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Facts
The assessee filed an ITR of Rs. 1,93,000, which was subsequently reassessed at Rs. 31,95,000 by the AO under Section 50C based on stamp duty valuation. The CIT(A) partly allowed the appeal, directing the AO to consider a specific property value. Crucially, the assessee passed away during the appellate proceedings, but this was not notified to the authorities, and no legal heir substitution occurred.
Held
The Tribunal held that the impugned order could not be sustained as it was passed against a deceased person without formal substitution of legal heirs. Citing Section 159(2a) of the Act, the Tribunal set aside the CIT(A)'s order and remanded the matter back for fresh adjudication against the legal representative. The grounds raised in the appeal were allowed for statistical purposes.
Key Issues
Whether appellate proceedings can be continued against a deceased assessee without substituting legal heirs; and issues related to property valuation under Section 50C of the Income Tax Act.
Sections Cited
50C, 159(2a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, LUCKNOW BENCH “SMC”, LUCKNOW
Before: SHRI KUL BHARAT
O R D E R
PER KUL BHARAT, VICE PRESIDENT.
: This appeal, filed by the legal heirs of the deceased assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 15.03.2024 pertaining to the assessment year 2011-12. The assessee has raised the following grounds of appeal: -
1. Ld. CIT(A) erred while not allowing the cost of improvement of land the initial amount was Rs.67,693.00 (F.Y. 97-98).
2. Ld. CIT(A) blatantly erred while directing to take the value of newly constructed property at Rs.8,97,000.00 if it has been shown in the return of income.
The facts, in brief, are that the assessee filed his return of income declaring a total income of Rs.1,93,000/-. Subsequently, the case was reopened on the basis of AIR information, it was opined by the Assessing Authority that a sum of Rs.30,02,000/- has escaped assessment. In response to the statutory notices, the Ld. Authorized Representative of the assessee appeared before the Assessing Officer and furnished submissions. After considering the submissions and making necessary enquiries, the Assessing Officer adopted the stamp duty valuation u/s 50C of the Income-tax Act, 1961 (“Act” for short) and assessed the total income at Rs.31,95,000/. Aggrieved by this, the assessee carried the matter before the Ld. CIT(A), who partly allowed the appeal of the assessee, thereby directed the Assessing Officer to consider the value of new residence of property at Rs.8,97,000/-. Now the assessee is in appeal before this Tribunal.
Apropos the grounds of appeal, the Ld. Counsel for the assessee, at the outset, submitted that the appeal may be considered as a mercy petition. It was contended that the report of the District Valuation Officer (DVO) is not based on the fair market value prevailing at the relevant point of time and that the DVO has also failed to take into consideration comparable instances of sale.
4. On the other hand, the Ld. Departmental Representative supported the orders of the lower authorities and contended that the assessee failed to substantiate the market value as disclosed in the sale deed. He drew my attention towards finding of Assessing Authority, to buttress the contention that the AO was Page 3 of 4 justified in adopting the value of property on the basis of circle rate.
5. Heard the Ld. Representatives of the parties and perused the materials available on records. It is pointed out by the Ld. AR for the assessee that the impugned order has been passed against a dead person. Admittedly, the appeal before the Ld. CIT(A) was filed in the name of late Shri Chhedi Lal and even before this Tribunal, Form No. 36 was initially filed in the name of late Shri Chhedi Lal. However, it is stated that the appellant before this Tribunal is the legal heir, namely the wife of the deceased assessee, late Shri Chhedi Lal, who expired on 10.01.2021. It appears that the factum of death of late Shri Chhedi Lal was not brought to the notice of the Ld. CIT(A). The impugned order is dated 15.03.2024. As per Form No. 35, the appeal against the assessment order dated 28.06.2016 was filed by late Shri Chhedi Lal in August 2016, when the assessee was alive, and the appeal was registered on 02.09.2016. However, during the pendency of the appellate proceedings, the assessee expired on 10.01.2021. This material fact was neither brought to the knowledge of the Ld. CIT(A) nor before this Tribunal. Though, Form No. 36 was later revised and the thumb impression of the wife of the deceased assessee was appended on both the original as well as the revised Form No. 36, no formal substitution of legal heir was carried out. In view of these facts and circumstances, the impugned order cannot be sustained. As per Section 159(2a) of the Act, “any proceedings 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”.
Page 4 of 4 6. Therefore, in the light of the provisions of Section 159(2a) of the Act, the proceedings should have been taken against the legal representative by the Ld. CIT(A). Looking to the facts of the present case, the impugned order is hereby set aside and the grounds raised in this appeal are restored to the Ld. CIT(A) who would decide the appeal afresh against the legal representative of the deceased assessee in accordance with law. The grounds raised in the appeal are allowed for statistical purposes.
7. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 30/01/2026.