DIWAKAR SAHOONJA,CHANDIGARH vs. CIT (A), CHANDIGARH

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ITA 532/CHANDI/2024Status: DisposedITAT Chandigarh01 June 2026AY 2010-116 pages
AI SummaryRemanded

What did the Tribunal hold?

The ITAT held that the CIT(A) failed to properly adjudicate the jurisdictional issue of reassessment proceedings against a deceased person and the computation of capital gains on inherited property. The tribunal found that the CIT(A)'s order lacked proper examination of facts and legal principles.

What were the facts?

The assessee's appeal before the ITAT was dismissed ex-parte by the CIT(A) due to non-compliance. The assessee had challenged the reassessment proceedings initiated in the name of a deceased person and the computation of capital gains on inherited property.

What were the issues?

The key issues were the validity of reassessment proceedings initiated against a deceased assessee and the correct computation of capital gains on inherited property, including the determination of the cost of acquisition.

Which sections of the Income-tax Act were involved?

Section 144,Section 147,Section 148,Section 49(1)(ii)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DIVISION BENCH, ‘A’ CHANDIGARH

Before: SHRI LALIET KUMAR & SHRI MANOJ KUMAR AGGARWAL

For Respondent: Shri Vivek Vardhan, Addl. CIT, Sr.DR
Hearing: 25.05.2026Pronounced: 01.06.2026

आयकर अपील�य अ�धकरण,च�डीगढ़ �यायपीठ, च�डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 532/CHD/2024 �नधा�रण वष� / Assessment Year: 2010-11 Diwakar Sahoonja, The CIT (Appeals), SCO 26, Sector 11-D, Vs Ward 1(4), Chandigarh. Chandigarh. �थायी लेखा सं./PAN NO: AKBPS7782E अपीलाथ�/Appellant ��यथ�/Respondent Assessee by : None Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr.DR Date of Hearing : 25.05.2026 Date of Pronouncement : 01.06.2026

PHYSICAL HEARING O R D E R PER LALIET KUMAR, JM

The assessee is in appeal before the Tribunal against the order passed by the ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [in short ‘the ld. CIT(A)’] dated 13.03.2024 for the assessment year 2010-11 arising out of assessment framed under section 144 r.w.s. 147 of the Income Tax Act, 1961.

2.

At the outset, it is observed that none appeared on behalf of the assessee at the time of hearing despite the matter having been

ITA No.532/CHD/2024 A.Y.2010-11 2 called out. Accordingly, the appeal is being disposed of ex-parte qua the assessee after hearing the submissions of the ld. Departmental Representative and after perusing the material available on record.

3.

The ld. Departmental Representative submitted that the assessee had remained non-compliant not only during the course of assessment proceedings before the Assessing Officer but also during the appellate proceedings before the ld. CIT(A). It was pointed out that repeated notices were issued by the ld. CIT(A), however, there was no effective compliance on behalf of the assessee. The ld. DR accordingly relied upon the findings recorded in the impugned appellate order and submitted that the appeal of the assessee deserved to be dismissed.

4.

We have heard the submissions of the ld. DR and have carefully perused the material available on record including the impugned order passed by the ld. CIT(A). It is noticed that the ld. CIT(A) has recorded in para 5 and 6 of the appellate order that several notices dated 25.01.2021, 19.04.2023, 28.06.2023, 16.08.2023, 15.09.2023 and 20.02.2024 were issued to the assessee calling for submissions, however, no response was received from the assessee and consequently the appeal was proceeded ex-parte. The ld. CIT(A), thereafter, proceeded to adjudicate the appeal both on legal grounds as well as on merits.

ITA No.532/CHD/2024 A.Y.2010-11 3 5. From the material available on record, it is evident that one of the principal grounds raised by the assessee before the ld. CIT(A) was that the notice issued under section 148 of the Act dated 27.03.2017 had been issued in the name of a deceased person namely Late Smt. Brij Rani and that the assessment had also been framed in the PAN of the deceased person while mentioning the name of the legal heir namely Shri Diwakar Sahoonja. The assessee had specifically challenged the validity of reopening proceedings on the aforesaid ground. Further, the assessee had also disputed the computation of capital gains and the determination of cost of acquisition in respect of the immovable property sold during the year under consideration

6.

