Assessment proceedings initiated against a deceased taxpayer are invalid if notices are issued in the name of the deceased and legal representatives are not recognized.

आदेश/ORDER

Manoj Kumar Aggarwal (Accountant Member)

1. Aforesaid appeal by revenue for Assessment Year (AY) 2016- 17 arises out of an order of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 23-06-2023 in the matter of an assessment framed by Ld. AO u/s 143(3) of the Act on 30-12-2018. The assessee has filed cross-objections against the revenue’s appeal wherein the assessee has raised pertinent legal grounds which read as under:

1 That having regard to the facts and circumstances of the case, the assessment order passed by Ld. A.O. ought to have been quashed inter-alia on the ground notice u/s 143(2) and other notices were not issued in the name of the legal heir but were issued in the name of the deceased assessee.

2. That having regard to the facts and circumstances of the case, the assumption of jurisdiction to pass the impugned assessment order is bad in law and against the facts and circumstances of the case and Ld. CIT(A) ought to have quashed the assessment order so passed.

3. That in any case and in any view of the matter, passing of the impugned assessment order u/s 143(3), dated 30.12.18 is illegal, bad in law and the same is not sustainable on various legal and factual grounds.

4 That the cross objector craves the leave to add, amend, modify, delete any of the ground(s) of cross objection before or at the time of hearing.

2. The Ld. AR advanced legal grounds and referred to various judicial decisions to support the same. The arguments were made on merits also. The Ld. CIT-DR controverted the argument of Ld. AR and supported the assessment order of Ld. AO. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under.

Proceedings before lower authorities

3.1 The assessee’s left for heavenly abode on 17-02-2016. The legal heir of the assessee filed return of income on 18-10-2016 declaring income of Rs.5.29 Lacs which was subjected to scrutiny vide notice u/s 143(2) on 26-09-2017. During the course of assessment proceedings, the assessee filed various documents in support of return of income. The main issue arose on Long-Term Capital Gains (LCTG) as earned by the assessee on sale of shares of two entities namely M/s Marksans Pharma Ltd. & M/s Deccan Gold Wimper Ltd. The assessee computed aggregate Long-Term Capital Gains (LTCG) of Rs.482.86 Lacs on sale of various scrips including these two scrips and claimed the resultant gains to be exempt from tax u/s 10(38). However, Ld. AO alleged that assessee’s own money was routed through the broker and received back in the form of capital gains. Accordingly, a show-cause notice was issued. The Ld. AO observed that there was abnormal increase in the price of the scrips which could be possible only if the prices were rigged. In the absence of any rebuttal as forthcoming from the assessee, the LTCG so earned for Rs.482.86 Lacs & claimed exempt u/s 10(38) was considered to be bogus and accordingly, added to the returned income of the deceased assessee.

3.2 The Ld. CIT(A), after considering assessee’s submissions as well as remand report and assessee’s rejoinder thereto, observed that no documentary evidence was brought in by Ld. AO to support the allegations. The prices of the impugned scrips were stated to be rigged by the concerned broker to abnormally high level. As against this, the assessee produced various documentary evidences to establish the genuineness of the transactions which were not rebutted by Ld. AO to be false. The documents include demat statements. The transactions were though brokers who were registered with SEBI and the transactions happened on stock exchanges. The exponential high could not be stated to be rigge