Invalidity of Tax Assessments Against Deceased Individuals: ITAT Mumbai Quashes Orders in Khursheed Dumasia Dispute

In the realm of tax jurisprudence, the jurisdictional validity of an assessment order is paramount. A fundamental tenet of the Income Tax Act, 1961 is that tax proceedings cannot be initiated or continued against a non-existent entity or a deceased assessee. When an assessee passes away, the revenue authorities are legally obligated to bring the legal representatives on record before proceeding with any statutory actions.

Recently, the Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) reaffirmed this critical legal doctrine in the judicial pronouncement of Khursheed Dumasia Legal heir of late Sh. Rusi Kaikhushroo Bhumgara Vs ITO. The Tribunal unequivocally established that any assessment framed in the name of a deceased assessee, especially after the revenue department has been explicitly notified of the demise, is a nullity in the eyes of the law.

Factual Matrix of the Dispute

The controversy in this matter arose from an assessment undertaken by the Assessing Officer (AO) long after the demise of the original assessee.

Chronology of Events and Notices

  1. Demise of the Assessee: The original assessee, Mr. Rusi Kaikhushroo Bhumgara, passed away in January 2012 (specifically on 16.01.2012).
  2. Issuance of Statutory Notice: Despite the assessee having been deceased for several years, the AO issued a notice under Section 142(1) on 23.08.2019, demanding statutory compliance in the name of the dead assessee.
  3. Intimation by the Legal Heir: Acting responsibly, the legal heir (the appellant) responded to the aforementioned notice. Through written communications dated 31.09.2019 and 31.10.2019, the legal representative explicitly informed the AO about the death of the assessee and formally placed the official death certificate on the assessment record.