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Facts
The assessee, Babubhai Joitaram Patel, died on September 11, 2019. Despite being informed of the assessee's death, the Assessing Officer (AO) issued notices under Section 153C and Section 144 of the Income Tax Act, 1961, and framed an assessment order in the name of the deceased person for the assessment year 2017-18. The CIT(A) upheld the assessment but set aside the matter to the AO.
Held
The Income Tax Appellate Tribunal (ITAT) quashed the assessment order, holding that proceedings initiated and an assessment order framed against a deceased person, when the department was aware of the death, are void ab initio. The tribunal relied on its previous decision in the assessee's own case for a different assessment year and other precedents.
Key Issues
The primary legal issue was whether an assessment order passed against a deceased person, after the tax authorities were informed of the death, is valid. A secondary issue involved the violation of natural justice due to ex-parte proceedings against a deceased individual.
Sections Cited
Section 153C, Section 144, Section 250, Section 143(2), Section 142(1), Section 147, Section 148, Section 263
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: DR. ARJUN LAL SAINI & DR. DINESH MOHAN SINHA
आदेश /ORDER Per Dr. Arjun Lal Saini, AM: Captioned appeal filed by the assessee, pertaining to assessment year (AY) 2017-18, is directed against the order passed under section 250 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 06.06.2022 by the National Faceless Appeal Centre (NFAC), Delhi/ Commissioner of Income Tax (Appeals) [in short ‘Ld.CIT(A)’] which in turn arises out of an assessment order passed by the Assessing Officer (in short ‘AO’) u/s. 153C r.w.s. 144 of the Act dated 01.03.2022.
The grounds of appeal
raised by the assessee are as follows:
1. 1. 1. 1. 1. 1. Notice Issued in the Name of a Deceased Person The Learned Assessing Officer (Ld. AO) erred in law and on facts by issuing the notice under Section 153C of the Income Tax Act, 1961, in the name of a deceased person. The issuance of such a notice is a fundamental jurisdictional defect that Ashvin D Jadav renders the notice and resultant assessment order void ab initio. Further, the Learned Commissioner of Income Tax (Appeals) [CIT(A)] failed to adjudicate this legal issue despite its fundamental importance. Hence, the notice and assessment order must be quashed.
2. Ex-party Assessment and Violation of Natural Justice The Ld. AO erred in law and on facts of the case in proceeding ex-party and passing the assessment order based on a notice issued to a deceased person. This action violates the principles of natural justice. The CIT(A) further erred in setting aside the matter to the AO instead of annulling the assessment order, which is bad in law. The assessment proceedings, therefore, should be quashed in their entirety.
3. Addition Based on Assumptions and Hypothetical Grounds The Ld. AO erred in law and on facts of the case in making an addition on account of interest income without any corroborative evidence and in treating it as unexplained money, basing the addition solely on assumptions and hypothetical grounds. The reliance on a "dumb document" without substantive evidence renders the addition untenable. The CIT(A) erred in not adjudicating this issue on merits, and the addition must be deleted.
4. Jurisdictional and Procedural Defects The assessment order suffers from jurisdictional and procedural defects, including a failure to adhere to the statutory requirements under the Income Tax Act. Despite these glaring defects, the CIT(A) failed to annul the assessment order. The assessment proceedings, therefore, deserve to be quashed.
5. Assessment Order Bad in Law The assessment order is bad in law and on facts as it suffers from fundamental jurisdictional errors and procedural irregularities. The CIT(A) erred in failing to annul the order. Consequently, both the assessment order and the appellate order passed by the CIT(A) are unsustainable and should be quashed.
6. Erroneous Treatment of Hypothetical Income The Ld. AO erred in law and on facts of the case in treating hypothetical interest income as unexplained income without any legal or factual basis. The CIT(A) further erred in not deleting the addition, which was based on arbitrary and unlawful presumptions. The assessment order and appellate order must be quashed.
7. Jurisdictional Overreach The Ld. AO erred in assuming jurisdiction, issuing notices, and passing the assessment order without satisfying the mandatory jurisdictional requirements under the Act. The lack of valid jurisdiction renders the entire assessment process void.
8. Non-supply of Satisfaction The Ld. AO erred in passing the assessment order and issuing notices without supplying satisfaction as required under Section 153C of the Income Tax Act. This procedural lapse vitiates the assessment order, which deserves to be quashed.
