2018 (2) TMI 439 - HC - Income Tax

Invalid Notice Against Deceased Person Nullified Under Income Tax Act

The court found that the notice issued against a deceased person under section 148 of the Income Tax Act was a nullity. Emphasizing the need to initiate ... Validity of reassessment notice issued against a deceased person - Legal representative liability under section 159 of the Income tax Act - Reassessment notice under section 148 of the Income tax Act - Deemed service by appearance and cooperation under section 292BB - Nullity of notice issued in the name of the deceased where proceedings ought to be against the heirValidity of reassessment notice issued against a deceased person - Reassessment notice under section 148 of the Income tax Act - Nullity of notice issued in the name of the deceased where proceedings ought to be against the heir - Impugned notice under section 148 issued in the name of the deceased assessee is a nullity and liable to be quashed. - HELD THAT: - The Court found as admitted that the original assessee had died on 19.08.2012 and the petitioner was the legal heir who had notified the department and participated in appellate proceedings as legal representative. Notwithstanding this knowledge, the Assessing Officer issued a notice dated 30.03.2017 in the name of the deceased for assessment year 2010 11. Applying the reasoning in Rasid Lala (supra) and on the facts of this case, the Court held that initiating reassessment proceedings after the death of the assessee by issuing notice to the deceased (rather than to the heir) renders the notice legally impermissible. In the circumstances, the notice under section 148 issued against the dead person could not be sustained and had to be set aside. [Paras 8, 9, 12]Impugned notice dated 30.03.2017 issued against the deceased for assessment year 2010-11 quashed as a nullity.Legal representative liability under section 159 of the Income tax Act - Section 159 requires proceedings for assessment or reassessment of a deceased person's income to be taken against the legal representative and does not validate a notice issued in the name of the deceased where the heir was known. - HELD THAT: - A plain reading of section 159 indicates that proceedings which could have been taken against the deceased may be taken against the legal representative for assessment, reassessment or recomputation. The Court held that where the department was aware of the death and the identity of the legal heir, proceedings ought to have been initiated in the name of the legal representative; section 159 therefore does not operate to cure a notice issued in the name of the deceased in such circumstances. [Paras 4, 10]Section 159 does not validate notices issued in the name of the deceased when proceedings should have been brought against the legal representative.Deemed service by appearance and cooperation under section 292BB - Section 292BB cannot be invoked to validate service where the person who appeared and cooperated was not the assessee and where objection was raised before completion of reassessment. - HELD THAT: - Section 292BB deems service to be proper where the assessee appears and cooperates in proceedings, thereby precluding objections about service. The Court observed that the petitioner was not the assessee but the legal heir, and further that the petitioner raised objection before completion of reassessment. Relying on the statutory proviso and applicable authority, the Court held that section 292BB does not apply to validate the impugned notice in the present facts. [Paras 11]Provisions of section 292BB do not avail the revenue; deemed service cannot be relied upon to cure the defect in issuing notice to the deceased.Final Conclusion: Petition allowed. The notice dated 30.03.2017 issued under section 148 against late Shri Dhirajlal Dayaljibhai Thakkar for assessment year 2010-11 is quashed and set aside. Issues:Challenge to notice under section 148 of the Income Tax Act, 1961 issued to a deceased person.Analysis:The petitioner challenged a notice issued under section 148 of the Income Tax Act, 1961, dated 30.03.2017, addressed to a deceased person, late Shri Dhirajlal Dayaljibhai Thakkar, who passed away on 19.08.2012. The petitioner, being the legal heir, filed the petition under Article 226 of the Constitution of India. The petitioner argued that the notice issued against a dead person is a nullity. The petitioner's counsel referred to the provisions of section 159 of the Act, emphasizing that proceedings against a deceased person should be taken against the legal representative. The counsel relied on previous court decisions to support the argument that the notice should have been issued in the name of the legal heir, not the deceased person.The respondent contended that the notice was computer-generated based on the deceased assessee's PAN and that the proceedings were not vitiated by the death of the assessee. The respondent argued that the legal heir's participation in the appellate proceedings validated the notice. The respondent cited sections 292B and 292BB of the Act to support their position that the notice was valid and legally sound.In response, the petitioner's counsel referred to a decision by the Madras High Court regarding the application of section 292BB, highlighting that in cases where the assessee is deceased, the provisions may not apply. The petitioner argued that the notice should be set aside based on this interpretation.After considering the arguments and precedents cited by both parties, the court found that the notice issued against a deceased person was a nullity. The court emphasized that proceedings against a deceased assessee should be initiated against their legal representative, as per the provisions of section 159 of the Act. The court held that the notice under section 148 of the Act was not in compliance with the law and, therefore, quashed and set aside the impugned notice issued to the deceased father of the petitioner for the assessment year 2010-11. The petition was allowed, and the rule was made absolute accordingly.