Reassessment notice under Section 148 to deceased person quashed as Section 292BB cannot cure fundamental defect

The Delhi HC quashed a reassessment notice issued under Section 148 to a deceased assessee and all consequent proceedings. The court held that Section 292BB could not cure the defect of serving notice on a deceased person, as the deceased could not have participated in proceedings to be estopped from contending non-receipt. The court found no statutory provision to fasten revenue liability upon a deceased individual absent pending proceedings. Additionally, the revenue's attempt to correct errors by changing the entity name in suspect transactions was deemed neither innocuous nor innocent, aimed at masking defective "reasons to believe" and failure to apply minds to case facts. The court also noted that completing reassessment without issuing notice under Section 143(2) rendered the assessment void, citing Supreme Court precedent. The writ petition was allowed.

---

---

Issues:
1. Validity of a notice under Section 148 of the Income Tax Act issued to a deceased assessee for the assessment year 2010-11.
2. Legality of conducting reassessment proceedings against a deceased individual.
3. Requirement of issuing notice under Section 143(2) of the Act for completing reassessment.

Analysis:

Issue 1: Validity of Notice under Section 148:
- The petitioner sought to quash a notice dated 29.03.2017 issued under Section 148 of the Act to the deceased assessee for the assessment year 2010-11.
- The petitioner argued that the Act does not provide for reassessment of a deceased person and that the reassessment notice was not based on valid reasons.
- The court referred to Section 159 of the Act, which makes the legal representative liable for the deceased's tax obligations.
- Citing the case of Vipin Walia Vs. ITO, the court held that proceedings against a deceased assessee must be initiated against the legal representative.
- The court concluded that the reassessment notice to a deceased individual was invalid, and the revenue's argument of curability under Section 292BB was untenable.

Issue 2: Legality of Reassessment Proceedings:
- The court emphasized that the revenue's attempt to impose tax liability on a deceased individual without pending or previously instituted proceedings was not supported by the Act.
- Referring to a Supreme Court judgment, the court held that the absence of provisions in the Act to impose revenue liability on a deceased individual rendered the revenue's effort to burden the legal representative fatal.

Issue 3: Requirement of Notice under Section 143(2):
- The court noted that the completion of reassessment without issuing a notice under Section 143(2) rendered the reassessment void.
- Citing the case of Asstt. CIT v. Hotel Blue Moon, the court established that the absence of a notice under Section 143(2) invalidated the reassessment.

Conclusion:
- The court quashed the impugned reassessment notice and all consequent proceedings, including the reassessment order, based on the above conclusions.
- The writ petition was allowed without any order on costs.

This detailed analysis of the judgment highlights the key legal issues involved and the court's reasoning behind quashing the reassessment notice and subsequent proceedings.

---