KUSHAL VINODKUMAR BHATT LEGAL HEIR OF LATE SHRI VINODKUMAR RAMANLAL BHATT,ANAND V. THE ACIT (OSD), WARD-5, ANAND

ITA 752/AHD/2025

AI Insights

The case revolves around the reassessment of income tax for the Assessment Year 2011-12 concerning the late Vinodkumar Ramanlal Bhatt, who had sold immovable properties but did not file a return declaring the capital gains. The Income Tax Officer (ITO) issued a notice under section 148 to the deceased, leading to reassessment. The legal heir contested the validity of the reassessment, arguing that the notice was improperly issued in the name of a deceased person and no fresh notice was issued to the legal heir. The Income Tax Appellate Tribunal (ITAT) in Ahmedabad, after considering various judicial precedents, ruled in favor of the legal heir, quashing the reassessment order due to the lack of a valid notice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705263 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2011-2012
• Other Referred Cases: Bhupendra Bhikhalal Desai vs. Union of India, Pravinchandra A Shah vs. Union of India, Chandreshbhai J Patel vs. Income Tax Officer
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Invalid notice; Reassessment proceedings; Period of limitation; Reopening of assessment; Search and seizure; Time period of passing order
• Section: 148; 144; 142(1)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “C” BENCH Before: Shri T.R. Senthil Kumar, Judicial Member And Shri Narendra Prasad Sinha, Accountant Member Kushal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt Ambica Bhuban, Opposite Big Bazar, Anand, Vidyanagar Road, Anand-388001, Gujarat PAN: ACLPB2634C (Appellant) Vs The ACIT (OSD), Ward-5, Anand (Respondent) Assessee Represented: Shri Bandish Soparkar, A.R. Revenue Represented: Shri Hargovind Singh, Sr.D.R. Date of hearing : 25-06-2025 Date of pronouncement : 30-06-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Legal Heir of the Assessee as against the appellate order dated 30.01.2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “CIT(A)”), arising out of the exparte re-assessment order passed under section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2011-12. ITA No. 752/Ahd/2025 Assessment Year 2011-12 I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 2 2. The registry has noted that there is delay of 96 days in filing the above appeal. The Legal Heir of the assessee filed a Notarized Affidavit stating that extensive discussions with Chartered Accountant on filing the above appeal on his deceased father name since it was setaside back to AO for de-nova assessment. More particularly, when the reopening notice u/s. 148 was issued on a deceased person. This has caused the delay in filing the appeal with a delay of 9 days and thereby requested to condone the delay in filing the appeal. Ld. Sr. D.R. appearing for the Revenue has no objection in condoning the delay thus the delay of 9 days in filing the above appeal is hereby condoned. 3. Brief facts of the case is that the assessee herein Mr. Vinod Kumar Bhatt was an individual and passed away on 11-02-2011. The assessee sold immovable properties amounting to Rs. 1,21,31,000/- on 26-08-2010 relevant to the Asst. Year 2011-12. However, the assessee has not filed Return of Income declaring the capital gain on sale of properties, which has escaped assessment. Therefore, the assessment was reopened by issuing notice u/s. 148 dated 27-03-2018 in the name of the dead person Shri Kushal Vinodkumar Bhatt which was duly served by Post. However, there was no response from the assessee. Therefore the A.O. issued notices u/s. 142(1) of the Act. In response the deceased assessee’s son informed that the Assessing Officer the death of his father by producing copy of the death certificate and also informed he does not know the various transactions carried out by his deceased father. The Assessing Officer called for information u/s.133(6) I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 3 from the Sub-Registrar, Anand and held that the Sale Deed bearing registration No. 8472 and 8473 of 2010 dated 26.08.2010 were signed by the Son in the capacity of Second party with others as Legal Representative of the assessee. Therefore, AO proceeded with the reassessment and taxed the entire sale consideration of Rs. 1,21,31,000/- as the assessed income of the assessee and demanded tax thereon. Thus, the AO mentioned in the assessment order Late Vinodkumar Ramanlal Bhatt Legal Heir: Kushal Vinod Bhatt. 4. Aggrieved against the reassessment order, assessee filed an appeal before Ld. CIT(A) with some delay which was condoned. The legal heir contented before CIT[A] that the reassessment order passed under section 144 rw.s. 147 for A.Y. 2011-12 is void ab initio. Since the notice issued under section 148, which confers jurisdiction for reassessment, was issued in the name of a deceased person, consequently the entire proceedings legally unsustainable. Despite being informed of the death of the assessee, the Ld AO failed to issue a fresh notice to the legal heir, violating Section 159(2)(b) of the Act. The legal heir never participated in the reassessment proceedings but merely requested the AO to drop the case due to the jurisdictional defect. Further, the delay in filing the appeal arose due to the need to register the appellant's PAN as a legal heir, a process that was only completed on 06.03.2019. 5. Ld CIT[A] considered the submissions of the assessee however held that since the reassessment order being an exparte order, Ld. I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 4 CIT(A) set aside the matter back to the file of Assessing Officer to make fresh assessment. 