ITAT Ahmedabad Restores Assessment and Penalty Passed in Name of Deceased Assessee
An appeal was filed challenging the reassessment and penalty orders passed in the name of a deceased person for AY 2011–12. The original assessee, who had passed away in August 2013, did not file returns for the year. The Assessing Officer, based on bank deposits and fixed deposits, reopened the case under Section 147 and completed the assessment ex parte under Section 144, making additions under Section 69A for unexplained deposits and imposing a penalty under Section 271C.
CIT (A) Held: On appeal the Commissioner (Appeals), National Faceless Appeal Centre, upheld the decision of the AO, thereby allowing the additions and penalty through ex parte orders due to non-compliance.
During appellate proceedings before the tribunal, it was explained that the legal heir was unaware of the proceedings as the deceased’s Chartered Accountant had also passed away, and departmental notices were sent only to his earlier email ID. The legal heir came to know of the proceedings only after the attachment of bank accounts. An affidavit was filed explaining the delay of 536 days in filing the appeal.
Main Issue: Whether reassessment and penalty orders issued in the name of a deceased person are void ab initio or require restoration for bringing a legal heir on record under Section 159, where the Assessing Officer had no knowledge of death.
ITAT’s Decision: The Tribunal condoned the delay, noting that the cause was bona fide and supported by evidence, and that substantial justice required a liberal approach. The Tribunal held that where, in a case, the reassessment proceedings are started without knowledge of the assessee’s death, such orders cannot automatically be treated as null and void. Relying on Section 159(1) and (3) of the Act, the tribunal observed that the legal representative of a deceased person becomes the assessee by law and is responsible to discharge tax liabilities of the deceased. In cases where both the Assessing Officer and the legal heir were unaware of each other’s position, the matter should be remitted for proper substitution and fresh adjudication.
Accordingly, the Tribunal set aside both the assessment and penalty orders and restored the matter to the Assessing Officer with directions to bring the legal heir on record, provide due opportunity of hearing, and decide the issue afresh on merits. Both appeals were thus allowed for statistical purposes.
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