Issuance of Notice in Name of Dead Person is not Valid: ITAT directs AO to quash Assessment Order u/s 143 (3) of Income Tax Act [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) has directed the Assessing Officer ( AO ) to quash the assessment order issued under Section 143(3) of the Income Tax Act, 1961 stating that the issuance of a notice in the name of a deceased person was not valid.

The assessee Late Sh. Birdi Chand retired from Rajasthan State Electricity Board from the post of lineman in the year 1996. No return of income was filed under Section 139(1) of the Act as his income was below the taxable limit. The assessee expired on 09.01.2018. The ld. AO on the basis of information received from O/o ITO(CRU) O/o Pr. CIT(Inv.), Jaipur that assessee along with 3 other person have sold a land situated at Village- Beelwa Kalan, Tehsil- Sanganer, Jaipur for Rs.11,03,09,000/- on 01.12.2011 issued notice under Section 148 of the Income Tax Act on 15.05.2017. This notice was issued when the assessee was alive

However, after his death, in response to this notice the legal heir of the assessee Sh. Mukesh Sharma filed return of income on 15.08.2018 declaring total income of Rs.1,640/-. The fact of the death of the assessee was also intimated to the AO vide letter dated 17.06.2018 and letter dated 15.08.2018. Thereafter AO again issued notice under Section 142(1) dated 30.10.2018 in the name of assessee instead of in the name of legal heir.

Mr. P.C. Parwala representing the assessee submitted that the assessment made on a dead person was not valid and is required to be quashed. The legal heirs submitted the fact that the assessee died and to that effect a specific information was given to the AO even though the assessment was made on a dead person which was not valid and is required to be quashed. To drive home to this contention he relied upon the various case laws.

Per contra, Mr. Anup Singh vehemently argued that the notice under Section 148 was served to the assessee when the assessee was alive. The judgment relied upon by the AR of the assessee are on different facts where even the notice was not served to the assessee who lived on those case laws relied upon. As regards the merits of the case the assessee has not provided any document so as to claim the deduction as alleged under Section 54F of the Income Tax Act.

The bench noted that the assessee retired from Rajasthan State Electricity Board from the post of lineman in the year 1996. No return of income was filed under Section 139(1) of the Income Tax Act as his income was below the taxable limit. The assessee expired on 09.01.2018. The AO on the basis of information received from O/o ITO(CRU) O/o Pr. CIT(Inv.), Jaipur that assessee along with 3 other person have sold a land situated at Village- Beelwa Kalan, Tehsil- Sanganer, Jaipur for Rs.11,03,09,000/- on 01.12.2011 issued notice under Section 148 of the Income Tax Act on 15.05.2017. This notice was issued when the assessee was alive and was accordingly severed to him. The assessee left heavenly abode on 09.01.2018 and  thus after the death of the assessee in response to the notice the legal heir of the assessee Sh. Mukesh Sharma filed return of income on 15.08.2018 declaring total income of Rs.1,640/-.

Thus, all that the legal heir of late shri birdi chand to inform about the death of his father. However, at the same time, we should not overlook the fact that even after coming to know about the demise of late Shri Birdin Chand, the department could have issued a valid notice to the legal heir the subsequent notices were served in the name of the assessee and even the assessment order was passed 22/11/2018 i.e. after 10 months of passage of the assessee. During this period what prevented the AO to bring the legal heirs and pass the order on the legal heirs after following the required procedure and passing the raising the demand on the legal heirs.

Thus, The two member bench of the tribunal comprising Rathod Kamlesh Jayant Bhai ( Accountant member) and Dr. S Seethalakshmi ( Judicial member) respectfully, following the ratio of judicial precedent cited by the  AR of the assessee that once the AO  came to his knowledge that the assessee was  no more the subsequent issuance of the notice in the name of dead person was  not valid and consequently framing the assessment without there being bringing the legal heirs on record and when these information was shared by the legal heirs time and again with the AO framing the assessment and raising the demand on the dead person was not legal and thus directed to be quashed. Accordingly, the appeal of the assessee was allowed.

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