ITAT Sets Aside Assessment Orders Issued Against Deceased Person

The Income Tax Appellate Tribunal (ITAT), Delhi, has recently quashed reassessment orders that were passed against a deceased assessee.

The case is about the late Shri Subhash Chandra, who passed away on 4.12.2014. His legal heir, i.e., his wife, Lalita Agarwal, had already informed the income tax department about the death of Subhash Chandra Agarwal in her categorical letter on 23.01.2015, along with the submission of a copy of his death certificate. Even after this, the department still continued to issue several notices under section 148 of the Income Tax Department against the deceased and also issued reassessment orders under section 147 under his PAN number from AY 2010-11 to 2014-15.

These reassessment orders and notices were challenged by Mrs Lalita Agarwal, as his legal heir. She initially filed an appeal before the CIT(A), but did not succeed. Therefore, she filed an appeal before the ITAT, Delhi.

It was submitted that separate assessment orders on the legal heir and wife of the assessee were made in the PAN number of the assessee, but the assessment was not done with the income of the deceased Subhash Chandra Agarwal. Mrs Lalita Agarwal argued that, as the notices and assessments were issued in the name of the deceased person and on the PAN of the deceased person, the whole proceedings were invalid and null. She further pointed out that in her late husband’s earlier cases (AYs 2008-09 to 2010-11), the ITAT had already quashed similar assessments on the same issue.

The Tribunal observed that all notices and assessments were actually issued after the assessee’s death under his PAN, even after the department was informed about his death. The ITAT also cited the decision of the Hon’ble Delhi High Court in the case of Savita Kapila vs. ACIT dated 16.7.2020 reported in 426 ITR 502, where it was ruled that there is no legal duty on the legal heir to inform the Income Tax Department about the death of an assessee.

The Tribunal held that CIT(A) is incorrect in sustaining the assessment. The Tribunal said that such notices must be sent to the correct person and not a deceased person. The tribunal also observed that the issue was already decided in the assessee’s own case for the preceding three years, i.e. AY 2008-09, 2009-10, and AY 2010-11, where the appeal of the assessee was allowed.

Therefore, the assessment orders were quashed, and the appeals filed by Mrs Lalita Agarwal were allowed.