2020 (7) TMI 441 - HC - Income Tax

Reassessment notice under s.147 on deceased assessee void ab initio; s.292BB cannot cure jurisdictional defect or oblige legal heirs

HC held that a reassessment notice issued u/s 147 in the name of a deceased assessee is void ab initio and cannot be cured under s. 292BB. The provision ... Reopening of assessment u/s 147 - notice in the name of dead person - applicability of section 292BB - notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission - duty upon the legal representatives to intimate the factum of death of an assessee to the income tax department - HELD THAT:- Purpose of issue of notice is to make the noticee aware of the nature of the proceedings. Once the nature of the proceedings is made known and understood by the assessee, he should not be allowed to take advantage of certain procedural defects. That was the purpose behind the enactment of Section 292BB. It cannot be invoked in cases where the very initiation of proceedings is against a dead person. Hence, the second contention cannot also be upheld. Even a Coordinate Bench of this Court in Rajender Kumar Sehgal [2018 (12) TMI 697 - DELHI HIGH COURT] has held “If the original assessee had lived and later participated in the proceedings, then, by reason of Section 292BB, she would have been precluded from saying that no notice was factually served upon her. When the notice was issued in her name- when she was no longer of this world, it is inconceivable that she could have participated in the reassessment proceedings, (nor is that the revenue's case) to be estopped from contending that she did not receive it. The plain language of Section 292BB, in our opinion precludes its application, contrary to the revenue's argument.” Consequently, the applicability of Section 292BB of the Act, 1961 has been held to be attracted to an assessee and not to legal representatives. - Decided in favour of assessee. Issues Involved:1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 to a deceased person.2. Jurisdiction of the Assessing Officer to initiate reassessment proceedings.3. Applicability of Section 159 of the Income Tax Act, 1961.4. Limitation under Section 149(1)(b) of the Income Tax Act, 1961.5. Applicability of Section 292B and Section 292BB of the Income Tax Act, 1961.6. Obligation of legal heirs to intimate the death of an assessee to the Income Tax Department.Detailed Analysis:1. Validity of Notice Issued Under Section 148 to a Deceased Person:The court noted that the notice dated 31st March, 2019 under Section 148 of the Income Tax Act, 1961 was issued to the deceased assessee after his death on 21st December, 2018. Consequently, the notice could never have been served upon him. The jurisdictional requirement under Section 148 of the Act, 1961 of service of notice was not fulfilled in the present instance. The court emphasized that issuance of a notice under Section 148 is the foundation for reopening an assessment and must be issued in the name of the correct person, not a deceased person. This requirement is not merely procedural but a condition precedent to the notice being valid in law.2. Jurisdiction of the Assessing Officer to Initiate Reassessment Proceedings:The court reiterated that if the Assessing Officer had no jurisdiction to initiate the assessment proceedings, the subsequent orders would not render the challenge to jurisdiction infructuous. The sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued to a correct person. Since the notice was issued to a deceased person, the jurisdictional requirement was not met, making the proceedings null and void.3. Applicability of Section 159 of the Income Tax Act, 1961:Section 159 of the Act applies to situations where proceedings are initiated or pending against an assessee when he is alive, and after his death, the legal representative steps into his shoes. Since the proceedings were not initiated or pending against the assessee when he was alive, Section 159 does not apply to the present case. The court cited precedents to support this interpretation, emphasizing that the legal representative cannot be held liable under Section 159 in such scenarios.4. Limitation Under Section 149(1)(b) of the Income Tax Act, 1961:No notice under Section 148 was issued to the petitioner within the period of limitation. The proceedings were transferred to the PAN of the petitioner on 27th December, 2019, beyond the prescribed period. Consequently, the proceedings against the petitioner are barred by limitation as per Section 149(1)(b) of the Act, 1961.5. Applicability of Section 292B and Section 292BB of the Income Tax Act, 1961:The court held that Section 292B, which addresses mistakes, defects, or omissions, does not apply to the issuance of notice to a dead person. Issuance of notice upon a dead person and non-service of notice do not come under the ambit of Section 292B. Furthermore, Section 292BB, which precludes an assessee from challenging the validity of notice if they have cooperated in the proceedings, is applicable to an assessee and not to a legal representative. The petitioner had merely uploaded the death certificate and had not cooperated in the assessment proceedings or waived the requirement of Section 148.6. Obligation of Legal Heirs to Intimate the Death of an Assessee:The court observed that there is no statutory obligation on the part of legal representatives to intimate the death of an assessee to the Income Tax Department. The absence of such a statutory provision makes it difficult to impose such a duty on legal representatives. The court cited precedents to support this view, emphasizing that whether the PAN record was updated or whether the Department was informed by the legal representatives is irrelevant.Conclusion:The court allowed the writ petition, quashing the impugned notice dated 31st March, 2019, and all consequential orders/proceedings, including orders dated 21st November, 2019, and 27th December, 2019. The court's reasoning was based on the settled legal position that notices issued to deceased persons are null and void, and the jurisdictional requirements under the Income Tax Act, 1961, were not fulfilled in this case.