The Commissioner of Income-tax (Appeals), through the National Faceless Appeal Centre (NFAC), Delhi, has allowed a legal heir’s appeal against a reassessment for Assessment Year 2019-20, accepting jurisdictional objections concerning limitation, notices issued in the deceased taxpayer’s name and the validity of the scrutiny notice.
The order dated November 11, 2026, was passed under Section 250 of the Income-tax Act, 1961. It concerned a reassessment that determined total income at ₹50,66,257. The order’s introductory particulars record a demand of ₹80,12,814 under the combined heading for tax, penalty, fine and interest.
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The appellate authority accepted grounds 1, 2 and 3 challenging the Assessing Officer’s assumption of jurisdiction. Its decision rested on those threshold objections, without separately adjudicating the factual merits of the disputed property investment, business receipts and bank deposits.
According to the appellate order, the taxpayer had not originally filed a return for AY 2019-20. The Assessing Officer received information about a property transaction of ₹10,20,000 and initiated proceedings under Section 148A.
During those proceedings, the legal heir informed the department of the taxpayer’s death. In the written submissions reproduced in the order, the legal heir stated that the death certificate had been furnished on March 29, 2023, before the reassessment notice was issued.
The notice under Section 148 was dated April 7, 2023. In response, the legal heir filed a return on May 6, 2023, declaring total income of ₹2,97,000.
The reassessment was subsequently completed on January 30, 2025, with additions relating to the property transaction, amounts described as business turnover and credits in bank accounts. Penalty proceedings under Section 271AAC were initiated separately, according to the assessment history recorded in the appellate order.
The principal objection was that the Section 148 notice had been issued beyond the ordinary three-year period under Section 149(1)(a).
The legal heir submitted that AY 2019-20 ended on March 31, 2020, and the ordinary limitation period expired on March 31, 2023. The notice dated April 7, 2023, was therefore issued seven days later.
The appellant argued that the extended period under Section 149(1)(b) was unavailable because the income alleged to have escaped assessment at the reopening stage was only ₹10,20,000, below the statutory ₹50 lakh threshold relied upon in the submissions.
The written submissions also disputed the Revenue’s ability to rely on the fifth and sixth provisos to Section 149(1) to save the notice. The legal heir challenged the alleged service by affixture and argued that the statutory provisions governing exclusion of time could not overcome the jurisdictional objection in the circumstances.
In support, the appellant cited the Telangana High Court’s decision in Mrs. Prashanthi Gangireddy v. ITO, along with other High Court and Tribunal decisions reproduced in the order. These authorities were invoked to challenge the notice’s timing and the approval supporting reopening.
In its findings, the CIT(A) specifically recorded the challenge that reopening had occurred after three years even though the alleged escaped income was only ₹10,20,000. The limitation ground was allowed along with the other jurisdictional grounds.
The second major objection concerned the identity of the person against whom proceedings were taken.
The legal heir submitted that, despite prior intimation of death and registration of the appellant as legal heir on the income-tax portal, the notices and orders continued to carry the deceased taxpayer’s name and PAN. According to the submissions, the documents did not correctly identify the living legal representative.
The appellant relied on Section 159 and argued that proceedings initiated after the taxpayer’s death had to be taken against the legal representative. Filing a return as legal heir, it was submitted, did not cure the jurisdictional defect in a notice issued to a deceased person.
The written submissions cited Savita Kapila (Legal Heir of Late Shri Mohinder Paul Kapila) v. ACIT and a Jaipur ITAT decision involving a deceased assessee. The appellant relied on these authorities to contend that such defects were not curable under Sections 292B or 292BB.
The CIT(A) expressly noted the objection that all notices had been issued in the deceased person’s name despite communication of the death, and allowed this ground.
The third jurisdictional ground concerned the notice under Section 143(2), dated June 18, 2024, following the return filed on May 6, 2023.
The ground of appeal challenged the notice’s timing. In the detailed submissions, the legal heir additionally stressed that the notice was invalid because it had been issued in the deceased taxpayer’s name rather than to the legal representative.
The appellant cited Pr. CIT (Central) v. Anilkumar Ochhavlal Desai and the Supreme Court’s decision in Pr. CIT v. Maruti Suzuki India Ltd. to support the objection concerning proceedings against a deceased or non-existent person.
The CIT(A) allowed ground 3 together with grounds 1 and 2. The operative findings do not separately analyse the computation of the Section 143(2) limitation period or distinguish between each alternative argument advanced under that ground.
Apart from jurisdiction, the legal heir challenged an addition of ₹11,02,600 relating to the property, including stamp duty. The appellant maintained that the property had been received as a gift from the taxpayer’s father and that no purchase consideration had been paid.
The appeal also disputed the treatment of amounts described as business turnover as unexplained money under Section 69A. The legal heir submitted that the return had been filed under Section 44AD and that the assessment order had incorrectly referred to Section 44ADA.
Further, bank credits of ₹19,84,357 had been added as unexplained money. The appellant argued that these represented business receipts already covered by the declared turnover and that withdrawals and rotation of funds had been ignored, resulting in duplication.
These remained the appellant’s substantive explanations. The CIT(A) did not independently decide their correctness after allowing the jurisdictional challenges.
The appeal was filed on July 3, 2025, against the reassessment order dated January 30, 2025. Seeking condonation of a stated delay of 125 days, the legal heir explained that uncertainty about proceedings against a deceased taxpayer and the absence of professional guidance had prevented a timely appeal.
The CIT(A) accepted the explanation and condoned the delay.
After considering the assessment order, grounds of appeal and written submissions, the appellate authority found sufficient merit in the legal heir’s jurisdictional objections and allowed grounds 1, 2 and 3. The appeal was accordingly allowed.
The decision provides relief against the impugned reassessment on jurisdictional grounds. It does not contain a separate ruling accepting the property-gift explanation or holding that every disputed bank credit was explained.
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