Late Shri Prakash Shukla Vs ITO (ITAT Lucknow)
Order Passed in Deceased Assessee’s Name Unsustainable: ITAT Directs Fresh Assessment Through Legal Heir
Summary: The Lucknow Bench of the Income Tax Appellate Tribunal (ITAT), in Late Shri Prakash Shukla Through Legal Heir Ashok Shukla Vs ITO, ITA No. 664/LKW/2024, dated 15 October 2026, set aside an appellate order passed in the name of a deceased assessee despite his death having been brought to the authorities’ notice. The Tribunal restored the matter to the Assessing Officer with directions to bring the legal heir or legal representative on record and make a fresh assessment in accordance with law. The dispute arose from an addition of ₹1,76,29,353 relating to the computation of capital gains.
Assessment completed after assessee’s death
The assessee, Shri Prakash Shukla, filed his return on 31 August 2013, declaring total income of ₹12,45,090.
He died on 19 April 2021 while the assessment proceedings were pending. Nevertheless, the Assessing Officer completed the assessment on 26 September 2021 under Section 147 read with Sections 144 and 144B of the Income-tax Act, 1961.
The addition of ₹1,76,29,353 increased the assessed income to ₹1,88,74,433.
An appeal was filed before the CIT(A) on 27 October 2021, after the assessee’s death. The CIT(A) dismissed it by an order dated 22 October 2024, also issued in the deceased assessee’s name.
Legal heir contended that death had been disclosed
Before the Tribunal, the assessee’s counsel submitted that the orders were passed in the name of a dead person and could not be sustained.
He pointed out that the fact of death had been communicated to the lower authority, that Form 35 specifically challenged the assessment on this ground, and that the appeal form had been verified by the legal heir.
The Revenue argued that the legal representative should have sought formal substitution before the appellate authority. In the absence of substitution, it defended the CIT(A)’s use of the assessee’s name as appearing in Form 35.
Death certificate could not be disregarded
The Tribunal noted that the death certificate was on record and established that the assessee had died before both the assessment order and the filing of the first appeal.
Referring to Section 159, it observed that proceedings taken against a person before death are deemed to continue against the legal representative from the stage reached on the date of death.
The Tribunal acknowledged that the provision referred to proceedings against the deceased rather than proceedings initiated by him. However, it held that the legislative intent could not be interpreted to deprive a party of the substantive right of appeal.
It also questioned why the CIT(A) proceeded against the deceased despite categorical disclosure of his death and the supporting certificate, without verification or contrary evidence.
Fresh assessment after bringing legal representative on record
The Tribunal held that the CIT(A)’s order in the deceased assessee’s name could not be sustained.
It set aside that order and restored the matter to the Assessing Officer, directing that the legal heir or legal representative first be brought on record and a fresh assessment thereafter be made in accordance with law.
The appeal was allowed for statistical purposes. The Tribunal did not decide the capital gains computation, valuation objections or applicability of Section 50C on merits.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
This appeal, filed by the legal heir of the deceased assessee, is directed against the order of the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi dated 22.10.2024 pertaining to the assessment year 2013-14. The assessee has raised the following grounds of appeal: –
“01. Because the assessment having been passed on a dead person is contrary to the provisions of law, illegal be quashed.
02. Because the CIT(A) has erred on facts and in law in upholding the assessment passed under section 147/144 of the Income-tax Act, 1961, which assessment order is without jurisdiction, contrary to the provisions of law be quashed.
03. Because the CIT(A) has failed to appreciate that there was no material to form reasons to believe that income has escaped assessment, the notice Issued under section 148 and the entire reassessment proceedings initiated thereafter, are all void abinitio and ought to have been quashed.
04. Because there being no approval from the competent authority as laid down in section 151 of the Act, the entire reassessment framed is bad in law and be quashed.
05. Because complete details of computation of capital gains having been furnished while filing the original return on 31.08.2013, based on the registered valuer’s report, there was no reason for the AO to infer that income has escaped assessment; the entire reassessment framed under section 147 r.w.s. 144 r.w.s. 144B is contrary to the provisions of law, the CIT(A) has failed to appreciate the submissions and has arbitrarily upheld the assessment.
06. Because the computation of capital gains as done by the AO and as upheld by the CIT(A) is contrary to facts, erroneous in law, in as much as
(i) The cost of acquisition as computed by the assessee has not been found fault with, in as much as, no reference under section 55A has been made.
