Section 143(3) assessment order in deceased assessee’s name is an irregularity, not a void order | Income Tax Assessment Procedure : ITAT D-Bench Ahmedabad

The Income Tax Appellate Tribunal clarified that an assessment order issued in the name of a deceased assessee, when the death occurs during the assessment proceedings, is not void but merely an irregularity that can be rectified, thereby preserving the tax authority's jurisdiction.

Background & Facts

The Dispute

The appellant, the legal heir Harshadbhai Ratilal Soni, filed this appeal on behalf of the deceased assessee Chandrikaben Ratilal Soni against the Revenue. The dispute arose from the assessment for AY 2017-18 where the Assessing Officer (AO) treated cash deposits of Rs.71,63,000 made during the demonetisation period as unexplained income and completed the assessment in the name of the deceased.

Key Facts

• 29.10.2017: Chandrikaben filed her return of income declaring total income of Rs.4,50,917.
• 09.11.2016 to 30.12.2016: Cash deposits of Rs.71,63,000 were made in her SBI account during demonetisation.
• 24.12.2019: AO completed assessment u/s 143(3) fixing total income at Rs.76,13,920 and added the cash deposits as unexplained income.
• 05.12.2019: Chandrikaben passed away.
• 24.09.2019: A letter was sent to the AO informing of her death (though the date precedes the death, the letter records the fact of death).
• 15.09.2025: The National Faceless Appeal Centre (CIT(A)) dismissed the first appeal.
• 04.08.2026: Date of hearing before the ITAT.
• 01.09.2026: Date of pronouncement of the present order.
• 134-day delay in filing the appeal was condoned on the basis of the appellant’s explanation.

Procedural History

• 29.10.2017: Return filed.
• 24.12.2019: AO’s assessment order passed.
• First appeal: Dismissed by the National Faceless Appeal Centre dated 15.09.2025.
• Second appeal: Filed before the ITAT (ITA No. 1293/AHD/2026) with a condoned delay of 134 days.
• Hearing: 04.08.2026.
• Order: 01.09.2026.

The Parties' Positions

• Appellant: Contended that the assessment order was void because it was passed in the name of a deceased person; argued that additions under s.69A were illegal; claimed that cash deposits represented legitimate business receipts.
• Respondent: Asserted that jurisdiction was validly assumed when notice under s.148 was issued while the assessee was alive; maintained that the assessment order was not void but an irregularity; relied on Section 159 and precedent that such orders are not a nullity.

Relief Sought

The appellant sought restoration of the matter to the AO’s file, direction to record the legal representative of the deceased, and re-framing of the assessment in the name of the legal heirs.

The Legal Issue

Whether an assessment order passed in the name of a deceased assessee, when the death occurs during the pendency of assessment proceedings, is void and illegal, or merely an irregularity that can be corrected without invalidating the assessment.

Arguments Presented

For the Appellant

• The order was passed in the name of a deceased person, violating the statutory requirement that an assessment be made against a living assessee; therefore, it is void and illegal.
• Additions under Section 69A of the Income Tax Act were improper because the cash deposits were reflected in the books of account.
• Cited CIT v. Sumantbhai C. Munshaw (Gujarat High Court) for the proposition that an assessment against a dead person is not a nullity only when jurisdiction was validly assumed.

For the Respondent

• The notice under Section 148 was issued while the assessee was alive, establishing valid jurisdiction for the AO.
• Section 159 of the Act treats the legal representative as the assessee for assessment purposes; the proceeding therefore continues against the heirs.
• The assessment order is an irregularity, not a nullity, and can be rectified; reliance on CIT v. Shri I. Mahabaleshwarappa (Karnataka High Court) and other Tribunal precedents.

The Court's Analysis

The Tribunal began by examining the statutory framework governing assessment proceedings against a deceased assessee. It noted that Section 148 confers jurisdiction on the Assessing Officer once a valid notice is issued, and that the notice in this case was served while Chandrikaben was alive. Consequently, the jurisdiction was correctly assumed.

"the issuance of valid notice conferred power upon the AO to assume jurisdiction for initiation of proceedings for assessment of escapement of income. It is a cardinal proposition in law that not issuing notice at all or issuing that beyond statutory period ... would make the assessment ... null and void. There was no such infirmity in the notice issued in the present case."

The Tribunal then turned to Section 159, which delineates the liability of legal representatives. It held that the provisions of s.159 make the legal representative the deemed assessee, allowing the assessment to continue against the heirs. The Tribunal quoted the provision verbatim and explained that clause (a) of sub-section (2) applies where proceedings were initiated before death.

The Tribunal surveyed precedent. It affirmed the Gujarat High Court’s view in CIT v. Sumantbhai C. Munshaw that an assessment order in the name of a deceased person, where jurisdiction was validly assumed, is a mere irregularity, not a nullity. It also relied on the Karnataka High Court’s decision in CIT v. Shri I. Mahabaleshwarappa, which held that an assessment passed after death is not void ab initio but can be corrected.

Further, the Tribunal distinguished the appellant’s reliance on the alleged illegality of the addition under Section 69A, observing that the cash deposits were reflected in the books of account and that the AO’s rejection of the explanation was not per se illegal.

Having established that the assessment order is not void, the Tribunal concluded that the defect is curable. It therefore ordered restoration of the matter to the AO’s file, directing the AO to record the legal representative of the deceased and to re-frame the assessment in the name of the legal heirs, after affording them a proper opportunity of hearing.

The Verdict

The appeal is allowed. The Tribunal restores the matter to the Assessing Officer’s file, directs the AO to bring the legal representative of the deceased assessee on record and to re-frame the assessment in the name of the legal heirs, and orders that the assessee may make submissions regarding the cash deposits during the re-assessment proceedings. No monetary award or penalty is granted.

What This Means For Similar Cases

Assessment Orders in Deceased Assessee's Name Are Not Void

• Practitioners should advise clients that an assessment order issued in the name of a deceased taxpayer, where the notice was served before death, remains valid as an irregularity that can be corrected.
• The focus shifts to ensuring that the legal heirs are properly notified and given an opportunity to be heard.

Section 159 Governs Continuation of Proceedings

• The legal representative is deemed the assessee; therefore, tax authorities must record the heir and continue the assessment against them.
• Failure to record the heir does not invalidate the assessment but must be remedied promptly.

Procedural Compliance Is Crucial

• Tax authorities must verify death certificates and heir details before finalising assessments.
• Tax practitioners should promptly file applications to correct procedural defects rather than seeking outright nullity.

Actionable Takeaways

• Verify the date of notice issuance; if it predates death, jurisdiction is intact.
• Promptly submit death certificates and heir details to the Assessing Officer.
• If an assessment order is passed in the deceased’s name, file a remedial application rather than a nullity claim.
• Cite CIT v. Sumantbhai C. Munshaw and CIT v. Shri I. Mahabaleshwarappa for supporting the irregularity view.