2019 (4) TMI 1172 - HC - Income Tax

Invalid Notice to Deceased: Court Quashes Income Tax Notice, Protects Legal Rep

The court allowed the petition, quashing the notice issued under section 148 of the Income Tax Act, 1961, to a deceased person. It held that a notice ... Validity of notice under section 148 - Jurisdictional notice - Section 159(2)(b) - proceedings against legal representative - Section 292B - correction of mistake or defect in notice - Notice addressed to deceased assessee - invalidity unless legal representative waives jurisdictionValidity of notice under section 148 - Jurisdictional notice - Section 159(2)(b) - proceedings against legal representative - Section 292B - correction of mistake or defect in notice - Notice addressed to deceased assessee - invalidity unless legal representative waives jurisdiction - Impugned notice dated 29.03.2018 under section 148 issued in the name of the deceased assessee is invalid and proceedings pursuant thereto cannot be sustained. - HELD THAT: - The court found on the record that the Department had notice of the assessee's death and had previously addressed notices and proceedings to the petitioner as legal heir. A notice under section 148 is a jurisdictional prerequisite to exercise power under section 147 and therefore must be validly addressed to the assessee entitled to receive it. Section 159(2)(b) permits proceedings that could have been taken against the deceased to be taken against the legal representative, but that requires issuance of the requisite notice to the legal representative. A notice issued to a dead person does not confer jurisdiction unless the legal representative, by filing a return or otherwise participating, waives the requirement of a proper notice. Where the legal representative immediately objected to the notice and did not submit to the jurisdiction by filing a return, there was no waiver. Consequently section 292B, which saves proceedings from mere mistakes or defects, is inapplicable because the defect went to jurisdiction: issuance of the jurisdictional notice to a deceased person without notice to the legal representative. Having regard to these legal principles and the factual finding that the petitioner had not waived her right to a valid notice, the notice dated 29.03.2018 and all proceedings pursuant thereto are without authority of law and must be quashed. [Paras 11, 12, 13, 14, 16]The notice dated 29.03.2018 under section 148 issued to the deceased assessee and all proceedings pursuant thereto are quashed and set aside.Final Conclusion: The petition is allowed; the section 148 notice dated 29.03.2018 issued to the deceased assessee and consequent proceedings are quashed for want of jurisdiction, with no order as to costs. Issues Involved:1. Validity of the notice issued under section 148 of the Income Tax Act, 1961, to a deceased person.2. Whether the reassessment proceedings initiated against the deceased person can be continued against the legal representative.3. Applicability of section 292B of the Income Tax Act, 1961, to cure the defect in the notice issued to a deceased person.Detailed Analysis:1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961, to a Deceased Person:The petitioner challenged the notice dated 29.03.2018 issued under section 148 of the Income Tax Act, 1961, on the ground that it was issued in the name of a deceased person, Shri Brijeshkumar Parsottambhai Ukani, and hence, was invalid. The court noted that the assessee had passed away on 23.01.2011, and the Department was aware of this fact, as evidenced by previous proceedings where notices were issued to the petitioner as the legal heir. Despite this knowledge, the notice for the assessment year 2011-12 was issued to the deceased person. The court held that a notice under section 148 issued to a dead person is invalid and lacks jurisdiction, as it is a jurisdictional notice necessary for the Assessing Officer to assume jurisdiction under section 147 of the Act.2. Whether the Reassessment Proceedings Initiated Against the Deceased Person Can Be Continued Against the Legal Representative:The court examined the provisions of section 159 of the Income Tax Act, 1961, which deals with legal representatives. It was noted that subsection (2)(b) of section 159 allows proceedings to be taken against the legal representative, which could have been taken against the deceased if he had survived. However, in this case, the proceedings were initiated against the deceased person, not the legal representative. The court referred to its decision in Chandreshbhai Jayantibhai Patel v. Income Tax Officer, where it was held that proceedings pursuant to a notice issued to a dead person cannot be continued against the legal representative. The court emphasized that the legal representative had not waived the requirement of notice under section 148 and had objected to the validity of the notice from the beginning.3. Applicability of Section 292B of the Income Tax Act, 1961, to Cure the Defect in the Notice Issued to a Deceased Person:The respondent argued that the defect in the notice could be cured under section 292B of the Act, which provides that no notice shall be invalid merely by reason of any mistake, defect, or omission if it is in substance and effect in conformity with the intent and purpose of the Act. The court, however, distinguished the present case from those where legal representatives had participated in the proceedings. It held that a notice under section 148 issued to a dead person is not in conformity with the intent and purpose of the Act, as it affects the jurisdiction of the Assessing Officer. The court concluded that section 292B would not apply to cure the defect in such a notice.Conclusion:The court allowed the petition, quashing the impugned notice dated 29.03.2018 issued under section 148 of the Act and all proceedings taken pursuant thereto. The notice was deemed invalid as it was issued to a deceased person, and the reassessment proceedings could not be continued against the legal representative based on such an invalid notice. The provisions of section 292B were held inapplicable in this context.