Loading judgment…
Facts
The assessee passed away during assessment proceedings. Notices and orders were issued subsequently to the deceased assessee, and the legal heir was not properly served. This led to ex-parte proceedings before the Assessing Officer and the CIT(A).
Held
The Tribunal held that proceedings conducted against a deceased assessee without proper legal representation or notice are unsustainable in the eyes of law. The CIT(A) failed to take cognizance of the assessee's death and proceeded ex-parte.
Key Issues
Whether assessment and appellate proceedings can be sustained against a deceased assessee without proper notice to legal heirs. Whether ex-parte orders passed against a deceased assessee are valid.
Sections Cited
143(3), 148, 159, 250, 221, 144, 54, 139(1), 54(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “B”NEW DELHI
Before: SHRIMAHAVIR SINGH, HON’BLE & SHRISANJAY AWASTHI
आदेश /O R D E R PER SANJAY AWASTHI, ACCOUNTANT MEMBER:
The ITAT Registry has reported that there is a delay of 351 days in the filing of the present appeal. The delay has been requested to be condoned through the following petition:
“May it please be your honours 1. That this is an application for condonation of delay in filing the appeal before the Hon’ble Income Tax Appellate Tribunal (“the Hon’ble Tribunal”) against the order dated 17.05.2024 passed under section 250 of the Income Tax Act, 1961 ("the Act”) by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre Delhi (“Ld. CIT(A)”) for the A.Y. 2016-17.
2 The assessee Sh. Madan Lai Bhaskar got expired on 04.10.2017 before the completion of proceedings under section 143(3) of the Act. 3 The assessment order for the AY 2016-17 was passed on 30.12.2018 and appeal before the CIT(A) was filed on 24.12.2020 by Late. Sh. Madan Lai Bhaskar, through his legal heir Smt. Hemlata. 4 While filing the appeal, in Form 35, communication email address was specifically mentioned as hem1408lata@gmail.com. However, the hearing notices from the office of the CIT(A) were not served on the email ID mentioned in Form 35 i.e., hem1408lata@gmail.com and as a result, no effective communication reached the assessee or his legal representatives. Further, no physical notices have been served upon the assessee. This led to the proceedings being concluded ex parte without any opportunity of being heard. 5 Your honour the order dated 17.05.2024 was also not served on the email hem1408lata@gmail.com.
It is recently, when the legal heir Smt. Hemlata checked her income tax portal for the preparation of her return of income for the AY 2025-26, she also checked the portal of deceased Sh. Madan Lal Bhaskar and got to know that notice u/s 221 of the Act was appearing at the portal wherein several demands were raised On further inspection, she discovered the impugned CIT(A) order dated 17.05.2024 under the "e-Proceedings" tab.
Immediately, upon discovering the said order, steps were taken to obtain necessary records and file the present appeal, which was eventually filed on 17.07.2025 resulting in a delay of 351 days which is neither deliberate nor due to any negligence, but for bona fide reasons explained above. 8 That in view of the above-mentioned facts it is humbly submitted before your honours that the delay in filing of the appeal may kindly be condoned as the reason of delay is unintentional and beyond the control of the applicant. 9 Accordingly, it is prayed that the delay in filing of the appeal be condoned, and appeal be heard on merit. For this act of kindness, the applicant shall ever be grateful. Prayed Accordingly.”
1.1 Considering the contents of the application extracted above, the delay is hereby condoned and this appeal is admitted for adjudication.
The present appeal arises from the order u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 17.05.2024, passed by the Ld. CIT(A)-NFAC, Delhi. This case has an unusual set of facts which deserve to be mentioned before we proceed any further with the adjudication. The assessee Madan Lal Bhaskar was duly appearing before the Ld. AO when the assessment proceedings were initiated against him. However, the assessee passed away of 04.10.2017, i.e. after the proceedings were initiated but before the conclusion of the said proceedings before the Ld. AO. Thereafter the Ld. AO passed an ex parteorder against the assessee and enhanced his income thereon.
Thereafter, served with an adverse assessment order the legal heir of the assessee filed an appeal before the Ld. CIT(A), where the fact of the passing away of the assessee was duly brought to his notice. However, the Ld. CIT(A) proceeded ahead with the adjudication also in an ex partemanner as seen from para 6 at page 8 of the impugned order. It is noteworthy that the Ld. CIT(A) did not deem it fit to take cognizance of the fact that the assessee was no longer alive. Needless to say, the action of Ld. AO was confirmed at first appellate stage.
2.1 Aggrieved with this action, the legal heir of the assessee has approached the ITAT with a following grounds of appeal:
“1. On the facts and circumstances of the case, the order passed by the learned Commissioner Income Tax (Appeals), Income Tax Department, National Faceless Appeal Centre (NFAC) is bad, both in the eye of law and on the facts.
2. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in passing the order ex-parte without providing the assessee adequate opportunity of being heard in violation of principle of natural justice.
3. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law, in dismissing the appeal of the assessee, without giving any findings on merits of the case.
