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Facts
The assessment was initiated under section 147 against a deceased assessee. The CIT(A) annulled the assessment order, finding it invalid because the notice was not issued to the legal heir, and the assessee was not alive. However, the CIT(A) directed the AO to initiate fresh proceedings under section 147 against a legal heir, Shri Nishant Dattatray Sonar, under section 150.
Held
The Tribunal held that the CIT(A) lacked the jurisdiction to direct the initiation of fresh reassessment proceedings against a legal heir, especially when the initial reassessment proceedings were found to be invalid. The direction to initiate proceedings against Shri Nishant Dattatray Sonar was also considered baseless as he was not a party to the proceedings.
Key Issues
Whether the CIT(A) has the power to direct the initiation of fresh reassessment proceedings against a legal heir when the original assessment proceedings were annulled due to procedural invalidity, and whether such a direction against a non-party is sustainable.
Sections Cited
147, 144, 144B, 148, 148A, 150, 251
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI B.M. BIYANI & SHRI PARESH M. JOSHI
आदेश/ O R D E R
Per B.M. Biyani, A.M.:
Feeling aggrieved by order of first appeal dated 24.03.2025 passed by learned Commissioner of Income-Tax (Appeals)-NFAC, Delhi [“CIT(A)”] which in turn arises out of assessment-order dated 17.02.2023 passed by learned Assessment Unit of Income-tax Department [“AO”] u/s 147 r.w.s. 144 & 144B of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2015-16, the assessee has filed this appeal.
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Late Shri Dattatray Vamanrao Sonar Through wife Aruna Sonar – AY 2015-16 2. At the outset, we note that the assessee “Dattatray Vamanrao Sonar” had already deceased on 20.09.2019 (even before issuance of notice dated 11.03.2022 u/s 148A / dated 30.03.2022 u/s 148 by AO for making assessment u/s 147). Therefore, the present appeal is filed in the name of “Lt. Shri Dattatry Vamanrao Sonar Through Wife Aruna Sonar, Ujjain” and being pursued by deceased assessee’s wife-cum-legal heir.
At first, we re-produce the relevant portion of impugned order of first- appeal passed by Ld. CIT(A):
“5.5 Apparently, notice has not been issued in name of the legal heir and the assessee was not live on the date of issuance of the notice u/s 148. Therefore, it cannot be said that the legal notice has been served on the assessee. Under these circumstances, proceedings u/s 147 initiated and consequently completion of assessment cannot be upheld. 5.6 Accordingly, ground No.1 of the appeal pertaining to the validity of the procedural issues in the assessment proceedings are allowed. Since the assessment procedure itself is invalidated /annulled, ground No. 2 of the appeal pertaining to addition made needs no adjudication at this juncture. 5.7 In this case, the AO is directed to initiate proceedings u/s 147, against the legal heir of the assessee, Shri Nishant Dattatray Sonar, for the AY 2015-16, in accordance with provisions of section 150 of the Income Tax Act, 1961, for reopening of the assessment.
In the result the appeal is allowed.”
Thus, the Ld. CIT(A) has already annulled the assessment-order made by AO declaring same “invalid” on the footing that the notice u/s 148 to take up assessment-proceeding u/s 147 was not issued in the name of legal heir and the assessee was not live on the date of issuance of notice. Accordingly, the CIT(A) has allowed first-appeal of assessee. Neither side (particularly, the Page 2 of 7
Late Shri Dattatray Vamanrao Sonar Through wife Aruna Sonar – AY 2015-16 revenue) is against this conclusion taken by Ld. CIT(A) and the same remains final.
However, the assessee is aggrieved by direction given by Ld. CIT(A) in Para 5.7 of impugned order (re-produced above). The CIT(A) has directed the AO to initiate proceedings u/s 147 against the legal heir of assessee “Shri Nishant Dattatray Sonar” in accordance with the provisions of section 150 for re-opening of assessment. The assessee is aggrieved by this direction and has raised following ground in present appeal:
“That the Learned CIT(A), NFAC, erred in directing the Assessing Officer to initiate proceedings u/s 147, against the alleged legal heir of a deceased assessee, for the AY 2015-16, in accordance with provisions of section 150 of the Income Tax Act, 1961, for reopening of the assessment. That on the facts and in the circumstances of the case and in law the order of the CIT(A), NFAC is perverse, and bad in law and the same may very kindly be quashed.”
