This article delves into the details of ITA No. 1889/DEL/2020, involving Farah Naaz & Others (Legal heirs of Late Sh. Ghulam Nezami), New Delhi, and ITO Ward 1(2), Ghaziabad. The case concerns the Assessment Year (AY) 2009-10, was filed on November 20, 2020, and the final order was pronounced on May 29, 2023. The core issue revolves around the issuance of a notice under Section 148 to a deceased person and the subsequent reassessment proceedings.
Farah Naaz & Others are the legal heirs of Late Sh. Ghulam Nezami. The original assessee, Sh. Ghulam Nezami, passed away on September 22, 2009. The Income Tax Officer (ITO), Ward 1(2), Ghaziabad, issued a notice under Section 148 dated March 28, 2016, to reopen the assessment for AY 2009-10. However, the notice was issued in the name of the deceased assessee and was returned on April 1, 2016.
The daughter of the deceased assessee, Ms. Farah Naaz, informed the Assessing Officer (AO) about her father’s death through a letter dated July 13, 2016, and requested to cancel the reassessment proceedings. Despite this, the AO proceeded with the reassessment and passed an order on December 5, 2016, under Sections 144/147, mentioning the name of Ms. Farah Naaz as the legal heir.
The assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)], Ghaziabad, challenging the validity of the notice issued under Section 148 and the subsequent reassessment proceedings. The CIT(A) upheld the AO’s actions, leading to the current appeal before the Income Tax Appellate Tribunal (ITAT).
The ITAT, comprising Shri Chandra Mohan Garg, Judicial Member, and Shri Pradip Kumar Kedia, Accountant Member, reviewed the case. The tribunal considered the grounds raised by the assessee, focusing on the legality of the notice issued to a deceased person and the continuation of proceedings in the absence of valid service of notice.
The learned authorized representative of the assessee (AR) argued that the notice issued under Section 148 was void ab initio as it was issued in the name of a deceased person. The AR cited judgments from the Delhi High Court, including Vipin Walia vs. ITO and Rajender Kumar Sehgal vs. ITO, which held that notices issued to deceased persons were invalid, and reassessment proceedings could not continue without a valid notice.
In response, the learned Senior Departmental Representative (DR) contended that the AO had sufficient information regarding cash deposits in the deceased assessee’s bank account to initiate reassessment proceedings. The DR argued that mentioning the legal heir’s name in the reassessment order validated the proceedings.
After considering the submissions from both sides, the ITAT concluded that the reassessment proceedings initiated against a deceased person were invalid. The tribunal noted that despite being informed of the death of Sh. Ghulam Nezami, the AO continued the proceedings and issued a reassessment order without proper service of notice to the legal heirs.
The tribunal held that, based on the judgments of the Delhi High Court, the issuance of a notice to a deceased person and the subsequent reassessment proceedings were void ab initio. The ITAT quashed the reassessment proceedings and the order dated December 5, 2016.
The ITAT’s decision underscores the importance of adhering to proper legal procedures in reassessment proceedings. The ruling highlights that notices must be correctly issued and served to valid recipients, and any procedural lapses can render the proceedings void.
The final order, pronounced on May 29, 2023, reads:
In the result, appeal of the assessee is partly allowed.
Signed by:
Pradip Kumar Kedia, Accountant Member
Chandra Mohan Garg, Judicial Member
This judgment emphasizes the necessity for proper legal interpretation and adherence to statutory provisions when dealing with reassessment and service of notices.
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