ACIT-CC-7(3), MUMBAI vs. RANIBEN KHIMJI PATEL, LEGAL HEIR OF SHRI KARAMSHI PATEL, MUMBAI

Date of Hearing 11.08.2025 Date of Pronouncement 09.09.2025 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The present appeal arising from the appellate order is filed by the Revenue against the order passed by the Learned Commissioner of Income-tax, Appeal, CIT(A) 49, Mumbai [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 26.07.2021 for the Assessment Year [A.Y.] 2018-19. P a g e | 2 A.Y. 2018-19 Raniben Khimji Patel (Legal Heir of Shri Karamshi Patel) 2. The grounds of appeal are as under: 1. “On facts and circumstances of the case and in law, the Learned CIT(A) erred in invalidating the assessment order passed by the Assessing Officer (AO) without considering the provisions of Section 292B of the Income Tax Act, 1961, which clearly stipulates that no proceeding under the Act shall be invalid merely due to any mistake, defect, or omission in the name, designation, or description of the assessee, or any procedural defect, provided that the substance of the order is valid and no prejudice has been caused to the taxpayer.” 2. “On facts and circumstances of the case and in law, the Learned CIT(A) failed to consider that under Section 159 of the Income Tax Act, 1961, the liability to pay tax passes to the legal heir upon the death of the assessee.” 3. “On facts and circumstances of the case and in law, the Learned CIT(A) failed to consider the decision of High Court in the case of Sardar Harvinder Singh Sehgal and Ors. vs Assistant Commissioner Of Income- Tax, which emphasized that the intention behind the Income Tax Act is to ensure that taxes are assessed correctly, and minor defects or errors in the notice (like incorrect or missing details) would not invalidate the process, provided the substance is intact.”

3. Brief facts of the case are that the assessee had filed return of income declaring total income of Rs. 21,67,880/-. The case was selected for scrutiny under CASS. Subsequently, statutory notices u/s 143(2) and u/s.142(1) along-with the questionnaires were issued and served to the assessee. During the assessment proceedings, the explanation for interest expense on unsecured loans was not fully accepted by the AO and disallowance of interest expense of Rs. 52,32,511/- u/s. 69C of the Act and addition of interest capitalized to WIP of Rs. 33,80,174/- to the P a g e | 3 A.Y. 2018-19 Raniben Khimji Patel (Legal Heir of Shri Karamshi Patel) business income on account of its impact on net profit for the year under consideration were made to the income of the assessee.

4. In the subsequent appeal before the ld.CIT(A),the assessee inter alia claimed that the assessment order passed u/s. 143(3) of the Act was without jurisdiction, invalid, bad in law and in violation of the principals of natural justice and order passed in the name of the deceased assessee is void ab initio and lacks jurisdiction despite specifically intimation in the course of assessment proceedings. It was submitted that it is not in dispute thatthe legal heir of late Shri Khimji Karamshi Patel had not participated in the proceedings.All that the legal heir of late Shri Khimji Karamshi Patel did was to inform the Assessing Officer about the death of her husband in April 2021.Even after coming to know about the demise of late Shri Khimji Karamshi Patel, the department could have issued a valid notice to the legal heir as the period of limitation of 21 months had not expired. We fail to understand what prevented the department from issuing a valid notice to the legal heir within the time period.

4.1 The ld.CIT(A) after examining the issue observed that the legal heir of the assessee namely Mrs. Raniben Khimji Patel had duly P a g e | 4 A.Y. 2018-19 Raniben Khimji Patel (Legal Heir of Shri Karamshi Patel) intimated to the Assessing Officer about demise of Shri Khimji Karamshi Patel on 15.04.2021. Hence, on facts, it is a case where the Assessing Officer was fully aware about the legal heir of the deceased assessee before passing the assessment order on 26.07.2021. Before him, the assessee relied upon number of case laws wherein it is held that the proceedings get vitiated even when the notice is issued in the name of the deceased. In the assessment order, the address of the assessee was mentioned as Legal Heir of Shri Khimji Karamshi Patel Ground Floor, 53 Sheth Motisha Lane, Malgaon Mumbai, Mumbai 400010, Maharashtra, India’.However, the name of the assessee is mentioned as ‘Khimji Karamshi Patel’.Thus, the assessment order was passed in the name of the deceased assessee and not his legal heir. There is no discussion regarding the demise of the assessee in the body of the assessment order. He further stated the appellant has relied upon the decision of Hon’ble ITAT, Jaipur in the case of Late Sh. Birdi Chand vs. ITO, where the facts of the case are identical. Respectfully, following the cited case laws and the fact that even after intimating about the demise of the deceased assessee and his legal heir prior to issue of assessment order, the AO ought to have issued the impugned order on 26.07.2021 in the name of legal heir of the deceased P a g e | 5 A.Y. 2018-19 Raniben Khimji Patel (Legal Heir of Shri Karamshi Patel) assessee which was not the case here, the impugned order passed u/s 143(3) was held to be invalid.

6.1 Whereas in this case, admittedly the LR did not participate in the proceedings but had informed the AO about the death of the assessee. The AO went on to complete the assessment in the name of the deceased assessee and did not comply with the provisions of section 159 of the Act, thus making the whole proceeding null and void which could not be cured by the provisions of section 292B of the Act. Reliance of the Revenue on the case of Sardar Harvinder Singh Sehgal and Others v. ACIT and Others (Guwahati HC) is not applicable to the facts of the case are factually distinguishable.

Place: म ुंबई/Mumbai ददनाुंक /Date 09.09.2025 Lubhna Shaikh / Steno P a g e | 8 A.Y. 2018-19 Raniben Khimji Patel (Legal Heir of Shri Karamshi Patel)