Pranav B Prem

The Income Tax Appellate Tribunal (ITAT), Chandigarh Bench “A”, comprising Judicial Member Laliet Kumar and Accountant Member Manoj Kumar Aggarwal, has held that an order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] in the name of a deceased assessee cannot be considered invalid solely on that ground when the appeal itself was instituted under the deceased’s name. The Bench observed that since the appeal before the CIT(A) was filed in the name of the deceased assessee, the order passed in the same name does not render it void-ab-initio. The Tribunal clarified that even if the order were to be treated as erroneous for that reason, the assessment order of the Assessing Officer would continue to remain valid and operative.

Also Read: Black Money Act Inapplicable to Non-Existent Foreign Assets: ITAT

Background

The appeal concerned Late Shri Lakha Singh, whose income for Assessment Year 2012–13 was reassessed under Section 144 read with Section 147 of the Income Tax Act, 1961, resulting in additions of ₹60 lakh towards alleged unexplained investment in land and ₹39.4 lakh on account of cash deposits. The reassessment order was passed on December 9, 2019, while the assessee passed away on January 17, 2020. Subsequently, an appeal was filed before the CIT(A), National Faceless Appeal Centre, Delhi, by the deceased’s legal heir Hira Singh, challenging the reassessment on multiple grounds, including invalidity of notice, non-service of statutory communications, and denial of natural justice. The CIT(A), despite being informed of the death of the assessee, passed the appellate order on September 28, 2024, in the deceased’s name and also rejected the application for admission of additional evidence filed under Rule 46A of the Income Tax Rules.

Assessee’s Contentions

On appeal before the ITAT, the legal heir argued that the CIT(A)’s order was void as it was passed posthumously in the name of a person no longer alive. He further contended that the assessee was of advanced age, suffering from prolonged illness, and could not participate effectively during assessment proceedings. It was submitted that sufficient cause existed for non-production of evidence earlier and that the CIT(A) had erred in rejecting the additional evidence without obtaining a remand report from the Assessing Officer as required under Rule 46A(3). The appellant also urged that vital legal issues — such as the non-service of notice under Section 148 and validity of reassessment — were not adjudicated by the CIT(A).

Revenue’s Submissions

The Department argued that the appeal before the CIT(A) itself was filed in the name of Late Shri Lakha Singh and verified by his legal heir in Form 35, and therefore, there was no procedural defect in the order being passed under the same name. It was further contended that the reassessment order was completed before the death of the assessee and hence was legally valid. The Revenue maintained that the CIT(A) was justified in rejecting the additional evidence since the assessee had been afforded adequate opportunity during assessment proceedings.

Tribunal’s Observations

The Tribunal first noted that the death of the assessee on January 17, 2020, was undisputed. However, it held that the order passed by the CIT(A) could not be quashed merely because it was issued in the name of the deceased, observing: “Since the appeal before the CIT(A) itself was instituted in the name of Sh. Lakha Singh and not in the name of his legal heir, the order passed by the CIT(A) cannot be held to be vitiated merely because it was passed in the name of the deceased.”

The Bench reasoned that even if the appellate order were to be considered defective for this reason, the assessment order would remain valid and operative. Thus, the plea to declare the order void on technical grounds was rejected. However, the ITAT agreed that the CIT(A) had erred in refusing to admit the additional evidence offered by the legal heir without seeking a remand report from the Assessing Officer. The Tribunal emphasized that the assessee’s advanced age, ill health, and subsequent death constituted sufficient cause for non-compliance during assessment and warranted lenient consideration.

The order noted that failure to forward the evidence to the Assessing Officer for comments amounted to denial of effective opportunity, contrary to the procedure mandated under Rule 46A(3). The Bench further observed that legal grounds challenging the validity of reassessment and service of statutory notices went to the root of the matter and therefore required specific adjudication by the CIT(A).

Also Read: Medical Expense of Director is an Allowable Business Expenditure in Hands of Company: ITAT

In light of the above findings, the ITAT held that the CIT(A)’s order was not void merely for having been issued in the name of a deceased person. However, it found merit in the plea regarding rejection of additional evidence and non-adjudication of key legal issues. Accordingly, the Tribunal set aside the CIT(A)’s order and remanded the matter for fresh adjudication, directing that the additional evidence be duly admitted, a remand report be obtained from the Assessing Officer, and all legal grounds be decided by a speaking order after providing adequate opportunity of hearing to the legal heir. The appeal was allowed for statistical purposes.

Appearance

For Appellant: Advocate Sudhir Sehgal

For Revenue: Vivek Vardhan, Addl. CIT

Cause Title: Late Shri Lakha Singh Through Legal Heir Hira Singh Dera v ITO, Kurukshetra

Case No: ITA No. 1151/Chd/ 2024

Coram: Judicial Member Laliet Kumar, Accountant Member Manoj Kumar Aggarwal