2021 (7) TMI 695 - HC - Income Tax

Court invalidates tax assessment due to notice issued to deceased person, highlighting jurisdictional error. Legal heirs not obligated to inform tax department.

Mrs. Sripathi Subbaraya Manohara L/H Late Sripathi Subbaraya Gupta Versus Principal Commissioner Of Income Tax 22, N. Delhi & Anr.

The court set aside the Impugned Notices and the Assessment Order dated 14.11.2019 as the Notice under Section 148 was issued in the name of a deceased ... Validity of reopening of assessment u/s 147 - notice to dead person - HELD THAT:- In the present case the Impugned Notice under Section 148 of the Act, having been issued in the name of a dead person, is null and void, and all consequent proceedings/orders, including the Assessment Order and Notices dated 14.11.2019, being equally tainted, are liable to be set aside. Issues involved:Challenge to Notice under Section 148 of the Income Tax Act, 1961; Validity of Assessment Order dated 14.11.2019; Validity of Penalty Notices dated 14.11.2019; Maintainability of the petition due to the availability of an alternate efficacious remedy; Jurisdictional requirement under Section 148 for service of notice; Applicability of Section 159 of the Income Tax Act, 1961; Statutory obligation of legal heirs to intimate the death of the assessee; Applicability of Section 292B and Section 292BB of the Income Tax Act, 1961.Detailed Analysis:1. Challenge to Notice under Section 148 of the Income Tax Act, 1961:The petitioner challenged the Notice dated 22.03.2019 issued under Section 148 of the Act, along with the Assessment Order dated 14.11.2019 and Penalty Notices dated 14.11.2019. The petitioner contended that the notice was issued in favor of a deceased person, Late Shri Gupta, and therefore, all subsequent proceedings were invalid. The petitioner relied on a previous judgment to support this claim.2. Jurisdictional Requirement under Section 148 for Service of Notice:The respondents acknowledged the death of the assessee but raised a preliminary objection on the maintainability of the petition due to the availability of an alternate efficacious remedy. The Department re-opened the assessment under Section 147 of the Act based on information that the deceased assessee had not filed his return of income. The Assessing Officer was unaware of the demise of the assessee as it was not informed by the petitioner despite various Notices issued.3. Applicability of Section 159 of the Income Tax Act, 1961:Section 159 of the Act applies when proceedings are initiated against the assessee when alive, and the legal representative steps in after the death. Since this scenario did not apply in the present case, Section 159 was deemed inapplicable.4. Statutory Obligation of Legal Heirs to Intimate the Death of the Assessee:The Court held that there is no statutory obligation on legal heirs to inform the tax department of the death of the assessee. The absence of such a provision makes it challenging to impose a duty on legal representatives to notify the department of the death of the assessee.5. Applicability of Section 292B and Section 292BB of the Income Tax Act, 1961:The Court clarified that Section 292B, which deals with notice issued to a dead person, was inapplicable in the present case. Similarly, Section 292BB was held to be applicable to an assessee and not to legal representatives. The legal heir in this case had not cooperated in the assessment proceedings, making Section 292BB inapplicable.The judgment set aside the Impugned Notices and the Assessment Order dated 14.11.2019 as the Notice under Section 148 was issued in the name of a deceased person, rendering all subsequent proceedings null and void. The Court emphasized the importance of issuing notices to the correct person and not to a dead person as a jurisdictional requirement. The judgment highlighted the legal position regarding the obligation of legal heirs to inform the tax department of the assessee's death and the applicability of specific sections of the Income Tax Act.