The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench held that notice issued initiating assessment proceedings in the name of deceased assessee is void ab-initio.
The tribunal noted that the assessee had filed return for the relevant assessment year by duly intimating the Department that the assesse had expired and the return was being filed in the capacity of legal heir of the assessee. Thus, the Department was well aware of the fact that as on the date when the notice u/s 143(2) of the Income Tax Act was issued, the assessee had expired and therefore, the notice ought to have been issued on the legal heir of the assessee who had filed the return of income.
The ITAT observed that Pratik Anil Desai had filed application for registration as legal heir of the deceased assessee on 06.11.2017, and such request for registration as legal heir was also approved by the Department on 07.11.2017. However despite this, notice under Section 143(2) of the Act was issued in the name of the deceased assessee on 17.08.2018. Therefore, in these facts, there seems to be no justification as to why impugned notice was issued in the name of a deceased person. This would effectively mean absence of a notice u/s 143(2) of the Act and therefore, notice issued in the name of deceased person would be no notice and the assessing officer would not acquire jurisdiction to proceed under section 143(3) of the Income Tax Act.
Issue Raised
Whether notice initiating assessment proceedings can be issued in the name of deceased assessee?
Facts
The return of income declaring total income at Rs.75,65,300/- was E-filed by the assessee on 31.03.2018. It was processed u/s 143(1) accepting the total income as returned by the assessee.
Subsequently, the case was selected for scrutiny and statutory notice u/s 143(2) of the Act was issued on 17.08.2018 and was duly served on the legal heir of the assessee. Vide reply dated 03.09.2019, Shri Pratik Anil Desai, legal heir of Late Anilkumar Ochhavlal Desai (assessee) contended that his father expired in the year 2016 on 10.09.2016 and the return has been filed by him as legal heir of Late Anilkumar Ochhavlal Desai under his PAN (i.e. PAN of deceased assessee). The legal heir of the assessee submitted that since notice u/s. 143(2) of the Act dated 17.08.2018 is invalid and void ab-initio the assessment proceedings are liable to be dropped. However, the assessing officer was of the view that the assessment proceedings related to the period 01.04.2016 to 10.09.2016 i.e. the period till the death of the assessee and Shri Pratik Anil Desai had filed the return of the deceased assessee in the capacity of legal heir. Since necessary changes were not made in the PAN data base, therefore notice u/s 143(2) of the Act being a system- generated notice, was issued in the name of Late Anilkumar Ochhavlal Desai and the same was valid in eyes of law
. As per existing Departmental Instructions, only system-generated notice are to be issued. Accordingly, the assessing officer proceeded to complete assessment in the name of the deceased assessee and added a sum of Rs.3,75,68,307/- as unexplained income in the hands of the of the assessee u/s 68 of the Act.
In appeal before CIT(A), the assessee challenged the initiation of proceedings and CIT(A) allowed the appeal of the assessee
The Department is in appeal before us against the aforesaid order passed by CIT(A). The initiation of assessment proceedings is per se valid since the legal heir of the assessee had not made any correction in the PAN database and as per Instructions of the Department, the notice which was issued was a system- generated notice in the name of the deceased assessee and hence the same was valid in the eyes of law. This has to be seen in light of the fact that the assessee had not made appropriate alterations to the PAN database.
The tribunal dismissed the appeal of the Department.
Case Name : DCIT VS Anilkumar Ochhavlal Desai
Judicial Level & Location : ITAT Ahmedabad Bench
Case Number : ITA No. 292/Ahd/2024
Date Of Ruling : 26 -07-2024
Ruling In Favour Of: Assessee
Coram: Annapurna Gupta, Accountant Member And Siddhartha Nautiyal, Judicial Member
Petitioner Advocate: Kamlesh Makwana
Respondent Advocate: Manish J. Shah
