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

IN THE INCOME TAX APPELLATE TRIBUNAL
“H (SMC)” BENCH MUMBAI

BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER &
SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER
ACIT-CC-7(3)
R. No. 655,
6thfloor,Aayakar Bhavan,
M. K. Road, Mumbai-400
020
Vs. RanibenKhimji Patel
(Legal Heir of Shri
KhimjiKaramshi
Patel),
602, 6th floor, Petit
Tower, August Kranti
Marg, Kemps Corner,
Mumbai-400 026

PAN/GIR No. AADPP8816G
(Applicant)

(Respondent)

Revenue by Shri Pravin Salunkhe, Sr. DR
Assessee by Shri Rushabh Mehta, Ld. AR

Date of Hearing
03.07.2025
Date of Pronouncement
13.08.2025

आदेश / ORDER

PER RAJ KUMAR CHAUHAN, JM:

This appeal by revenue is directed against the order dated 15.01.2025 passed by the Ld. Commissioner of Income Tax (Appeal)-49, Mumbai (herein after referred as “Ld. CIT(A)” u/s 250 of the Income-tax Act, 1961 (herein
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel) after referred as “the Act”), whereinLd. CIT(A) has set aside the assessment order dated 28.09.2021 on the ground that the assessment order issued against a dead person is a nullity.
2. The brief facts as culled out from the proceeding before the authorities below are that the assessee was running proprietary concern in the name of M/s Trishul
Developers which was into the business of construction and development of residential and commercial properties.
In addition, the assessee also used to run a grocery store in the name of M/s RatilalHirji& Co. The assessee filed the return of income on 22.10.2019 declaring total income at Rs.
NIL and business loss carried forward of Rs.
62,25,780/-. Thereafter the case was selected for scrutiny under CASS and subsequently, notice u/s 142(1) dated
31.03.2021 and notice u/s 142(1) dated 09.09.2021 was issued and served upon the assessee electronically, calling on various information and documents. It is alleged that in response to the notices issued, submissions from time to time were uploaded and the details were verified and placed on record wherein addition of interest expenses u/s 36(1)(iii) of the Act alongwith addition u/s 69C of the Act were made and demand was raised.
The penalty proceedings were also initiated separately.
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel)

Bombay in the case of the appellant has quashed the notice u/s 148 issued for AY 2013-14 and 2014-15 on the ground that notice issued u/s 148 of the Act against the deceased person was void ab initio. After considering the submission of the appellant, Ld. CIT(A) has noticed that the legal heir of the assessee i.e. the present appellant has duly intimated to the AO about the death of the assessee i.e. Late Shri KhimjiKaramshi Patel vide letter dated
15.04.2021 and the AO was fully aware of the legal heir of the deceased assessee before passing the assessment order on 26.07.2021 and the assessment order is passed in the name of deceased assessee and not in the name of his legal heir Smt. RanibenKhimji Patel and there is no discussion regarding the demise of the assessee in the assessment order. Before Ld. CIT(A), the appellant has relied on the decision of ITAT Jaipur Bench in ITA No. 502/JPR/2023
wherein the ITAT has allowed the legal ground raised by the appellant. Ld. CIT(A) after following the said judgment observed that the impugned order passed by AO was invalid because after the intimation of demise of the deceased assessee and also knowing the legal heir of the assessee prior to the issue of assessment order, the AO ought to have issued the impugned order dated 26.07.2021
in the name of legal heir of the deceased assessee which is not the case here.
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel)