9. Right to Amend Grounds Page 2 of Ashvin D Jadav The appellant craves leave to add, alter, or amend any of the grounds of appeal during or before the hearing of the appeal.”
When this appeal was called out for hearing, the Ld. Counsel for the assessee invited out attention to the order dated 05.08.2025 passed by the Hon’ble ITAT, Rajkot Bench in assessee own case, in ITA 15 & 23/Rjt/2025 for AY 2018-19, wherein the appeal of the assessee was allowed on the fact that the assessee was died on 11.09.2019 and legal heirs of the assessee has informed the assessing officer about the fact that the assessee has died on 11.09.2019, despite of this fact the assessing officer issued notice in the name of the dead person and also framed the assessment order in the name of the dead person, therefore, assessment order framed by the assessing officer on the dead person is bad in law. Hence, the assessment order itself should be quashed. The Ld. Counsel also submitted that present appeal is squarely covered by the above said judgement. A copy of the judgement was also placed before the Bench.
On the other hand, the Ld. DR for the revenue relied on the findings of the assessing officer.
We see no reason to take any other view of the matter then the view so taken by the Hon’ble ITAT, Rajkot Bench in the assessee own case, vide order dated 05.08.2025 (supra), in this order the Tribunal has inter-alia observed as follows: “8. At the outset, Ld. Counsel for the assessee, submitted that notice u/s 143(2) of the Act, was issued in the name of the dead person, despite informing to the department that the assessee had died. The Ld. Counsel submitted that assessing officer framed assessment order u/s. 144 of the Act, on 01.03.2022. The assessee under consideration has died on 11.07.2019 and death certificate of the assessee is reproduced below:
Learned Counsel further stated that during the proceeding before the DDIT investigation, it was informed to the revenue authorities that the assessee had died and the said information was available before the Assessing Officer, during the assessment proceedings, that the assessee has died, however, in spite of this, the assessing officer issued the notices in the name of the dead person and also framed Page 4 of Ashvin D Jadav assessment, in the name of the dead person, therefore, the assessment order passed by the assessing officer on the dead person is invalid and may be quashed.
On the other hand, Ld. Sr. DR for the revenue, argued that, since the assessing officer has framed the assessment order u/s. 144 of the Act, therefore, the Ld. CIT(A), remitted the issue back to the file of the assessing officer for fresh adjudication. The Ld. DR also submitted that during the assessment proceeding, the further notices were issued in the name of the legal heirs, therefore, it is sufficient compliance and assessment order should not be quashed on this issue.
I have heard both the parties and noted that notice u/s 153C r.w.s. 143(3) of the Act was issued in the name of deceased person and notice u/s 142(1) of the Act, was also issued in the name of the deceased person. In fact, the order was framed in the name of the deceased person. Therefore, I find that the assessee is under consideration had died on 11.07.2019 and the assessing officer was aware about this fact that the assessee had died, despite of this fact, the notices were issued in the name of the deceased person and ultimately the assessing officer framed the assessment order in the name of the deceased person. Therefore, I find merit in the submission of the Ld. Counsel for the assessee, and hence assessment order need to be quashed, and for that reliance is placed on the judgement of the Co-ordinate Bench of ITAT Rajkot in the case of Amrutlal Karsandas Samani in order dated 25.04.2025. In this order, the Tribunal has inter alia observed as follows: 14.We have heard both the parties and perused the material available on record. We note that Late Shri AmrutlalKarshandas Samani( assessee) was running his business of Grain, Pulses, Jaggery, Sugar, etc, on wholesale, semi wholesale basis for more than 25 (Twenty five) years, that is, from the starting up his business until his sudden death. His unfortunate death occurred on 24/12/2018.Copy of the death certificate is enclosed on paper book page no. 31, which we have examined.Then after on the base of portal data Ld. ADIT (Inv), Jamnagar issued summons on 8-7-2019 and 23-02-2021 for the verification of cash deposited, during the demonetization period 09.11.2016 to 31.12.2016 in which SBN (old notes) cash deposit was at Rs. 19,00,000/-. In response to the summons, Legal heir of assessee field reply and informed the income tax authorities that assessee had passed away on 24-12-2018 and requested to drop the proceedings. Thereafter, the case of the assessee was reopened u/s. 147 of the IT Act, 1961, after getting approval from the Ld. Add/Joint commissioner of Income Tax, Range-1, Jamnagar, a notice u/s. 148 of the IT Act, 1961 was uploaded at portal on 16-04- 2021. However, Ld. AO continued proceedings, issued notice u/s 143(2) of the Act. The assessee again informed to the income tax officer about death