We have heard learned Representatives of both sides and considered their submissions, written as well as oral, and the documents filed in Paper- Book.
On a careful consideration, we find a strong merit in the claim of assessee that the CIT(A)’s direction is perverse, bad in law and unsustainable in the eyes of law, for the following reasons:
Firstly, the powers of Ld. CIT(A) are circumscribed by provisions of (i) section 251 of the Act. While the CIT(A) is empowered to confirm, reduce, enhance, or annul an assessment, the statute confers no power upon the appellate authority to direct the initiation of fresh reassessment proceedings against another person (including a legal
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Late Shri Dattatray Vamanrao Sonar Through wife Aruna Sonar – AY 2015-16 heir) who was not the subject of the assessment-order under challenge.
The impugned direction thus falls outside the four corners of section 251.
(ii) Secondly, once the Ld. CIT(A) has categorically held the reassessment proceedings initiated by AO u/s 147 as invalid in law on account of issuance of notice u/s 148 in the name of a deceased person, the entire assessment stands annulled. Having annulled the assessment, the Ld. CIT(A) becomes functus officio qua such proceedings and cannot travel beyond the subject matter of appeal to issue further directions for initiating fresh reassessment proceedings.
(iii) Thirdly, it is a well-settled proposition of law that no assessment proceedings can be validly initiated against or continued in the name of a deceased person and any such defect is non-curable in law. When the foundational notice is void ab initio, any consequential direction to proceed against the legal heir, without independent initiation of proceedings in accordance with law, is equally untenable and contrary to established legal principles.
Fourthly, such direction also offends the principle that an appellate (iv) authority cannot issue directions that are prejudicial to the assessee in a manner that does not arise from or is not warranted by the assessment-order under challenge before it. The impugned direction, which potentially exposes the legal heir to fresh tax proceedings, clearly travels beyond the scope of appellate power.
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Late Shri Dattatray Vamanrao Sonar Through wife Aruna Sonar – AY 2015-16 (v) Fifthly, in the peculiar facts of present case, the direction given by CIT(A) to AO to initiate proceeding against “Shri Nishant Dattatray
Sonar” is absolutely baseless. This is for the reason that “Shri Nishant
Dattatray Sonar” was never a party in present case. Admittedly, it is “Smt. Aruna Sonar” (wife of deceased assessee) who was approved as Legal Heir in departmental database; she only filed and perused first- appeal before Ld. CIT(A) and also present appeal before ITAT. “Shri
Nishant Dattatray Sonar” was never a party before CIT(A), therefore the direction given by Ld. CIT(A) against a non-party “Shri Nishant
Dattatray Sonar” is absolutely baseless, illegal and untenable in law.
(vi) Lastly, the direction invoking section 150 of the Act is wholly misconceived. Section 150 operates as a saving provision in matters of limitation; its application is contingent upon the satisfaction of specific statutory preconditions that are required to be independently examined and determined by the AO. The CIT(A) cannot, in exercise of first appellate jurisdiction, pre-judge the applicability of such a provision, much less mandate the AO to act upon it. Such a direction amounts to the appellate authority encroaching upon the independent statutory jurisdiction of the AO.
In view of the foregoing discussions and the reasons mentioned therein, we hold that the direction issued by Ld. CIT(A) in Para 5.7 of the impugned order directing the AO to initiate proceedings u/s 147 against legal heir “Shri Nishant Dattatray Sonar” u/s 150, is without jurisdiction,
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Late Shri Dattatray Vamanrao Sonar Through wife Aruna Sonar – AY 2015-16 contrary to law and unsustainable. The said direction is hereby quashed and set aside. The assessee’s ground is allowed.
Before parting, we make it clear that in the present matter we have adjudicated only the limited issue concerning the validity of the direction issued by the Ld. CIT(A), which has been set aside. We have not expressed any opinion on the question as to whether the AO may, in accordance with law, independently initiate proceedings against the appropriate person, including “Shri Nishant Dattatray Sonar”, in terms of the relevant provisions of the Act.
Resultantly, this appeal is allowed.
Order pronounced in open court on 10/04/2026
Sd/- Sd/- (PARESH M. JOSHI) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक/Dated : 10/04/2026 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative
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Late Shri Dattatray Vamanrao Sonar Through wife Aruna Sonar – AY 2015-16 (6) Guard File By order E COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore
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