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Facts
The assessee, Bhavnaben Y. Joshi, filed her return for AY 2012-13. Her case was reopened under Section 147 based on information regarding bogus long-term capital gains from penny stocks. Her legal representative (husband, Yogesh Hargovindbhai Joshi) informed the department of her demise, but the Assessing Officer (AO) proceeded to issue statutory notices and passed the assessment order in the name of the deceased assessee, making an addition of Rs. 19,43,000/-. The Ld. CIT(A) dismissed the appeal.
Held
The Tribunal held that an assessment order passed in the name of a deceased person, when the department was explicitly aware of the assessee's death and failed to implead the legal representatives, is invalid and cannot be considered a curable defect under Section 292B. Citing the Gujarat High Court, the Tribunal ruled that the AO's failure to take corrective measures rendered the assessment bad in law, and therefore, it was quashed.
Key Issues
Whether an assessment order passed in the name of a deceased assessee is valid when the department was aware of the death and failed to bring legal representatives on record.
Sections Cited
250, 143(3), 147, 10(38), 234A, 234B, 234C, 139, 148, 129, 143(2), 142(1), 292B
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Income Tax Appellate Tribunal, “B” BENCH, AHMEDABAD
Before: DR. BRR KUMAR, VICE- & MS.SUCHITRA R. KAMBLE
PER SUCHITRA R. KAMBLE, JUDICIAL MEMBER:
The present appeal has been filed by the assessee against order passed by the Commissioner of Income Tax(Appeal), National Faceless Appeal Centre (NFAC) Delhi under section 250 of the Income Tax Act, 1961 dated 20.12.2024, pertaining to the assessment year 2012-13.
There is a delay of 7 days in presenting the appeal before the Tribunal, which is condoned.
The grounds raised
by the assessee are as under:
1. In law and in the facts and circumstances of appellants case, the impugned assessment order passed u/s 143(3) r.w.s 147 of the Act by the LD. Assessing Officer is void and deserves to be quashed.
2. In law and in the facts and circumstances of the appellant's case, the Ld. Assessing Officer has erred in making addition of 2 ₹19,43,000/-considering Long Term Capital Gain on sale of shares of Karma Ispar as undisclosed income and thereby denying the exemption claimed u/s 10(38) of the Act. The Assessing Officer may be directed to delete the same.
3. The Assessing officer has erred on facts and in law charging interest u/s 234A, 234B, 234C when no such interest is leviable. The appellant denies its liability to pay interest.
The assessee has filed return of income under section 139 of the Act for the assessment year 2012-13 on 20.7.2012 declaring total income at Rs.66,12,118/-. As per the survey conducted by Directorate of Income-tax (Investigation), Unit-2(3), Kolkatta on 13.6.2014 on Shri Rajesh Kedia and his associates, the Revenue observed that a syndicate of persons in connivance with stock-brokers and exit entry providers, was generating bogus long term capital gain/short term capital gains/business loss to the beneficiaries through rigged trading in scrip of several paper companies having no liquidity and genuine business operations. The Department also noted that the assessee had traded in scrip of Karma Ispat Ltd. during the year under consideration. After examining the returns filed by the assessee, the assessee’s case was reopened under section 147, and thereafter, issued notice under section 148 of the Act dated 30.3.2019. In response to the notice under section 148 of the Act dated 30.3.2019, the legal representative of the assessee, Shri Yogesh Hargovindbhai Joshi (husband) of the assessee i.e. late Bhavna Yeshbhai Joshi filed return of income on 9.4.2019. Further a notice under section 129 of the Act was issued to the assessee on change of incumbent. The Legal representative (“L/R” for short) of the assessee filed objection against the issuance of notice under section 148 of the Act dated 30.3.2019. The objections of the assessee were disposed by a speaking order dated 11.7.2019. The L/R vide submissions dated 10.5.2019 stated that the assessee entered in sale of shares amounting to Rs.19,43,000/- during the year, and claimed 3 Rs.17,61,433/- as exempt LTCG. The submissions also mentioned that the assessee has purchased shares of Karma Isp. Vide contract note no.BSECB2010/B/020/0014 dated 28.04.2010 and sold the said shares vide contract note no.BC/049/3193 dated 13.06.2011. Notice under section 143(2) of the Act dated 11.9.2019 was issued and served to the assessee on the registered email-id, but no compliance was made. The L/R of the assessee vide letter dated 2.12.2019 filed adjournment letter and submitted response to the show cause notice vide letter dated 9.12.2019. After taking cognizance of the submissions, the AO made addition of Rs.19,43,000/- in respect of the transaction of the assessee involving penny stock of Karma Isp and treated the same as non-genuine and bogus, and thus, disallowed long term capital gain.