6. Aggrieved against the appellate order, the assesses is in appeal before us raising the following Grounds of Appeal: 1. The National Faceless Appeal Centre (NFAC) has erred in law and in facts in not annulling the assessment order passed in the name of a deceased person in toto, despite the fact that the Assessing Officer was informed about the death of the assessee and no fresh notice u/s 148 was issued to the legal heir. 2. The National Faceless Appeal Centre (NFAC) has erred in law and in facts in setting aside the matter back to the Assessing Officer to examine various grounds raised by the legal heir when the Assessing officer does not have jurisdiction to pass the assessment order. 3. The appellant further reserves its right to add, alter, amend or modify any of the aforesaid grounds before or at the time of hearing of an appeal. 7. Ld. Counsel Mr. Bandish Soparkar appearing for the legal heir of the assessee submitted that the reopening notice u/s. 148 was issued on 27-03-2018 in the name of deceased assessee. Hence the very jurisdiction for the reassessment itself is bad in law. The Legal heir duty bound informed the Assessing Officer the death of the assessee, however the AO without issuing fresh reopening notice, proceeded with the reassessment by impleading the legal heir in the reassessment order is not permissible in law and relied upon following case laws and others: I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 5 S No Particulars Citation 01 Bhupendra Bhikhalal Desai 131 taxmann.com 40 (SC) 02 Pravinchandra A Shah 154 taxmann.com 616 (Guj) 03 Chandreshbhai J Patel 101 taxmann.com 362 [Guj] 8. Per contra Ld Sr DR appearing for the Revenue supported the orders passed by the lower authorities and requested to dismiss the appeal since the Ld CIT[A] set aside the reassessment de-nova only and no prejudice caused to the legal heir. 9. We have given our thoughtful consideration and perused the materials available on record including the Paper Book and case laws filed by the Ld Counsel. The main allegation of the department is that the assessee sold immovable properties amounting to Rs. 1,21,31,000/- on 26-08-2010 relevant to the Asst. Year 2011-12 but not filed the Return of Income declaring the capital gain on sale of properties, which has escaped assessment and issued notice u/s.148 on 28-03-2018. The Ld AO in the reassessment order records that was his office in possession of then details of sale of immovable properties made on 26-08-2010. If the AO was in possession of the details of immovable properties transaction, then why did he waited till the end of six assessment years and issued the 148 notice on 28-03-2018, when the immovable properties were sold in 2010 and assessee died in 2011, why the AO waited till the time barring period. For initiating a reassessment proceeding u/s.147 of the Act, issuance of notice u/s.148 which confers jurisdiction to the AO for reassessment. I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 6 9.1. In this case the notice u/s.148 was issued in the name of a deceased person, as per the information available with the department. When the legal heir informed the AO about the death of the assessee and requested to issue fresh notice for reassessment, but the Ld AO proceeded with the reassessment and taxed the entire sale consideration of Rs.1,21,31,000/- as the assessed income of the assessee and treated the son as the legal heir and passed exparte order. Thus the AO is not justified in proceeding with the notice issued u/s.148 on a dead person and also taxing the entire sale consideration as the assessed income of the assessee, consequently the entire reassessment proceedings are legally unsustainable. Thus, the provisions of Section 292B does not cure a jurisdictional defect, and provisions of Section 292BB does not apply to legal heirs who have not participated in the reassessment proceedings. Furthermore, since no valid notice under section 148 was issued to the legal heir within the limitation period u/s.149(1)(b) of the Ace, the proceedings are time-barred. Therefore, the reassessment made in the name of a deceased person is void ab-initio and liable to be quashed. 10. The above view of ours is supported by the judgement of the Hon’ble Supreme Court in the case of Bhupendra Bhikhalal Desai [cited supra] by dismissing the Department SLP as follows: “Section 153C of the Income-tax Act, 1961 Search and seizure Assessment of income of any other person (Validity of notice) Assessment years 2011-12 to 2017-18 Original assessee, nam ely 'B', passed away on 23-4-2017- Assessing Officer issued a notice under section 153C in name of 'B' on 29-3-2019 After receiving said notice legal heir informed Assessing Officer that I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 7 his father, B had passed away and requested to drop proceedings as notice was issued to a dead person Assessing Officer rejected objections raised by legal heir on ground that no information was provided about demise of B and even after his death income tax returns were filed in name of B for relevant assessment years High Court by impugned order held that impugned notice under section 153C issued against dead person, is unenforceable in law and revenue could not contend that as they had no knowledge about death of assessee, they were entitled to plead that notice was not defective and, therefore, impugned notice as well as order were to be quashed and set aside - Whether Special Leave petition filed against impugned order was to be dismissed Held, yes [Para 2] [In favour of assessee) 10.1. Further the Jurisdictional High Court in the case of Pravin Chandra A Shah vs. Union of India [cited supra] held that reopening notice u/s. 148 issued upon deceased assessee was a nullity. Therefore, consequential proceedings and order passed thereon were liable to be quashed by observing as follows: “6.7 Having gone through the decisions referred to herein above, it is pertinent to note here that, in the case on hand, the Respondent-authorities initiated the proceedings, under section 148 of the Act, against the dead person, Le. late Ms. Shah, by issuing notice on 27-3-2021. Subsequently, an amendment in the Act came into force with effect from 1-4-2021. Under the circumstances, we are of the considered opinion that, if, any notice Is to be issued under section 148 of the Act in post 1-4- 2021 period, the procedure required under the amended Act was required to be followed. 