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Facts
The assessment order for AY 2017-18 was passed in the name of the deceased assessee, Late Abdul Rahiman Ibrahim Patait, who expired on 09.08.2021. The assessment was finalized on 18.03.2022. The department failed to provide evidence of service of statutory notices on the deceased assessee while he was alive.
Held
The Tribunal held that an assessment order passed in the name of a deceased person without proof of service of statutory notices on him during his lifetime is bad in law. Section 159 of the Income Tax Act, 1961, provides for proceedings against legal representatives, but the initial proceedings must be validly initiated.
Key Issues
Whether the assessment order passed in the name of a deceased assessee, without proof of service of statutory notices while alive, is valid in law?
Sections Cited
147, 144, 142(1), 159, 250
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC” :: PUNE
Before: DR.DIPAK P. RIPOTE & SHRI VINAY BHAMORE
ORDER
PER DR. DIPAK P. RIPOTE, AM:
This is an appeal filed by Mr.Mujeeb Patait as Legal Heir of Late Abdul Rahiman Ibrahim Patait, against the order of ld.Commissioner of Income Tax(Appeal)[NFAC], passed under section 250 of the Income Tax Act, 1961 for the A.Y.2017-18 dated 25.03.2025, emanating from order u/s.147 r.w.s 144 of the Income Tax Act, 1961, dated 18.03.2022. The Assessee has raised following grounds of appeal :
1. On the facts and circumstances of the case and in law the notices issued u/s 142(1) and 144 as well as the assessment framed on late Mr.Abdul Patait being on deceased is bad in law and hence needs to be quashed.
2. ON the facts and circumstances of the case an in law the CIT(A), NFAC erred in confirming the action of the AO, Ward 1, Ratnagiri (Hereinafter referred to as the AO) of making addition of interest income in the hands of the appellant not accepting the submission of the appellant in this respect.
The appellant prays that the AO be directed to delete the addition.
On the facts and circumstances of the case and in law the CIT(A), NFAC the erred in confirming the action of the AO of not granting credit for TDS as per Form 26AS.
The appellant craves leave to add to, amend, alter, delete or modify all or any of the above ground of appeal or raise a new ground of appeal before or at the time of hearing.”
Submission of ld.AR : 2. At the outset of hearing, no one appeared on behalf of the assessee.
Submission of ld.DR : 3. Ld.DR for the Revenue relied on the order of the Assessing Officer.
Findings & Analysis : 4. We have heard ld.DR for the Revenue and perused the records. The Assessment Order was passed on 18.03.2022 for A.Y.2017-18 in the name of “ABDUL RAHIMAN IBRAHIM PATAIT”.
4.1 The Assessee “ABDUL RAHIMAN IBRAHIM PATAIT” expired on 09.08.2021. The Assessment was finalized on 18.03.2022. The fact that ABDUL RAHIMAN IBRAHIM PATAIT” expired on 09.08.2021 is recorded in the order of the Ld.CIT(A).
4.2 The assessee has relied on the decision of Hon’ble Jurisdictional High Court in the case of Rupa Shyamsunder Dhumatkar, Sumit Balkrishna Gupta[2019] 103 taxmann.com 188 (Bombay).
Thus, admittedly the assessment order has been passed in the name of deceased person.
5.1 Section 159 of the Act is reproduced here as under : “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 [A] 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. 5.2 Thus, as per Section 159, if any proceeding is taken against the deceased person before his death shall be deemed to have been taken against legal representative and may be continued against the legal representative. Thus, if a proceeding is started when the individual was alive, then, it can be continued against the Legal Representative. However, for that purpose, the Assessing Officer has to bring on record the Legal Representatives of the deceased individual.
In this case, the assessment order has been passed u/s.147 r.w.s 144 of the Act, on 18.03.2022 and the Assessee i.e.Late Abudl Rahiman Ibrahim Patait expired on 09.08.2021. We have studied the assessment order, nowhere in the assessment order, it is mentioned that the statutory notices were served on Late Abdul Rahiman Ibrahim Patait when he was alive. The Assessment Order is ex-parte itself suggests that Late Abdul Rahiman Ibrahim Patait was not aware about the proceedings.
6.1 The Hon’ble Bombay High Court in the case of Dr. Madhav Vishwanath Dawalbhakta ... Vs. M/s.Bendale Brothers Writ Petition No.4217 of 2018 vide order dated 7th August, 2018, explained the concept of service of Notice as under : Quote “23. The service is neither an empty formality nor procedural ritual but the soul of the service is to have the knowledge of the proceedings to the defendant or the contesting party…………..” Unquote.
The Income Tax Department has not brought on record any evidence to prove that statutory notices were served on Late Abdul Rahiman Ibrahim Patait when he was alive. In these facts and circumstances of the case, when an assessment order is passed in the name of the deceased individual and no evidence on record to prove that the first statutory notice was served on the Individual when he was alive, we are constraint to hold that the Assessment Order is bad in law. Accordingly, Ground No.1 of the Assessee is allowed.