We further notice that while adjudicating the aforesaid legal issue, the ld. CIT(A) merely observed that the notice server had reported that no person was residing at the address mentioned in the notice and thereafter the notice was served by way of affixture under Rule 20 of CPC at the last known address of the assessee. The ld. CIT(A) thereafter concluded that since the Assessing Officer was allegedly unaware of the death of the assessee and since no information regarding the death was stated to have been furnished before issuance of notice under section 148, therefore, the notice issued in the name of the deceased person was legally valid.

ITA No.532/CHD/2024 A.Y.2010-11 4 7. In our considered opinion, the aforesaid adjudication made by the ld. CIT(A) cannot be sustained in the eyes of law. The issue regarding validity of reassessment proceedings initiated against a deceased person is a foundational jurisdictional issue which goes to the very root of the assessment proceedings. Such issue requires detailed factual examination and proper adjudication in the light of settled legal principles laid down by various Hon’ble High Courts and Hon’ble Apex Court. The ld. CIT(A), despite noticing that the notice under section 148 had admittedly been issued in the name of deceased person, failed to examine essential facts such as the actual date of death of the assessee, whether the department had prior knowledge of such death, whether any notice was ever issued upon the legal heirs in accordance with law, and whether the jurisdiction assumed by the Assessing Officer could legally survive in absence of valid notice to a living person or legal representative. In our considered view, the issue has not been examined in the proper legal perspective and therefore requires fresh adjudication.

8.

We also find substance in the grievance of the assessee regarding computation of capital gains. The ld. CIT(A) has recorded that the Assessing Officer had received information regarding sale of immovable property for consideration of Rs.82,00,000/- and upon making enquiries under section 133(6), it was found that the property had been inherited by the assessee. The Assessing

ITA No.532/CHD/2024 A.Y.2010-11 5 Officer, by referring to provisions of section 49(1)(ii), adopted the cost of acquisition at Rs. 100/- and consequently computed long- term capital gain at Rs. 81,99,900/-. The ld. CIT(A), without making any further verification or examination of facts, simply upheld the action of the Assessing Officer.

9.

In our considered opinion, once the ld. CIT(A) himself records that the property was inherited, then the issue regarding determination of cost of acquisition and indexed cost of acquisition required proper verification with reference to the cost to the previous owner and the relevant statutory provisions applicable in cases of inherited property. The adoption of cost at merely Rs.100/- without proper enquiry, verification of title documents, date of acquisition by previous owner, nature of inheritance and applicability of indexation provisions, cannot be sustained merely on account of non-appearance of the assessee. The first appellate authority being a quasi-judicial authority was under obligation to examine the correctness of the assessment on facts and in law even in ex-parte proceedings.

10.

Having regard to the entirety of facts and circumstances of the case, we are of the considered opinion that the issues involved in the present appeal require fresh adjudication at the level of the ld. CIT(A). The impugned order passed by the ld. CIT(A) suffers from lack of proper examination on both the jurisdictional issue

ITA No.532/CHD/2024 A.Y.2010-11 6 relating to validity of notice issued in the name of deceased person as well as on the issue relating to computation of capital gains arising from inherited property. Accordingly, in the interest of substantial justice, we deem it appropriate to set aside the impugned appellate order and restore the entire matter to the file of the ld. CIT(A) for adjudication afresh in accordance with law after granting adequate and effective opportunity of hearing to the assessee. The assessee shall also cooperate in the appellate proceedings and furnish all requisite evidences and documents in support of its contentions. The ld. CIT(A) shall pass a speaking and reasoned order dealing with each ground raised by the assessee in accordance with law.

11.

In the result, appeal is allowed for statistical purposes.

Order pronounced on 1 s t June,2026.

Sd/- Sd/-

(MANOJ KUMAR AGGARWAL) (LALIET KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER “Poonam” आदेश क� �ितिलिप अ�ेिषत/ Copy of the order forwarded to : अपीलाथ�/ The Appellant 1. ��यथ�/ The Respondent 2. आयकर आयु�/ CIT 3. िवभागीय �ितिनिध, आयकर अपीलीय आिधकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 4. गाड� फाईल/ Guard File 5.

सहायक पंजीकार/ Assistant Registrar

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