6.7.1 Here, it is pertinent to note that the notice was issued in the name of the present petitioner, who happens B to be the legal heir of the original assessee, le late Ms. Shah. Thus, it becomes clear that, before issuing the notice to the present petitioner, the Respondent-authorities failed to comply with the provisions of the amended Act. It is not being disputed by the Respondent-authorities that the impugned order is also passed in the name of the dead person, ie. late Ms. Shah, which is a I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 8 nullity. Under the circumstances, the provisions of section 2928 and 292BB of the Act shall not apply in the facts of the case on hand, as discussed herein above. 6.7.2 Keeping in mind the ratio laid down by the Apex Court on the issue involved in this matter as well as the decisions of the other High Courts, we are of the view that the proceedings initiated by the Respondent authorities against a dead person, Le. late Ms. Shah in this case, as well as the impugned orders passed by it deserves to be quashed and set aside.” 10.2. The Jurisdictional High Court in the case of Chandreshbhai J Patel vs. Income Tax Officer [cited supra] held that where original assessee died and thereafter Assessing Officer issued notice u/s.148 in his name to reopen assessment and petitioner being heir and legal representative of deceased raised an objection that assessee had already expired and, therefore, notice in his name was not valid, merely because petitioner had informed Assessing Officer about death of assessee and asked him to drop proceedings, it could not be construed that petitioner had participated in proceedings and, therefore, provisions of section 292B would not be attracted and notice under section 148 was to be treated as invalid by observing as follows: “… 18. The question that therefore arises for consideration is whether the notice under section 148 of the Act issued against the deceased assessee can be said to be in conformity with or according to the intent and purposes of the Act. In this regard, it may be noted that a notice under section 148 of the Act is a jurisdictional notice, and existence of a valid notice under section 148 is a condition precedent for exercise of jurisdiction by the Assessing Officer to assess or reassess under section 147 of the Act. The want of a valid notice affects the jurisdiction of the Assessing Officer to proceed with the assessment and thus, affects the validity of the proceedings for assessment or reassessment. A notice issued under section 148 of the Act I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 9 against a dead person is invalid, unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection. Therefore, where the legal representative does not waive his right to a notice under section 148 of the Act, it cannot be said that the notice issued against the dead person is in conformity with or according to the intent and purpose of the Act which requires issuance of notice to the assessee, whereupon the Assessing Officer assumes jurisdiction under section 147 of the Act and consequently, the provisions of section 292B of the Act would not be attracted. In the opinion of this court, the decision of this court in the case of Rasid Lala (supra) would be squarely applicable to the facts of the present case. Therefore, in view of the provisions of section 159(2)(b) of the Act, it is permissible for the Assessing Officer to issue a fresh notice under section 148 of the Act against the legal representative, provided that the same is not barred by limitation; he, however, cannot continue the proceedings on the basis of an invalid notice issued under section 148 of the Act to the dead assessee. 19. In the facts of the present case, as noticed hereinabove, the notice under section 148 of the Act, which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has not complied with the same. The legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid. In the absence of a valid notice, the Assessing Officer has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding under section 147 of the Act pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained. 20. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 28.03.2018 issued by the respondent under section 148 of the Income Tax Act, 1961 as well as all proceedings pursuant thereto, are hereby quashed and set aside. Rule is made absolute accordingly with no order as to costs.” I.T.A No. 752/Ahd/2025 A.Y. 2011-12 Page No KUshal Vinodkumar Bhatt Legal Heir of Late Shri Vinodkumar Ramanlal Bhatt. vs. ACIT 10 11. Respectfully following the above judicial precedents, the reopening of assessment made in the hands of the dead person is invalid in law. Thereby the entire reassessment liable to be quashed. 12. In the result, the appeal filed by the Assessee is allowed. Order pronounced in the open court on 30-06-2025 Sd/- Sd/- (NARENDRA PRASAD SINHA) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER True Copy Ahmedabad : Dated 30/06/2025 आदेश कȧ Ĥितिलǒप अĒेǒषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद "