Assessment Proceedings can’t be Nullified merely because of Irregularity: ITAT [Read Order]

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The Ahmedabad bench of the ITAT last week said that the assessment proceedings under the Income Tax Act, 1961 cannot be invalidated merely on ground of irregularity.

Assessee , an individual, has filed his returns showing a total income of Rs. 1,41,830/-. The assessment proceedings were started after his demise. During the assessment proceedings the Assessing Officer found that there was a large sum of money deposited in different banks in the name of the assessee which are not shown in the return of income filed by the assessee. The AO has issued notice under section 142 (1) of the Income Tax Act.

The ld. Counsel for the assessee has contended that as per sub section 2 of section 159 the notice up on legal heirs should be issued by the AO but the AO has failed to do so because of this the assessment order to be nullity and deserve to be quashed.

Ahmedabad bench of Income Tax Appellate Tribunal consists of Judicial Member Rajpal Yadav and Accountant Member Amarjit Singh has observed that section 159 of the Income Tax Act read as “Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased”.

This assessment proceeding was set in motion by the AO when the assessee was alive. But the notice u/s 143(2) appears to have been served upon the assessee after his death. In fact the AO has failed to issue notice up on the legal heirs but it cannot be considered as any illegality committed by him, it is considered as just an irregularity hence the proceedings itself cannot be declared void, rather irregularity deserves to be rectified.

And the bench also held that the AO shall issue notice to the legal representatives by providing reasonable opportunity of hearing, and thereafter pass assessment order.  Insofar the AO can decide whether the penalty is imposing or not after passing the assessment order.

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