of assessee. However, assessing officer framed the assessment order on the dead person which is bad in law. The learned PCIT also framed the revision order under section 263 of the Act on the dead person.That is, revision order under section 263 of the Act was framed on, non-existent assessee, hence, revision order framed by the ld. PCIT, under section 263 of the Act, is bad in law and needs to be quashed. We note that Co-ordinate Bench of ITAT Cuttack, in the case of Janardan Gupta, (2019) 75 ITR 64 (trib), on the identical and similar facts, has quashed the revision order under section 263 of the Act, observing as follows: “6. After hearing both the sides and perusing the entire material available on record and the impugned order passed u/s263 of the Act, we noticed from the death certificate submitted by the assessee that late Janardan Gupta died on 15.03.2015 which has duly been recorded by the AO in his assessment order and Page 5 of Ashvin D Jadav order has been passed in the name of legal heir also. We further noticed from the order of Pr.CIT that he has passed order in the name of deceased-assessee who was not in existence on the date of passing of the revisional order u/s.263 of the Act. We also agree with the case law relied on by the ld. AR in the case of M. Hemanathan (supra), wherein the Hon'ble Madras High Court in para 12 has held as under “12. But unfortunately, the said contention loses sight of the settled position that any proceeding initiated against a dead person is a nullity. The contention of the learned Standing Counsel for the Department loses sight of one important distinction between a case where the proceedings are initiated against a person, who is alive, but continued after his death and a case of proceedings initiated against a dead person himself. If the proceedings had been initiated against a person, who was alive, and they were continued after his death after putting his legal heirs on notice, those proceedings, under certain circumstances, may be saved. Such a situation is also contemplated in civil proceedings and a provision is made in the Civil Procedure Code itself under Order XXII Rule 4. Therefore, the cases where the very proceedings are initiated against a dead person stand apart from those proceedings where they are initiated against a live person, but continued after his death against the legal heirs. Hence, the first contention is rejected.”
Respectfully following the above decision of Hon'ble Madras High Court, we are of the considered view that the Pr. CIT is not justified in setting aside the assessment order invoking powers u/s.263 of the Act ignoring the fact that the assessee is already expired on 15.03.2015, which was already informed by legal heir Shri Jitendra Kumar Gupta, the son of the assessee during the course of assessment proceedings. The AO has also passed order u/s.143(3) of the Act in the name of legal heir of the assessee. Therefore, fresh assessment cannot be initiated against the deceased assessee. Accordingly, we quash the order passed by the Pr. CIT u/s.263 of the Act and allow the appeal of the assessee.8. In the result, appeal of the assessee is allowed.”
Hon`ble High Court of Madras, in the case of M.Hemanathan, 384 ITR 177 (Mad-HC), held that where notice issued in name of deceased-assessee was served upon legal heir,who, then, participated in proceedings, such proceedings was a nullity beinginitiated against a dead person. It was also held that where notice issued in name of deceased-assessee was served upon legal heirwho, then, participated in proceedings, said legal heir could not be deprived of rightto challenge service of notice. The Co-ordinate Bench of ITAT Delhi in the case of Sheela Devi, 64 CCH 186 ( Del-trib), held that if show cause notice was addressed to deceased assessee instead of legal heirs, order was ab-initio void. Respectfully following the above binding precedent, we quash the order passed by the ld. PCIT under section 263 of the Act, dated 21.02.2024.
As the issue is squarely covered in favour of the assessee, by the decision of the Co-ordinate Bench, (supra) and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Co-ordinate Bench (supra). I find no reason to interfere in the said order of the Co-ordinate Bench, therefore, respectfully following the judgment of the Coordinate Bench, I allow both these appeals of the assessee. ”
As the issue is squarely covered in favour of the assessee by the decision of the ITAT, Rajkot Bench in the assessee’s own case, and there is no Page 6 of Ashvin D Jadav change in fact and law and the revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench. We note that the assessee died on 11.09.2019, and during the assessment proceeding, the legal heirs of the assessee informed the assessing officer about death of the assessee, despite of informing to the assessing officer that the assessee died on 11.09.2019, the assessing officer issued various notice in the name of the dead person. Therefore, respectfully following the judgment of the co- ordinate Bench in assessee own case(supra), we allow the appeal of the assessee.
7. In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 28/01/2026.