ITAT gives Relief to Widow, Says Order in Dead Husband's Name can be Fixed [Read Order]

The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench held that an assessment order passed in the name of a deceased person is not automatically void. The tribunal decided that such an error is a curable irregularity, providing a major relief to a widow who was contesting a tax demand raised against her late husband.

Prasanna Prabhakaran, the legal heir of the late Vasava Panicker Prabhakaran. The Income Tax Department had reopened the assessment for the year 2013-14 after information was received that the deceased had made cash deposits and time deposits totalling over Rs. 70 lakh.

The Assessing Officer, having completed the assessment after the taxpayer's death, passed the final order in the name of the deceased Mr. Prabhakaran. The widow appealed, arguing that an order against a dead person was invalid from its inception.

The ITAT bench comprising Siddhartha Nautiyal (Judicial Member) and Narendra Prasad Sinha (Accountant Member), however, took a different view. It meticulously analysed the sequence of events, noting that the legal proceedings were validly initiated while Mr. Prabhakaran was still alive.

The tribunal found that the department had issued the initial notice under Section 148 in March 2020, to which the assessee had responded, citing medical reasons for delays. The court record showed that the department was informed of the death in February 2021, but the death certificate was only provided much later, just before the case's limitation period was about to expire.

In its decision, the tribunal distinguished this case from others where legal proceedings are started against a person already deceased. It relied on a key precedent from the Gujarat High Court in the case of CIT v. Sumantbhai C. Munshaw, which established that an assessment order in a deceased's name, where jurisdiction was validly assumed during their lifetime, is a mere irregularity and not a nullity. The bench noted that the legal heirs in this case were aware of the proceedings and had made submissions, but had not formally provided the details of the legal heirs to the tax officer for the order to be reframed.

Consequently, the ITAT did not cancel the assessment. Instead, it set aside the order and restored the matter to the file of the Assessing Officer. The tribunal directed the tax officer to formally bring the legal representative, Prasanna Prabhakaran, on record and then reframe the assessment in her name. This process must be completed after giving her a proper opportunity to present her case on the merits, explaining the source of the deposits in question.

In conclusion, the appeal was allowed for statistical purposes.

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