4. On the facts and circumstances of the case, learned CIT(A), ITD has erred both on facts and in law in passing the order despite the fact that the assessment order passed by AO under section 144 of the Act is invalid, without jurisdiction, non-est and liable to be quashed since the same have been passed in the name of deceased person.
5. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in confirming the addition of Rs.1,81,84,179/- made by the AO on account of Long- Term Capital Gain on sale of residential house property. 6. On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on fact and in law, in confirming the disallowance of Rs.71,03,714/- made by the AO on account of indexed cost of improvement claimed by the assessee while computing the income under the head Long Term Capital Gain. 7. (i) On the facts and circumstances of the case, the learned CIT(A), ITD has erred both on facts and in law in confirming the disallowance of exemption of Rs.1,10,80,465/- claimed by the assessee under Section 54 of the Income Tax Act while computing the income under the head Long-Term Capital Gain. (ii) That the abovesaid disallowance has been confirmed despite the fact that the assessee has deposited the above amount in the ‘Capital Gains Account Scheme’ (“CGAS”) before the due date for filing of return of income under section 139(1), as per the provision of section 54(2) of the Act. (iii) That the abovesaid disallowance has been confirmed despite the fact that the exemption has been claimed in accordance with the conditions specified under section 54 of the Act. 8. The appellant craves leave to add, amend or alter any of the grounds of appeal.”
Before us the Ld. AR argued that there was no legal basis due to which the assessment and subsequent appellate order could be passed against a deceased assessee. For this purpose, reliance was placed on the case of Savita Kapila legal heir of late Shri Mohinder Paul Kapila vs. ACIT reported in 118 taxmann.com 46 (Del), order dated 16.07.2020.
The Ld. AR pointed out from the following head notes and the conclusion in this case law:
“Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for (Service of notice) - Assessment year 2012-13 - An information was received by Assessing Officer that assessee had deposited certain amount in his bank account source of which was not explained - Assessing Officer thus issued a notice to asseessee under section 148 seeking to reopen assessment - Petitioner i.e. legal representative of assessee filed instant petition challenging validity of said notice by contending that it was issued subsequent to death of assessee and, thus, statutory requirement of service of notice had not been fulfilled - Whether in absence of a statutory provision, a duty cannot be cast upon legal representatives to intimate factum of death of assessee to department - Held, yes - Whether, therefore, question as to whether PAN record was updated or not or whether department was made aware by legal representatives or not is irrelevant - Held, yes - Whether in view of aforesaid legal position and, having regard to fact that impugned notice could not have been served upon assessee, same deserved to be quashed - Held, yes [Paras 32, 41 and 42] [In favour of assessee]” CONCLUSION 41. To conclude, the arguments advanced by the respondent are no longer res integra and have been consistently rejected by different High Courts including this jurisdictional Court. In view of consistent, uniform and settled position of law, to accept the submissions of the respondent would amount to unsettling the 'settled law'. In. fact, in Pr. Commissioner of Income-tax v. Maruti Suzuki India Limited (supra), the Supreme Court speaking through Hon'ble (Dr.) Justice Dhananjaya Y. Chandrachud has succinctly observed as under:- "40. We find no reason to take a different view. There is a value which the court must abide by in promoting the interest of certainty in tax litigation. The view which has been taken by this Court in relation to the respondent for AY 2011-12 must, in our view be adopted in respect of the present appeal which relates to AY 2012-13. Not doing so will only result in uncertainty and displacement of settled expectations. There is a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable."
Keeping in view the aforesaid, the present writ petition is allowed and the impugned notice dated 31st March, 2019 and all consequential orders/proceedings passed/initiated thereto including orders dated 21st November, 2019 and 27th December, 2019 are quashed.” 3.1 The Ld. DR, on the other hand, pointed out that there were several distinguishing features in the case of Savita Kapila (supra) and the present case in as much as in the Savita Kapila case (supra) the assessee had died before the AO could initiate the proceedings whereas in the present case the assessee passed away during the course of the proceedings before the Ld.AO. It was pointed out that the Ld. AO had no means of knowing about the status of the assessee since no one informed him about the death of the assessee. It was the submission by the Ld. DR that in such a situation the Ld.AO cannot be faulted and his order cannot be struck down on the ground that the proceedings were being conducted on a dead person.
We have carefully considered the rival submissions and have gone through the records, as also the case of Savita Kapila (supra) while the facts are not in doubt to the extent that the assessee was alive when the proceedings were initiated by the Ld. AO, but at the same time it is seen that the Ld. CIT(A) has chosen not to adjudicate on this issue or even taken cognizance of the situation under the provisions of section 159 of the Act. To this extent it is seen that the impugned order has well and truly been passed on a dead person even when the notice of death of the assessee was duly given to the Ld. CIT(A). To this extent we are by the judgment of Savita Kapila (supra), especially the portions extracted above. Thus, it deserves to be held that the impugned proceedings are not sustainable in the eyes of law and they deserve to be struck down.
In the light of the findings given above, the appeal of the assessee is allowed.
Order pronounced in the open court on 09.12.2025