HC Sets Aside ITAT Remand; Assessment on Deceased Assessee Quashed

The assessee, Late Shri Gopalaiyengar Madabushi Muralidhar, filed his return for AY 2016-17. During the pendency of assessment proceedings, he passed away on 09.11.2017. Despite this, the Assessing Officer completed the assessment on 27.12.2018 in the name of the deceased. Notably, a notice under Section 142(1) dated 13.12.2018 had already been issued to the legal heirs, indicating that the Assessing Officer was aware of the assessee’s death.

The legal representatives challenged the assessment, contending that it was invalid both on jurisdictional grounds and because it was passed against a deceased person. The ITAT set aside the assessment and remanded the matter to the Assessing Officer for fresh adjudication after giving an opportunity to the legal heirs. Aggrieved by the remand, the assessee approached the High Court.

Main Issue: Whether an assessment order passed in the name of a deceased person is valid when the Assessing Officer had prior knowledge of the death and whether such a case can be remanded for fresh assessment.

HC Held: The Karnataka High Court allowed the appeal and quashed both the assessment order and the ITAT’s remand direction. The Court held that once the Assessing Officer had knowledge of the assessee’s death, as clearly evidenced by the issuance of notice to the legal heirs, the assessment could not legally be completed in the name of the deceased. Such an order is fundamentally invalid and unsustainable in law. It further observed that remand by the Tribunal would only be justified in cases where the Assessing Officer was unaware of the death. In the present case, since knowledge was established, the defect was not curable, and the assessment itself stood vitiated. Accordingly, the Court set aside the assessment order dated 27.12.2018 as well as the ITAT’s order of remand. The question of jurisdiction was left open academically.

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