LATE RAJASEKHAR CHELIKANI,HYDERABAD vs. ACIT., CENTRAL CIRCLE-3(2), HYDERABAD

Facts

The assessee, Late Rajasekhar Chelikani, passed away on 29.08.2020. The Assessing Officer (AO) completed an assessment under Sections 144 and 147 for Assessment Years 2011-12 to 2014-15, making an addition for 'deemed dividend' in the name of the deceased. The legal heirs informed the AO of the death but the AO proceeded with the assessment against the deceased. The CIT(A) set aside the assessment for fresh consideration, which was then appealed by the legal heirs to the ITAT.

Held

The Income Tax Appellate Tribunal (ITAT) held that the assessment framed in the name of a deceased person is suffering from a fundamental defect and is a nullity in the eyes of law. The Tribunal set aside the assessment order, approving the CIT(A)'s decision, and directed the AO to continue the proceedings against the legal representatives of the deceased assessee from the stage at which it stood on the date of the assessee's death, as per Section 159 of the Income Tax Act.

Key Issues

Whether an assessment completed in the name of a deceased assessee is valid; and the correct procedure for assessing income after the assessee's death, particularly regarding the continuation of proceedings against legal representatives under Section 159 of the Income Tax Act, 1961.