capital gains and income from other sources. Further

to this, notice u/s. 142(1) dated 23.07.2015 was issued. The A.O. passed the assessment

order u/s. 143(3) dated 28.03.2016 by determining the total income at Rs.6,68,13,580/- in

the name of the assessee by making various additions/disallowances. It is observed that

during the assessment proceeding, the assessee expired on 30.06.2015 and the copy of the

death certificate of the assessee was filed before the A.O. It is observed that the

assessment order dated 28.03.2016 was passed by the A.O. subsequent to the demise of

the assessee.

CIT(A) challenging the assessment order and also on the ground that there was a mistake

in the calculation made by the A.O. for disallowance u/s. 14A of the Act read with Rule

8D and also on the ground of non genuinity of the unsecured loan obtained by the

assessee. The ld. CIT(A) allowed the assessee’s appeal on the ground that the assessment

order passed in the name of an deceased person is invalid and bad in law.

of the Hon'ble High Court of Karnataka in the case of Rudra Gouda vs. Asst. CIT [2018]

3 ITA No. 1919/Mum/2022 (A.Y. 2013-14) Dy. CIT vs. Shri Navnitlal Ratanji Shah 93 taxmann.com 333 (Kar) which justify the Tribunal’s action in remanding the matter to

the A.O. for de novo assessment on legal representative of the deceased assessee in the

case where the assessment order is passed on the deceased person. The ld. DR submitted

that the assessment order could not be passed on the legal heirs of the assessee as the

details of the legal heirs were not furnished before the A.O. The ld. DR prayed for

remanding the matter back to the A.O. for de novo assessment on the legal

representatives of the deceased assessee. The ld. AR, on the other hand, controverted the

arguments of the ld. DR and stated that during the assessment proceeding, the ld. AO was

intimated by the legal heir of the assessee as to the demise of the assessee and despite

this, the A.O. proceeded to pass the assessment order on the dead person. The ld. AR

relied on the decision of the Hon’ble Delhi High Court in the case of Savita Kapila vs.

ACIT [2020] 118 taxmann.com 46 (Del).

evident that the impugned assessment order dated 28.03.2016 was passed by the A.O.

subsequent to the demise of the assessee which is on 30.6.2015. From the submissions

made by the assessee, it is evident that the death of the assessee was intimated to the A.O.

during the assessment proceeding and was substantiated by furnishing a copy of the death

certificate to the A.O. The ld. DR had not controverted this fact.

whether letter dated 23.02.2016 was available on record along with the copy of the death

certificate of the assessee and whether the authorization to appear during the assessment

proceedings was issued by the legal heir for which the ld. CIT(A) observed that the copy

4 ITA No. 1919/Mum/2022 (A.Y. 2013-14) Dy. CIT vs. Shri Navnitlal Ratanji Shah of the death certificate of the assessee was filed vide letter dated 23.03.2016 and also the

letter of authority authorizing M/s. Ashwin Dedhia & Co. Chartered Accountants to

appear during the course of assessment proceedings was issued by Mrs. Fizzah N. Shah,

the legal heir of the deceased assessee was available on record. It is also observed that the

Revenue had contended that there is no documentary proof to show that Mrs. Fizzah N.

Shah was the legal heir of the assessee as there was no legal heir certificate submitted

along with the letter dated 23.02.2016. The assessee in response to the copy of the

remand report had replied that Mrs. Fizzah N. Shah was the wife of the deceased assessee

and had also enclosed a marriage certificate to substantiate the same. The moot question

here is whether section 159 is applicable for the facts of the present case. It is pertinent to

cite the provisions of section 159 of the Act for ease of reference:

Legal representatives. 159. (1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased. (2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section 147) of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1),— (a) any proceeding 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; (b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and (c) all the provisions of this Act shall apply accordingly. (3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee. (4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undischarged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of or parted with. (5) The provisions of sub-section (2) of section 161, section 162, and section 167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative.

5 ITA No. 1919/Mum/2022 (A.Y. 2013-14) Dy. CIT vs. Shri Navnitlal Ratanji Shah (6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub-section (5), be limited to the extent to which the estate is capable of meeting the liability.

proceeding which is 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.

While interpreting the said provision, it is relevant to observe that whether the statutory

notice issued in the name of the dead person is a curable mistake, defect or omission as

per the provision of section 292B of the Act. We would like to place our reliance on the

decision of the Hon'ble Delhi High Court in the case of Savita Kapila (supra) which held

that the issuance of notice upon the death person does not come under the ambit of

mistake, defect or omission for which section 292B of the Act and the said provision

does not apply. The above said decision has also considered various other decisions in

this line and has extensively dealt with the present issue in hand. The said decision has

also held that the legal heirs are not under the statutory obligation even to intimate the

death of the assessee to the Revenue. In the present case, the legal heir of the assessee has

intimated the demise of the assessee to the A.O. even before the completion of the

assessment proceedings. The ld. CIT(A) has held that it was the responsibility of the A.O.

to identify the legal heir as per the provision of section 159(2) and pass the assessment

order in the name of the legal heir of the assessee by relying on the decision of Hon'ble

High Court of Madhya Pradesh in the case of CIT vs. Dalumal Shyamumal [2005] 276

ITR 62 (MP). By considering the decisions cited by both the authorized representatives,

we are of the considered view that the order of the ld. CIT(A) in holding that the

6 ITA No. 1919/Mum/2022 (A.Y. 2013-14) Dy. CIT vs. Shri Navnitlal Ratanji Shah assessment order passed on the deceased person is invalid or bad in law, is justified and

we find no reason to decide otherwise.

Order pronounced in the open court on 31.01.2023

Sd/- Sd/-

(Prashant Maharishi) (Kavitha Rajagopal) Accountant Member Judicial Member Mumbai; Dated : Roshani, Sr. PS

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT - concerned 5. DR, ITAT, Mumbai 6. Guard File BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai