2016 (12) TMI 1282 - HC - Income Tax

Invalid reassessment against deceased assessee; notice must target legal heirs. Section 159 inapplicable.

Rasid Lala Versus Income Tax Officer

The court held that the reassessment proceedings against a deceased assessee were invalid as the notice should have been issued against the legal heirs. ... Validity of reopening of assessment - notice to dead person - Held that:- In the present case, admittedly, the reassessment proceedings have been initiated against the dead person and that too after a long delay, therefore, even if Section 159 of the Act is attracted, in that case also, the notice was required to be issued against and in the name of the heirs of deceased assessee. Under the circumstances, in the facts and circumstances of the case, Section 159 of the Act shall not be of any assistance to the Revenue. - Decided in favour of assessee Issues:1. Validity of notice under Section 148 of the Income-tax Act, 1961 for reopening assessment against a deceased assessee.Analysis:The petitioner, as the legal heir of the deceased assessee, filed a petition under Article 226 of the Constitution of India challenging the notice issued under Section 148 of the Income-tax Act, 1961 to reopen the assessment for Assessment Year 2009-2010 against the deceased assessee. The petitioner contended that the reassessment proceedings against a dead person cannot be sustained and should be dropped. Despite informing the Assessing Officer about the death of the assessee, the proceedings continued. The petitioner relied on a decision of the Delhi High Court to support the petition.In response, the respondent relied on Section 159 of the Income-tax Act and cited decisions from the Delhi High Court and Madhya Pradesh High Court to oppose the petition. The respondent argued that the reassessment proceedings were valid under Section 159 of the Act.After hearing both parties, the court noted that the assessee had died before the notice was issued, and the reassessment proceedings were initiated against the deceased. The court emphasized that the notice should have been issued against the legal heirs of the deceased as per Section 292 [b] of the Income-tax Act, 1961. The court found that Section 159 of the Act, relied upon by the Revenue, was not applicable to the case.Regarding the decisions cited by the Revenue, the court distinguished them from the present case. The court highlighted that in those cases, legal representatives had participated in the reassessment proceedings, which was not the situation in the current matter. Consequently, the court allowed the petition and quashed the impugned notice dated 29th March 2016 issued under Section 148 of the Income-tax Act, 1961.