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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM & MS. KAVITHA RAJAGOPAL, JM Shri Navnitlal Ratanji Shah Dr. Annie Besant Road, Worli,
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.
The Revenue has challenged this appeal on the ground that the ld. CIT(A) has erred in holding the assessment order passed u/s. 143(3) of the Act as invalid and bad in law on the ground that it was passed in the name of the deceased person. 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.
Aggrieved by the said order, the assessee’s legal heir was in appeal before the ld. 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.
The Revenue is in appeal before us, challenging the order of the ld. CIT(A).
The learned Departmental Representative (ld. DR for short) relied on the decision of the Hon'ble High Court of Karnataka in the case of Rudra Gouda vs. Asst. CIT [2018] 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).
Having heard the rival submissions and perused the materials on record. It is 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.
It is observed that the ld. CIT(A) has called for the remand report for verifying 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 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 (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.
It is observed that the said provisions of section 159 clause 2(a) states that any 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 we find no reason to decide otherwise.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced in the open court on 31.01.2023