Why the ITO Filed a Case Against Late Sant Ram Through His Legal Heir Krishna Devi – ITA 6086/DEL/2019

Case Overview: Late Sant Ram vs. ITO Ward 54(5), New Delhi

Case Number: ITA 6086/DEL/2019

Appellant: Late Sant Ram (Through Krishna Devi, w/o Late Shri Sant Ram), New Delhi

Respondent: ITO Ward 54(5), New Delhi

Assessment Year: 2014-15

Case Filed On: 2019-07-17

Order Type: Final Tribunal Order

Date of Order: 2022-06-22

Pronounced On: 2022-06-22

Introduction

The case ITA 6086/DEL/2019 revolves around the assessment made by the Income Tax Officer (ITO), Ward 54(5), New Delhi, against Late Shri Sant Ram for the assessment year 2014-15. The assessment was initially carried out in the name of the deceased, despite the Income Tax Act, 1961, requiring the proceedings to be carried out against the legal heir, in this case, Krishna Devi, the widow of Late Sant Ram.

Background of the Case

Late Shri Sant Ram had filed his income tax return on September 27, 2014, for the assessment year 2014-15. Unfortunately, he passed away on February 13, 2015. After his demise, the Income Tax Department issued a notice under Section 143(2) of the Income Tax Act on September 22, 2015, to the deceased individual, Late Shri Sant Ram.

When the notice was issued, the department was informed of Shri Sant Ram’s demise. His legal heir, Krishna Devi, through her authorized representative, brought this fact to the attention of the Assessing Officer (AO). Despite being aware of the taxpayer’s death, the AO proceeded with the assessment in the name of the deceased.

Legal Grounds and Arguments

The appellant, through her representative, challenged the assessment on the grounds that it was conducted in the name of a deceased individual, rendering the entire process void ab initio. The primary legal contention was that as per Section 159 of the Income Tax Act, any proceedings against a deceased person should be directed toward their legal representatives. This is crucial to ensure that the legal heir is duly notified and given a chance to represent the estate of the deceased in any tax-related matters.

Two additional legal grounds were raised in the appeal:

• Ground No.1: The assessment order was invalid and illegal since the notice under Section 143(2) was issued in the name of a dead person, and the assessment was framed without impleading the legal representative.
• Ground No.2: The assessment order lacked jurisdiction and was void ab initio due to the non-issuance and service of a valid notice under Section 143(2) of the Income Tax Act, 1961.

Tribunal’s Observations and Findings

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, SMC, presided over by Judicial Member Shri Sanjay Garg, heard the case on June 22, 2022. The tribunal reviewed the facts and legal grounds presented by both parties.

The ITAT noted that the Assessing Officer had indeed been informed about the death of Shri Sant Ram and was aware that Krishna Devi was his legal heir. The tribunal found it concerning that despite this knowledge, the AO did not implead the legal representative, Krishna Devi, and instead proceeded with the assessment in the name of the deceased.

The tribunal emphasized that as per Section 159 of the Income Tax Act, 1961, any proceeding that could have been taken against a deceased person if they had survived may be taken against their legal representative. Moreover, the legal representative is deemed to be an assessee for all purposes under this Act. Therefore, conducting an assessment in the name of a deceased person, without impleading the legal representative, violates the provisions of the law and renders the assessment null and void.

Case Conclusion and Final Judgment

Given the clear violation of legal provisions, the ITAT concluded that the assessment order was invalid and void ab initio. The tribunal quashed the assessment order, stating that the entire process was flawed due to the improper issuance of the notice and the failure to involve the legal heir in the proceedings.

The tribunal’s order was pronounced in the open court on June 22, 2022, with the decision being in favor of the appellant, Krishna Devi, who was representing the estate of Late Shri Sant Ram.

Impact and Implications of the Ruling

This ruling underscores the importance of adhering to procedural requirements when dealing with cases involving deceased taxpayers. It serves as a critical reminder to tax authorities that assessments against deceased individuals must be directed towards their legal representatives to ensure the process’s legality and validity.

The case also highlights the necessity for legal heirs to be vigilant in tax matters related to their deceased relatives. They must ensure that the tax authorities are promptly informed of the taxpayer’s death and that any proceedings are appropriately redirected to them.

The tribunal’s decision is expected to influence similar cases where procedural lapses may have occurred, reinforcing the need for strict compliance with the provisions of the Income Tax Act. This judgment sets a precedent that any assessment made in the name of a deceased person without impleading the legal representative is void and unenforceable.

In summary, the case of ITA 6086/DEL/2019 highlights the critical importance of proper legal procedures in tax assessments involving deceased persons. The ITAT’s decision to quash the assessment order serves as a significant affirmation of the rights of legal heirs and the necessity for tax authorities to follow due process.

Why the ITO Filed a Case Against Late Sant Ram Through His Legal Heir Krishna Devi – ITA 6086/DEL/2019