143(2) was issued in the name of assessee when he was alive. Therefore, the juri ictional notice u/s 143(2) was in order and valid and for that reason the case relied by Ld.
CIT(A) is not applicable.
vii) Since the PAN of the deceased assessee was not updated to include the legal heir, the details like name of deceased assesseewas automated while generating any notice or order and therefore the AOhas consciously addressed such notices and order to the legal heir. It is therefore submitted that the impugned order is liable to be set aside and Ld. CIT(A) may be directed to adjudicate the matter on merit.
viii) In support of these arguments, Ld. DR relied on the following case laws:- a.
 In this case the Hon‟ble Delhi High Court has held that theissue of notice in the name of M/s
Skylight Hospitality Pvt. Ltd. which has ceased to exist was a mistake nevertheless human error and mistakes and should not nullify the proceedings which are valid and no prejudice has been caused and the purpose behind section 292B is to ensure that technical pleas
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel) on the ground of mistake, defect or omission should not invalidate the assessment proceedings, when no confusion or prejudice is caused due to non-observance of technical formalities.
 In this case, the AO had also proceeded to pass the final assessment order in the name of non- existent entity and this assessment order assailed by the assessee before the Ld. CIT(A) and had succeeded before the Ld. CIT(A) on the ground that the impugned order was passed against a non-existent entity. The appeal of the revenue was dismissed on the ground that no question of law was arisen and while referring to the judgment of Hon‟ble Supreme Court in the case of PCIT vs. Maruti Suzuki India Ltd.
(2019) 107 taxmann.com 375 (SC), it was held that the assessment made in the name of non- existent entity is without juri iction, hence, null and void ab initio and as such type of order suffers from „juri ictional defect‟ and not from „procedural defect‟, therefore the same cannot be curved even by section 292B, even if,
 In this case, the notice u/s 148 was issued in the name of deceased assessee and the widow of deceased has participated in the proceedings, the defect, if any, stands automatically cured.
7. On the other hand Ld. AR in his written arguments has contested the departmental appeal on the following grounds:- i) That the legal heir has not been taken on record as per the procedure laid down in the Act. The AO after becoming aware of death of the assessee, it was incumbent to bring the legal representative on record before proceeding in the matter.
The deceased assessee namely,
Mr.
KhimjiKaramshi Patel had expired on 02.03.2021 and the assessee had duly intimated to the Juri ictional A.O.
about the death of the deceased assessee vide letter dated15.04.2021 along with copy of death certificate and copy of the Will as a proof of Mrs. RanibenKhimji Patel being the legal heir of the deceased assessee.However, the Ld. A.O. has brought the legal heir on record only on RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel)

PCIT v. Maruti Suzuki India Ltd. [2019] 107 taxmann.com
375 (SC), wherein the Apex Court was pleased to hold that the amalgamating entity ceases to exist upon the approved scheme of amalgamation and participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. Ld. AR further relied on the decision of ITAT Delhi Bench in ITA No. 1525/Del/2024
for AY 2011-12 order dated 03.02.2025 wherein it was held that Hon‟ble Supreme Court in the case of Maruti Suzuki
India Limited (supra) has categorically held that where assessment order is passed in the name of non existing entity, the same is without juri iction and has to be set aside.
v) Further, reliance is also placed by the Ld. AR on the judgment of Hon‟ble Bombay High Court in case of PCIT v.
Culver Max Entertainment (P.) Ltd (supra) and in the said case the Hon‟ble Bombay High Court had relied the decision of Hon‟ble Supreme Court in the in the case of Maruti Suzuki India Limited (supra) and held that the assessment order passed in the name of non existing entity is without juri iction, hence null and void ab initio. It is therefore submitted that in view of the above referred case laws and the facts of the present case, such proceedings are nullity and section 292B cannot protect the revenue.
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel) vi)
Provision of section 159 of the Act has not been followed by the revenue because the legal heir has not been brought on record whereissuing the notices nor mentioned the name of legal heir in the assessment order. Since the proceedings have been carried out in the name of deceased assessee and not in the name of legal heir and also the assessment order has not been passed in the name of legal heir, therefore section 159 as relied by the revenue does not stand because the legal heir would be liable to pay tax only in the circumstances when the assessment order having been passed lawfully against the deceased assessee which is not the case here.
vii) The legal notice u/s. 143(2) of the Act issued on the dead person is anullity and void ab initio and consequential order passed in the name of deceased person is also invalid and bad in law. In this regard, Ld. AR relied on the decision of Hon‟ble Gujarat High Court in case of Bhupendra
Bhikalal
Desai v.
Income
Tax
Officer,
Ward1(2)(1),
Gujarat
[2021]
130
taxmann.com
196
(Gujarat) and the said case was affirmed by Hon'ble
Supreme Court in ITO v. Bhupendra Bhikalal Desai [2021]
131 Taxmann.com 40 (SC) wherein the SLP filed against the impugned order of the Hon‟ble Gujarat High Court was dismissed in limini.
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel) viii) The case laws relied by the revenue of Hon‟ble High
RanibenKhimji Patel. Regarding the judgment of Hon‟ble
High
Court of Madhya
Pradesh in case of Smt.
Kaushalyabai v. CIT [1999] 238 ITR 1008 (MP), it is submitted that in the said case, the assessment order was passed u/s 144 r.w.s. 147 of the Act i.e. the impugned order is an ex-parte order and the death of the assessee is also not intimated by the legal heir to the Ld. AO, which is not the case here.
8. Therefore, the Ld. AR submitted that the impugned order having been passed against the deceased assessee u/s 143(3) of the Act and also the notices were issued in the name of the deceased assessee where the death of assessee was already intimated to the AO, hence the assessment order passed against the dead person is nullity and the assessment proceedings, consequently are liable to be quashed. Therefore the grounds raised by the revenue while taking protection of section 292B and 159 of the Act, are liable to be dismissed.
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel)

