The Income Tax Appellate Tribunal, Bangalore, has clarified that the death of an assessee, coupled with the legal heir’s lack of access to notices and procedural knowledge, constitutes sufficient cause for delay in filing an appeal under Section 271AAC. This ruling reinforces the principle that procedural rigidity must yield to equitable considerations when the taxpayer is no longer alive to defend their position.
Background & Facts
The Dispute
The dispute arose from the assessment and penalty proceedings initiated against the late Lalitha Jayanna, proprietor of Medhini Service Station, for assessment year 2017-18. The assessee had not filed any income tax return despite generating a turnover of ₹70,292,274. The Assessing Officer (AO) computed income under Section 69A and Section 44AD, adding ₹5,623,381 as presumed profit (8% of turnover) and ₹5,679,500 as unexplained cash deposits made during demonetisation. The total assessed income was ₹11,302,881 under Section 144, passed on 6 December 2019.
Key Facts
- The assessee, Lalitha Jayanna, suffered a stroke on 15 July 2017 and remained in a coma until her death on 20 February 2021.
- The penalty order under Section 271AAC(1) was issued on 18 August 2021, claiming a penalty of ₹340,770.
- The penalty order was allegedly received by the assessee on the same date (18 August 2021), despite her being deceased for over six months.
- The legal heir, Sri Jayanna, filed the appeal on 28 January 2022 - 4 months and 10 days after the deadline of 18 September 2021.
- The legal heir submitted in Form No. 35 that he was unaware of the penalty proceedings, had no access to documents, and was unfamiliar with tax appellate procedures.
- The revenue failed to produce evidence of service of the penalty order on the deceased assessee.
Procedural History
- 06 December 2019: Assessment order passed under Section 144.
- 18 August 2021: Penalty order issued under Section 271AAC(1).
- 18 August 2021: Penalty order allegedly received by the assessee (despite her death on 20 February 2021).
- 28 January 2022: Appeal filed before the Commissioner of Income Tax (Appeals) - delayed by 4 months and 10 days.
- 11 August 2025: CIT(A) dismissed the appeal in limine for delay, refusing to condone it.
- 23 March 2026: Hearing before ITAT Bangalore.
- 11 June 2026: ITAT pronounced order restoring the appeal.
Relief Sought
The appellant sought condonation of delay in filing the appeal and admission of the appeal on merits, arguing that the delay arose due to the death of the assessee and the legal heir’s lack of awareness and access to documents.
The Legal Issue
The central question was whether the death of the assessee, combined with the legal heir’s inability to access notices or understand procedural requirements, constitutes sufficient cause for condonation of delay under Section 249A of the Income Tax Act, 1961.
Arguments Presented
For the Appellant
The appellant’s advocate, Ms. Hitha, argued that the delay was not due to negligence but to extraordinary circumstances: the assessee’s prolonged coma and death before the penalty order was issued. The legal heir had no access to the penalty notice or any related documents, and the revenue failed to prove service of the order on the deceased. She relied on the principle that procedural deadlines must yield to equity when the taxpayer is deceased and the heir is uninformed.
For the Respondent
The Departmental Representative, Sri N. Balusamy, contended that the delay of over four months was unexplained and that the legal heir had ample time to file the appeal after the assessee’s death. He argued that the CIT(A) was correct in dismissing the appeal in limine as the reasons provided did not meet the threshold of sufficient cause under established jurisprudence.
The Court's Analysis
The Tribunal observed that the penalty order was issued on 18 August 2021 - over six months after the assessee’s death on 20 February 2021. It noted the inherent impossibility of serving a penalty notice on a deceased person and questioned the revenue’s assertion that the order was received on the date of issuance.
"We are also surprised that when the assessee has passed away on 20th of February 2021 how the penalty order passed on 18 August 2021 could have been served on the assessee."
The Tribunal emphasized that the legal heir, having no prior involvement in the tax proceedings, could not be expected to act with the same diligence as a living taxpayer. The failure of the revenue to establish service of the penalty order further undermined the CIT(A)’s refusal to condone delay.
The Tribunal held that the death of the assessee, coupled with the absence of any evidence of notice delivery and the heir’s lack of procedural knowledge, constituted a compelling and sufficient cause for delay. The CIT(A)’s mechanical application of the 30-day deadline without considering the factual matrix was legally untenable.
The Verdict
The appeal was allowed for statistical purposes. The ITAT set aside the CIT(A)’s order dated 11 August 2025, condoned the delay of 4 months and 10 days, and restored the appeal to the file of the CIT(A) for adjudication on merits. The legal heir was directed to comply with any future notices issued by the CIT(A). No monetary penalty or cost was imposed.
What This Means For Similar Cases
Death of Assessee Automatically Triggers Equitable Relief
- Practitioners must now argue that the death of an assessee before issuance of a penalty order renders the concept of "service" legally inapplicable.
- Delay caused by the heir’s need to obtain succession documents, probate, or legal representation should be treated as inherently excusable.
- Revenue authorities must prove actual service of notices on the deceased - mere presumption is insufficient.
Procedural Rigidity Must Yield to Equity
- Tribunals and appellate authorities must examine the factual matrix behind delays, not apply deadlines mechanically.
- Form No. 35 explanations involving death, illness, or lack of awareness must be given serious weight, especially when the taxpayer is deceased.
- The burden shifts to the revenue to demonstrate that the notice was properly served on the assessee prior to death.
Legal Heirs Are Not Bound by the Assessee’s Procedural Knowledge
- Legal heirs cannot be held liable for the assessee’s failure to file returns or respond to notices.
- The law must recognize the practical reality that heirs often lack access to financial records or tax correspondence.
- In cases involving deceased taxpayers, appellate forums should adopt a liberal approach to condonation of delay under Section 249A.
