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Facts
The assessee, Manju Devi, derived income from a proprietorship business. The case was selected for scrutiny due to substantial cash deposits during demonetization. The Assessing Officer (AO) added Rs. 9,61,54,830/- to the assessee's income under Section 69A of the Act. Subsequently, it was discovered that the assessee had passed away before the assessment order was passed.
Held
The CIT(A) quashed the assessment order, holding that an order passed in the name of a deceased person is bad in law. The Tribunal, while acknowledging that an assessment order on a dead person is invalid, noted that the AO was unaware of the assessee's death. The Tribunal decided to remand the matter back to the AO.
Key Issues
Whether the assessment order passed in the name of a deceased person is legally valid? Whether the AO should be given an opportunity to bring the legal heirs on record and re-examine the matter?
Sections Cited
69A, 143(2), 144, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “PATNA BENCH”, PATNA
Assistant Commissioner of Income Tax, Circle-1, Patna, 4th Floor, J.P. Bhavan, Dak Bunglow Chauraha, Patna – 800001 ........…...……………...... Appellant vs. Manju Devi, Harnaut, Nalanda [PAN: AESPD9642K] ..........…..…....................Respondent Appearances by: Assessee represented by : None Department represented by : Ashok Kumar, CIT Date of concluding the hearing : 09.01.2025 Date of pronouncing the order : 14.01.2025 O R D E R
PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
The present appeal emanates from order u/s 250 of the Income Tax Act, 1961 (hereafter ‘the Act’) dated 22.02.2024, passed by Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. In this case, it is noticed that the assessee derives income from proprietorship business in the name and style of M/s Raghubanshi Oil Distributors. This case was selected for scrutiny on account of substantial cash deposited during demonetization period. It is seen that the opportunities given for hearing of the case were not availed of. Therefore, the Ld. AO analysed the deposit of cash in the three bank accounts of the assessee and proceeded to add Rs. 9,61,54,830/- u/s 69A of the Act.
Manju Devi 1.1 Aggrieved with this action, the assessee approached the Ld. CIT(A) and there presented certain facts which indicated that the assessee had died on 11.04.2018. Evidently, during the pendency of assessment proceedings itself the assessee had passed away. It was claimed that due to the death of the assessee, the notices issued were effectively pertaining to proceedings on a deceased person, and thus void. The Ld. CIT(A) has been persuaded by the fact of passing away of the assessee to hold that the entire assessment has been illegally framed on a non-existing person. Some relevant portions from the Ld. CIT(A)’s order are extracted as under:
Vide these Grounds, the Appellant has challenged the action of the AO in passing assessment order in the name of a deceased person. In this regard, the Appellant has placed reliance on a catena of judgements wherein it has been held an order passed on a deceased person is bad in law and liable to be quashed. I have considered the submissions of the Appellant. I have also perused the assessment order. Undisputed facts that arise for consideration is that the Mrs. Manju Devi (in whose name assessment order has been passed for the relevant assessment year) passed away on 11/04/2018. The AO issued notice u/s 143(2) of the Act on 22/09/2018 i.e. the notice was issued after the demise of Mrs Manju Devi. The assessment order was passed on 12/12/2019, again in the name of Mrs Manju Devi who was already deceased. In background of these undisputed facts, the issue to be decided is whether the assessment order passed in the name of a deceased person is legally valid in this regard…… Thus, in view of the facts of the case and discussions made hereinabove and respectfully following the above decisions of Hon'ble ITAT Bangalore and ITAT Mumbai (supra), I concur with the submissions of the Appellant and hold that the assessment order passed by the AO in the name of Mrs Manju Devi is bad in law and, therefore, liable to be quashed. Grounds are, thus, allowed.
Aggrieved with this action of Ld. CIT(A), the revenue is before us through the following grounds as under:
“1. Whether on the facts and circumstances of the case, the Ld. CIT (A), NFAC has erred in allowing the appeal of the assessee following the decision of Hon'ble ITAT Banglore.
&906/Bang/2018 dated 31.08.2020 in the case of DCIT Vs. R.R. Gold palace & decision of Hon'ble ITAT Mumbai in the case of Late Shri Motilal Hastimaji Bothra Vs. ITO, dated 06.10.2023 in spite of that during the assessment proceedings, there was no intimation to the AO by the legal heirs regarding the demise of the assessee.
2. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in allowing the appeal and hold that the assessment order passed by the AO in the name of Mrs Manju Devi is bad in law, which is contrary to fact that the AO has provided ample opportunities to file response but the legal heirs had not submitted Manju Devi a single response during the assessment proceedings, it shows that legal heirs intentionally not provided information regarding death of the assessee.
3. Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in observing that the assessment order liable to be quashed, in spite of that the legal heirs has filed appeal before the Ld. CIT(A) on 25.01.2020 against the assessment order passed u/s 144 of the Act on 12.12.2019 i.e. after 44 days from the passing of assessment order. It shows that legal heirs willingly hide the information regarding demise of the assessee. Further in this case the tax effect is more than prescribed monetary limit of Rs. 50 lakhs for filling appeal before the ITAT mentioned in CBDT Circular No. 3/2018, dated 11.07.2018 as amended by Circular No. 17/2019, dated 08.08.2019.
4. Whether on the facts and circumstances of the case, the Ld. CIT (A), NFAC, has not called for a remand report for giving an opportunity to the Assessing Officer for substantiate the Assessment order passed by the A.O. Considering the above facts and discussion this case is being recommended for further Appeal before the Hon'ble ITAT, Patna.
5. Any other ground that may be urged at the time of hearing.”
It is seen that neither on the last date nor on an earlier date of hearing dated 21.11.2024 was there any attendance from the assessee’s side. Accordingly, the Bench requested the Ld. DR to lead the department’s case.
3.1 The Ld. DR contended that the Ld. AO was totally in the dark about the state of affairs concerning the assessee. Also, the Ld. CIT(A) has relied on the fact of death of the assessee to hold that the assessment could not have legally been passed on a dead person. The Ld. AR pointed out that it is not known whether a death certificate or any other proof of death was presented before him. The Ld. DR also pointed out that even the Ld. CIT(A)’s order was in the name of the deceased person. It was also pointed out that in the petition for condoning the delay in filing of appeal before the Ld. CIT(A), it has been clearly mentioned that the legal heirs have filed the form of appeal. He requested that the Ld. AO should be allowed an opportunity to bring the legal heirs on record and examine the documents etc. regarding the cash deposits and thereafter pass an appropriate assessment order.
We have carefully considered the argument of Ld. DR and gone through the orders of authorities below. Right at the outset, it is understood that the Ld. AO had no means of knowing whether the notices were served Manju Devi on a living person or not. The critical document here is the death certificate which either was placed before the Ld. CIT(A) or its availability was merely informed to him. Either way this is an entirely new fact which has a material bearing on the case, which was not before the Ld. AO. It is also clear that an assessment order on a dead person is not valid in the eyes of law. Thus, we deem it fit to remand the matter back to the file of Ld. AO for doing the following:
(a) Bringing the legal heirs on record.
(b) Examining books of accounts etc. to verify whether the impugned cash deposits are reflected in the books of accounts or not.
(c) After performing the action as per (a) and (b) above, he should pass an appropriate order assessing the correct income of the assessee (legal heirs). We remand the matter back accordingly.
In the result, appeal filed by the Revenue is allowed for statistical purposes.
Order pronounced in the court on 14.01.2025