No. 2329 of 2021 at page no. 33 to 37 in the paper book, the Hon‟ble Bombay High Court has relied its earlier judgment in the case of SumitBalkarishna Gupta Vs. ACIT
(2019) 103 taxmann.com 188 (Bom) wherein it was held that notice issued in the name of dead person for re- opening is null and void in law. It was further held that the notice which has been issued in the name of the dead person is also not protected either by provisions of section 292B or 292BB of the Act because the requirement of issuing a notice in the name of correct person is the foundational requirement to acquire juri iction to reopen the assessment and the assessee on whom the notice must be sent must be a living person i.e. legal heir of the deceased assessee, for the same to be responded.
Therefore, section 292B of the Act cannot be invoked to correct a foundational /substantial error as it is meant so as to meet the juri ictional requirement. On behalf of the revenue, Ld. DR was argued that this case is not applicable to the case in hand because the said order was with respect to reopening of the assessment order and in the present case, it is the original assessment and not the reopened assessment.
12. We are not convinced by the argument of Ld. DR because what is the binding precedent of a judgment is the ratio of decision arrived. The ratio of the decision relied by the assessee is that the notice issued in the name of dead
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel) person and not in the name of legal heir, is not a mere procedural but a substantive illegality which is not even curable by section 292B of the Act. Hence this principle laid down by the Hon‟ble High Court is applicable in the present case because admittedly the notice during the assessment proceedings and the assessment order was issued in the name of deceased assessee and not in the name of legal heir of the deceased assessee. It is to be noticed that the notice u/s 143(2) of the Act (placed at page 43 of the paper book) is issued to the deceased assessee on 31.03.2021 and statutory notice u/s 142(1) of the Act is issued on 06.08.2021 (placed at page 44 of the paper book). Show cause notice is issued to deceased assessee on 20.09.2021. The assessee has already expired on 02.03.2021. Hence, the claim of the revenue that the notice u/s 142(1) of the Act was issued to the assessee when he was alive, is found to be factually incorrect.
13. Further, the provision of section 159 of the Act may also not be helping to the revenue and we are of the considered opinion that the basic requirement of the provision of section 159 of the Act that the legal heir is bound to pay the tax resulting from the assessment order having been issued in the name of deceased person, has not been fulfilled in this case because the legal heir has not been brought on record neither in the notices issued nor in the assessment order and just by mentioning „Legal
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel) heir of the deceased assessee‟ will not satisfy the requirement of law for bringing the legal heir on record during the assessment proceedings. The grounds were raised in this appeal shows that revenue has admitted that there is alleged irregularity in issuing the notice as well as assessment order in the name of deceased assessee and for that reasons it has raised the ground of protection under the provision of section 292B of the Act alongwith section 159 of the Act. As held by Hon‟ble Bombay High Court in the case of assessee in Writ Petition no. 2329/2021 and 2394/2021 for AY 2014-15 and AY 2013-14 respectively, order dated 15.02.2022 (supra) that issuing of notice during the assessment proceedings and issuing of assessment order in the name of deceased assessee is not a mere procedural irregularity but a substantive illegality during the assessment proceedings. Hence, the present case suffers from the substantive illegality and not from procedural irregularity which is not curable even by section 292B of the Act. Accordingly, both the points enumerated as Point No. 1 and 2 are decided in favour of the assessee.
14. With regard to Point no. 3, we are convinced by the arguments of Ld. AR that the case of the Hon‟ble Madhya
Mumbai, Dated /08/2025
Dhananjay, SPS
RanibenKhimji Patel (Legal Heir of Shri KhimjiKaramshi Patel)

आदेश की प्रतितिति अग्रेतिि/Copy of the Order forwarded to :