(ii) The assumption of the AO that the index cost of acquisition, as claimed by the assessee, is erroneous is without any basis.
(iii) Because the property in question as transferred, being leasehold, the provisions of section 50C are not applicable, the capital gains to be computed, is to be done on the actual consideration received, accordingly, the order passed by the AO and upheld by the CIT(A) be quashed.
07. Because the CIT(A) has failed to appreciate that the cost of acquisition as worked out by the assessee including cost of improvement, all based on registered valuer’s report, the AO was not justified in ignoring the same and the CIT(A) has erred in upholding the cost of acquisition as adopted by the AO, the entire exercise resulting in an addition of Rs.1,76,29,353/- on account computation of capital gains is contrary to the provisions of law be deleted.”
2. Briefly stated, the facts of the case are that the present appeal has been filed through the legal heir of the assessee, Late Shri Prakash Shukla, who expired during the course of the assessment proceedings on 19.04.2021. The assessee had filed his return of income on 31.08.2013, declaring total income at Rs.12,45,090/-. The case was taken up for scrutiny assessment. Thereafter, the assessment was framed vide order dated 26.09.2021 u/s 147 read with sections 144 and 144B of the Income Tax Act, 1961 (“Act”, for short), threby, the Assessing Officer (“AO”, for short) made an addition of Rs.1,76,29,353/- and determined the total income of the assessee at Rs.1,88,74,433/- as against the returned income as disclosed by the assessee of Rs.12,45,090/-. Aggrieved by this, an appeal before the Ld. CIT(A) was preferred who dismissed the appeal of the assessee. Aggrieved against this, the legal heir of the assessee has preferred the present appeal before this Tribunal.
3. At the outset, the Ld. Counsel for the assessee drew our attention to the fact that the orders passed by the authorities below are in the name of a dead person. He submitted that an order so passed is void ab initio and cannot be sustained in the eyes of law. He submitted that the factum of death was duly intimated to the lower authority. He drew our attention to Form no. 35 wherein it is clearly averred that the assessment order is non est on account of the fact that the same has been framed in the name of a dead person. He further contended that the Form no. 35 has been verified by the legal heir of the assessee.
4. On the other hand, the Ld. Departmental Representative (“Ld. DR”, for short) opposed the submissions of the assessee. He submitted that the appeal before the Ld. CIT(A) was required to be prosecuted by the legal representative of the deceased assessee after bringing the factum of death to the notice of the appellate authority and seeking substitution in accordance with law. He submitted that, in the absence of such substitution, the Ld. CIT(A) was justified in passing the order in the name of the assessee as appearing in the to Form no. 35.
5. We have heard the Ld. Representatives at length and is perused the material. It is noted that the assessee, Late Shri Prakash Shukla, expired on 19.04.2021. A copy of the death certificate issued by the Registrar (Death Certificate), Gram Panchayat Kukradev, has been placed on record. It is further noted that the appeal before the Ld. CIT(A) was filed on 27.10.2021. Thus, by that date, the assessee had already expired. However, the impugned order passed by the Ld. CIT(A) dated 22.10.2024 has been passed in the name of the deceased assessee. As per section 159 of the Act, any proceedings taken against the deceased before his death shall be deemed to have been taken against the legal representative from the stage at which it stood on the date of the death of the deceased assessee. We are conscious of the fact that section 159 of the Act speaks about the proceedings initiated against the assessee but not by the assessee. In our considered view such cannot be the intent of the legislation where one party is deprived of its substantive legal right of appeal. Moreover, the factum of death of the assessee has been categorically brought to the notice of lower authority. We failed to understand as to why Ld. CIT(A) proceeded to pass the impugned order against the dead person when a certificate in this regard issued by the Concerned Authority (Gram Panchayat Kukradev) without verifying or bringing any adverse evidence.
In view of the above facts and circumstances, the impugned order passed by the Ld. CIT(A) in the name of the deceased assessee cannot be sustained. We, therefore, set aside the impugned order and restore the matter to the file of the AO with a direction to bring the legal heir/legal representative of Late Shri Prakash Shukla on record and thereafter make an assessment afresh in accordance with law. The grounds raised in this appeal are allowed for statistical purposes.
6. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 15/10/2026.
