B.G. SHARMA (DECEASED) ( BY L/H SHRI MUKESH B SHARMA),MUMBAI vs. ITO 14(3)(1), MUMBAI

PER PAWAN SINGH, JUDICIAL MEMBER: 1. These two appeals under section 253 of the Income-Tax Act (“The Act”)

Year (AY) 2007-08 and 2007-08. The facts of both the appeals are interconnected; hence, both the appeals were clubbed together and are decoded by common order. The assessment order for AY 2007-08 was re-opened by assessing officer during the assessment proceedings for AY2008-09.

AY 2008-09 2. Brief facts of the case are that return for the year under consideration was filed on 30 March 2010 declaring total income of Rs. 49,380/-. Since the assessee had expired on 14th November 2007, the return of income was signed by son of assessee Sh. M.B. Sharma in the capacity of legal heir.

The assessment was completed on 30 December 2010 under section 143(3). The assessment order was passed in the name of the deceased Bhawarilal Girdharilal Sharma. During the assessment proceeding the assessing officer on the basis of AIR information that the assessee had sold property during the year of which value was considered at Rs.31,91,500/- by Stamp Valuation Authority. The assessing officer further observed that in the return of income for assessment year 2007-08 filed on 31 March 2008, when the sale agreement was shown to have made on 4 July 2007 which was registered on 10 September 2007. Thus, the assessing officer took the view that the transfer of capital asset was completed in earlier assessment year i.e. in assessment year 2007-08, the assessee had not offered any capital gain in the return of income for 2 & 1536/M/13- B.G. Sharma (Deceased) assessment year 2008-09. The assessing officer while passing assessment order made addition on account of Capital Gain of Rs.24,20,100 /- on protective basis. On appeal before Commissioner (Appeals) the action of assessing officer was confirmed. Thus, aggrieved by the order of Commissioner (Appeals) the assessee has filed present appeal before us.

ITA No. 1536/Mum/2013 for AY 2007-08 3. On the basis of observation of assessing officer while passing assessment order for assessment year 2008-09, the assessment for assessment year 2007-08 was reopened under section 147. Notice under section 148 dated 12 November 2010 was served, to file the return of income for relevant assessment year. The legal heir of the assessee filed return of income on 26 November 2010. The legal heirs demanded the reasons recorded. The legal heirs of the assessee filed objection vide objection dated 18 December 2010, against reopening of the assessment. The assessing officer proceeded to complete the re-assessment. The assessment was completed under section 143(3) rws 147 on 02.01.2012. Again, the re- assessment was passed against the deceased person. The assessing officer while passing assessment order added the Capital Gain of Rs. 24,64,900/- on transfer of asset. On appeal before Commissioner (Appeals) the action of assessing officer was confirmed. The learned Commissioner (Appeals) dismissed the appeal holding that appeal for 3 & 1536/M/13- B.G. Sharma (Deceased) assessment year 2008 -09 has been dismissed, wherein the protective addition was made in that assessment year. Thus, further aggrieved the assessee has filed present appeal before us.

argued that assessment order passed in both the assessment years is bad in law. The assessee expired on 14th November 2007, intimation to this effect was given to the assessing officer vide letter dated 7

December 2007, copy of which is placed on record (page No.62 paper book). The assessing officer, thereafter, issued notice under section 143(2) on 19th December 2007 addressed to assessee for assessment year 2008-09, despite the fact that information of death was duly communicated to him. The assessment order passed against the dead person is nullity. The assessing officer reopened the assessment for assessment year 2007-08 on the basis of his observation while passing assessment order for assessment year 2008-09. The assessing officer also passed the assessment order for 2007-08 under section 143 (3)rws147 on 02.01.2012, which is also viod ab initio. The landed AR of the assessee in support of his submission relied upon the decision of coordinate bench in case of Late Mr. Chandravadan J Dalal Vs ITO dated 19.03.2010. On the other hand the learned and AR for the revenue supported the order of authorities 4 & 1536/M/13- B.G. Sharma (Deceased) below. It was argued that the legal heirs of the assessee was given sufficient opportunity before passing the assessment order for both the assessment years. The legal heirs of the assessee participated in the proceedings. The assessee has not taken specific grounds of appeal regarding the invalidity of the assessment order passed. 5. We have considered the rival submission of the parties and perused the material available on record. In our considered view the ld. AR for the assessee has raised purely legal issue, which requires consideration. We have noted that the return of income for assessment year 2008-09 was signed by legal heir of assessee. The legal heir of the assessee vide his letter dated 6 December 2007 intimated assessing officer about the death of assessee. The letter of the legal higher of assessee is duly acknowledged by assessing officer. Despite, the information of death of assessee the assessing officer issued notice under section 143(2) dated 19.08.2010 in the name of the deceased assessee. The assessment order for assessment year 2008-09 was also passed against the dead person. Again, the assessment for assessment year 2007-08 in the reopening assessment proceeding also completed against the dead person. We have noted that the assessing officer was aware about the expiry of assessee; estate assessing officer proceeded to complete the assessment against the dead person. It is settled law & 1536/M/13- B.G. Sharma (Deceased) that assessment order passed against the deceased person is not valid in the eyes of law.

6. The Hon’ble Gujarat High Court in Rasid Lala Vs Income-tax Officer, [2017] 77 taxmann.com 39 (Gujarat) held that where original assessee, namely, 'B' died on 2-12-2009 and after a period of six years Assessing Officer issued notice under section 148 in her name to reopen assessment for assessment year 2009-10 and further despite pointing out by heir of 'B' that 'B' had expired long back, he relying upon section 159 continued with reassessment proceedings against 'B', section 159 would not applicable to instant case and, therefore impugned notice was liable to be set aside. The Hon’ble Punjab & Haryana High Court in CIT Vs Asha Rani [1997] 95 TAXMAN 535 (PUNJ. & HAR) held that when the assessee (since deceased) had filed a return, which was later revised by his legal heir with a slightly enhanced income. The Assessing Officer completed the assessment at a much higher figure than what was shown in the revised return. On appeal, the legal heir contended that the assessment had been framed against a dead person and was, therefore, void ab initio. The Commissioner (Appeals) held that while the notice had been initially issued to the assessee, the same had also been issued thereafter to the legal heirs of the deceased assessee, and, therefore, though the assessment had been framed in the name of the deceased assessee, that was a mistake which could not be said to be fatal and so 6 & 1536/M/13- B.G. Sharma (Deceased) was rectifiable as an irregularity. On second appeal, the Tribunal annulled the assessment on ground of having been framed against the deceased, and also declined to make reference under section 256(1).