JUDGMENT :

K.R. Shriram, J.

1. Petitioners are impugning an order dated 9th March 2020 passed by respondent no.1 under Section 264 of the Income Tax Act, 1961 (the Act) rejecting petitioners’ application.

2. The order impugned came to be passed while rejecting an application filed by petitioners impugning an order dated 7th May 2018 passed under Section 179(1) of the Act.

3. Petitioners are two out of the four legal heirs of one late Dinesh Shamji Rita (the deceased), who was a Director of Bhavya Infrastructure India Private Limited (the company) during the Assessment Year 2012-2013. The other two legal heirs are married daughters of the deceased and petitioner no.1.

4. The company had filed its return of income for Assessment Year 2012-2013 on 29th September 2012 declaring an income of Rs.62,47,290/-. The return of income was processed under Section 143(1) of the Act and was selected for scrutiny assessment and accordingly, notice under Section 143(2) of the Act was issued. An assessment order under Section 143(3) of the Act came to be passed on 30th March 2015 by which several additions were made, i.e., a sum of Rs.18,37,21,188/- under Section 68 of the Act for unexplained cash credit, interest on loan of Rs.1,21,11,106/- and disallowance under Section 14A of the Act of Rs.2,06,642/-. A demand of Rs.8,66,76,960/- was also made under Section 156 of the Act.

5. The deceased applied for stay before the Assessing Officer and filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. The Assessing Officer rejected the application for stay by an order dated 16th July 2015. An application was moved by the deceased before the Additional Commissioner of Income Tax for grant of stay of the demand, which application also came to be rejected. The company, though had not accepted the additions/disallowance, voluntarily paid various amounts in October/November 2017. Certain properties were attached but the attachment order was later vacated. Petitioners’ revision application under Section 264 of the Act also came to be rejected.

6. Thereafter, petitioners received an order dated 7th May 2018 passed under Section 179 of the Act against which petitioners filed another revision application under Section 264 of the Act. This revision application came to be rejected by the impugned order dated 9th March 2020. In the meanwhile, it is averred in the petition that the deceased took seriously ill and was ailing for almost six months before succumbing to multiple organ failures on 6th May 2018, a day before the order dated 7th May 2018 came to be passed under Section 179 of the Act. The order impugned passed by respondent no.1 under Section 264 of the Act also is a very brief order in the sense that the only ground on which the application under Section 264 of the Act came to be rejected is contained in paragraph 4.2 of the impugned order. Respondent no.1, without considering any of the submissions made by petitioners, has simply rejected the application under Section 264 of the Act noting that notice of the death of the deceased was not brought to the Assessing Officer by anybody and before the order under Section 179 of the Act was signed by the Assessing Officer and, therefore, as on the date of the passing of the order, there was nothing invalid.

7. In our view, not only this order dated 9th March 2020 but also the order passed on 7th May 2018 under Section 179 of the Act require to be quashed and set aside. Considering the order dated 7th May 2018, there is no ground made out in the order for even commencing proceedings under Section 179 of the Act. The relevant paragraphs are paragraph 4 and paragraph 7, which read as under :

4. For A.Y.2012-13, order was passed u/s 143(3) dt. 30.03.2015 resulting demand of Rs.8,66,76,960/- Demand notice u/s. 156 of the I.T. Act had been served on the assessee company and the assessee company was supposed to pay the demand within 30 days of receipt of demand notice from the department. As the assessee c