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Facts
The appeal pertained to AY 2010-11 against an order arising from an assessment order. The original assessee died during the pendency of appellate proceedings. The assessee's legal heir filed the appeal. A difference of opinion arose between the members, leading to the case being referred to the Third Member.
Held
The Tribunal held that the re-assessment proceedings were not in accordance with law and were liable to be quashed. It was also held that the legal heir could not be denied the status of a legal representative, and the appeal was maintainable even in the absence of other legal heirs.
Key Issues
Whether re-assessment proceedings are valid when additions made are not the basis of reopening, and whether an appeal is maintainable when filed by a legal heir of a deceased assessee without all other legal heirs being on record.
Sections Cited
143(3), 147, 2(29), 2(11), 254(1), 250(6), 159, 253(1)(a)
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Income Tax Appellate Tribunal, PUNE BENCHES “B”, PUNE
Before: DR.MANISH BORAD & SHRI VINAY BHAMORE
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
1. The instant appeal at the instance of assessee pertaining to A.Y.2010-11 is directed against the order 30.06.2023 passed by ld.CIT(A)/NFAC, Pune arising out of Assessment Order dated 03.12.2012 passed u/s.143(3) of the Act.
This appeal was heard by this Tribunal on 29.01.2024 and a draft order was prepared by the Hon’ble Judicial Member but the Hon’ble Accountant Member did not agree with the view taken by the Hon’ble Judicial Member and he passed a dissenting order on 29.02.2024. Consequent to the difference of opinion among the Hon’ble Members, the matter was referred before the Hon’ble President and the Hon’ble President vide order 31.05.2024 has nominated the Hon’ble Third Member to adjudicate the dispute which arose between the view of Hon’ble Accountant Member and Hon’ble Judicial Member. The questions framed by the Hon’ble Members read as follows :
“Questions framed by the Hon’ble Judicial Member:
1. Whether, in the facts and circumstances of the case, the appellant herein Shri Vivek Naresh Shah, admittedly son of the deceased-assessee Shri Naresh Umedilal Shah [expired on 11.08.2020 during pendency of the lower appellate proceedings), could be denied status of the latter's legal representative at this stage u/sec.2(29) of the Income Tax Act, 1961 read with sec.2(11) of the Code of Civil Procedure, 1908 once the learned "NFAC" has already confirmed the assessment findings in his hands in entirety as per para 1.1 of the lower appellate discussion under challenge? 2. Whether, in the facts and circumstances of the case, the appellant herein could be held as not having any "locus standi [as the legal representative of the deceased- assessee) for purpose of invoking this tribunal's sec.254(1) jurisdiction in light of the NFAC's mutually contradictory findings 'in para 1.1 upholding the Assessing Officer's action in his hands' as well as disputing his status as the legal representative in paras 9 to 9.1; at the same time, on "alternative" basis. 3. Whether, in the facts and circumstances of the case, the appellant is barred from involving sec.254(1) appellate jurisdiction of this tribunal, in absence of the remaining legal heirs of his father/deceased-assessee, in light of the fact that learned "NFAC" has upheld the entire addition in his hands?
Questions framed by the Hon’ble Accountant Member:
1. Whether in facts and circumstance and in law the impugned order dismissed as infructuous by the first appellate authority u/s 250(6) of the Act owning to non- compliance of section 159 r.w.s. 2(29) of the Act is appealable u/s 253(1)(a) of the Act? If yes whether maintainable? If yes whether maintainable in the event of non-compliance of section 159 r.w.s. 2(29) of the Act? 2. Whether in facts and circumstance of present case the appeal filed by the appellant without complying the provisions of section 159 r.w.s. 2(29) of the Act and in view of decision of this bench rendered in Yogesh Bhomraj dt. 01/11/2023] is maintainable in law? 3. Whether in facts and circumstance and in law the appellant is entitled to prosecute the present appeal without establishing on record with cogent evidences that, he in law amongst two sons and widow of the deceased assessee (and any other living/dead person if any) solitarily represents the estate of deceased assessee?