Being aggrieved by the assessment order, the assessee-legal heir filed appeal before the ld.CIT(A). The ld.CIT(A) dismissed the appeal of the assessee.
Before us, the ld.AR submitted that the assessment order is passed in the name of a dead-person, and therefore, the assessment itself becomes invalid. The ld.AR further submitted that vide letter dated 30.3.2019 while responding the notice under section 148 intimated the AO that the assessee was no more. Thus, the Department was very well aware that the assessee is no more, but despite the same, the AO issued notice in the name of deceased Yogesh Harvondbhai Joshi, which is statutory notice under section 143(2) and the show cause notice dated 28.11.2019 was subsequent to the intimation to the department regarding the deceased assessee. Thus, the ld.AR submitted that the assessment itself becomes bad in law as the notices were issued in the name of a dead person, and thus, the assessment order may be quashed.
The ld.DR submitted that the assessment order issued in the name of dead person is a curable mistake/defect and therefore it can be rectified, and cannot be taken as defective assessment in law. The ld.DR relied on the decision of the Hon’ble Madhya Pradesh High Court in the case of Smt.Kaushalyabhai Vs. CIT, 238 ITR 1008 (MP). The ld.DR submitted that the said decision categorically mentioned that the issue of notice on a dead-person under section 292B of the Act is a procedural irregularity, and therefore, the assessment is just and proper.
The ld.AR relied on the decision of the Hon’ble Gujarat High Court in the case of Rasid Lala Vs. ITO, (2017) 77 taxmann.com 39 (Guj), and the decision of the Ahmedabad Tribunal in the case of Kushal Vinodkumar Bhatt Vs. ACIT, order dated 30.6.2025.
We have heard both the parties and perused all the relevant material placed on record. It is pertinent to note that the death of the assessee was informed by the L/R. of the assessee on 9.4.2019 in response to notice under section 148 of the Act. The Department, therefore, was aware in the month of April, 2019 that the assessee expired and the L/R has filed return of income of the dead assessee. But despite that the notices were issued on 11.9.2019 under section 143(2) of the Act and notice issued under section 142(1) of the Act on 28.11.2019 were in the name of the dead-person. In fact, the assessment order was also passed in the name of a dead-person without referring to the L/R of the assessee. Thus, the AO has not taken precaution which is a statutory requirement of impleading/addressing the correct legal representatives/legal heirs in the notices which are statutory notices, when the AO was very well 5 aware that the assessee is a dead person. While passing the assessment order also, the AO despite having knowledge on the assessees’s death, chose to mention dead-assessee’s name which cannot be said as a curable mistake under Section 294B of the Act. The case law given by the Revenue/ld.DR that of Smt.Kaushalayabhai (supra) of Hon’ble Madhya Pradesh High Court has a different set of facts where the notice under section 143(2) were not responded, and the department was not aware about the death of the assessee. But in the present case, the AO was well aware before the issuance of notice under Section 143(2) of the Act that the assessee is no more and expired. The decision relied on by the ld.AR that of Hon’ble Gujarat High Court in the case of Rasid Lala (supra) has commented on the decision of Hon’ble Madhya Prakesh High Court in the case of Smt.Kaushalyabhai (supra) and categorically held that it was pointed out by the heirs of the deceased-assessee that the assessee has expired, and the notice issued on the dead-person is not valid. The Hon’ble High Court further held that instead of taking corrective measure, the AO passed the assessment order in the name of the dead person, the said action cannot be stated as a curable mistake. Hence, in the present assessee’s case also the assessment itself is bad in law and therefore, quashed.
In the result, the appeal of the assessee is allowed. Order pronounced in the Court on 29th July, 2025 at Ahmedabad.