The Hon’ble Third Member after hearing both the parties concurred with the view expressed by the Hon’ble Judicial Member vide order dated 07.01.2025. The finding given by the Hon’ble Third Member is reproduced below:
“8. I have carefully perused the record and gone through the orders of both the Hon’ble Members. It is an admitted fact that no addition has been made by the Assessing Officer on account of which the case was reopened but certain other additions were made which was not the basis of reopening of the assessment. A perusal of the reasons so recorded shows that the Assessing Officer has reopened the assessment on the ground that the assessee has purchased shares worth Rs.6,77,00,975/- from unaccounted cash which has escaped assessment. However, in the order passed u/s 143(3) r.w.s. 147 of the Act, the Assessing Officer has made addition of Rs.1,95,90,855/- by disallowing the speculation loss shown on account of trading in commodities and Rs.77,35,444/- u/s 68 being the speculation profit earned through Divya Commodities as unexplained income. Thus, there is absolutely no addition on account of which the case was reopened but certain other additions have been made. Therefore, the re-assessment proceedings in the instant case are not in accordance with law and are liable to be quashed in view of the decision of the Hon’ble jurisdictional High Court in the case of CIT vs. Jet Airways (I) Ltd. (supra) and various other decisions which the Ld. Judicial Member has adopted.
Although the Ld. Accountant Member agrees with this proposition, however, he proceeded to dismiss the appeal as infructuous on the ground that all the legal heirs were not brought on record and it is incumbent upon the tax authorities to issue notice of proceedings under the Act on the correct person i.e. all the legal representatives of the deceased assessee in this case. He held that in the absence of compliance to provisions of section 159 r.w.s. 2(29) of the Act, the appeal deserves to be dismissed with a leave to revive.
This argument of the Ld. Accountant Member, in my opinion, is nothing but to prolong the litigation and harass the assessee. Once it is held that the re-assessment proceedings are not in accordance with law and are liable to be quashed and since one of the legal heirs had participated in the appeal proceedings and in whose name the appeal order has been passed by the Ld. CIT(A) / NFAC, the matter should have rested there. I, therefore, answer the questioners referred to me in the following manner:
In the facts and circumstances of the case, the appellant herein Shri Vivek Naresh Shah, admittedly son of the deceased-assessee Shri Naresh Umedilal Shah [expired on 11.08.2020 during pendency of the lower appellate proceedings), could not be denied status of the latter's legal representative at this stage u/sec.2(29) of the Income Tax Act, 1961 read with sec.2(11) of the Code of Civil Procedure, 1908.
2. In the facts and circumstances of the case, the appellant herein could not be held as not having any "locus standi [as the legal representative of the deceased-assessee) for purpose of invoking this tribunal's sec.254(1) jurisdiction.
3. In the facts and circumstances of the case, the appellant is not barred from involving sec.254(1) appellate jurisdiction of this tribunal, in absence of the remaining legal heirs of his father/deceased- assessee.
4. In facts and circumstance and in law the impugned order dismissed as infructuous by the first appellate authority u/s 250(6) of the Act owning to non- compliance of section 159 r.w.s. 2(29) of the Act is appealable u/s 253(1)(a) of the Act and is maintainable under the facts and circ of the case.
The Hon’ble Third Member while concurring with the view point of Hon’ble Judicial Member held that once the re- assessment proceedings are held to be not in accordance with law and are liable to be quashed in view of decision of Hon’ble Jurisdictional High Court in light of CIT Vs. Jet Airways (I) Ltd. reported in (2011) 331 ITR 236 (Bom.) and since the legal heirs had participated in the appeal proceedings, there is no need to bring the legal representatives on record in terms of section 159 r.w.s.2(29) of the Act r.w.s.2(11) of CPC issue notice on the legal representatives of the deceased assessee. In consequence of the same and in view of the majority opinion, the appeal of the assessee is allowed.
Order pronounced on this 17th day of July, 2025.