2022 (4) TMI 1185 - HC - Income Tax

Invalidity of Income Tax Notice to Deceased: Legal Representative Must Submit to Jurisdiction

The court held that a notice issued under Section 148 of the Income Tax Act to a deceased person is invalid unless the legal representative submits to the ... Jurisdictional notice - invalidity of proceedings for want of a valid notice - legal representative - distinction between clause (a) and clause (b) of section 159(2) - curative effect of section 292B - waiver / submission to jurisdictionJurisdictional notice - Section 148 notice - legal representative - waiver / submission to jurisdiction - curative effect of section 292B - invalidity of proceedings for want of a valid notice - Validity and maintainability of proceedings initiated under a notice issued under Section 148 (and consequential proceedings under Section 142(1)) when the notice was addressed to a person who had died before issuance and the legal representative objected without submitting to jurisdiction. - HELD THAT: - The Court examined whether a notice under Section 148 issued to a deceased person can sustain reassessment proceedings where the deceased had died prior to issuance and the legal representative did not participate by filing a return but instead objected to the proceedings. The Court applied the statutory scheme that makes the legal representative a deemed assessee for the purposes of the Act and drew a mandatory distinction between section 159(2)(a) (proceedings already initiated before death deemed to be taken against legal representative) and section 159(2)(b) (proceedings which could have been taken if the person had survived may be taken against the legal representative). A reopening under Section 147 is triggered by a valid jurisdictional notice under Section 148; where Section 148 was issued after the death to the deceased, clause (a) is inapplicable and clause (b) requires that a fresh, valid notice be issued to the legal representative. The Court held that issuance of the Section 148 notice to the dead person is not in conformity with the intent and purpose of the Act and is therefore invalid in the absence of waiver by the legal representative. The curative provision in Section 292B cannot be invoked to cure such invalidity where the legal representative has expressly objected and has not submitted to the jurisdiction by filing a return; decisions permitting curing by waiver were distinguished on the factual basis that the legal representative there had participated or filed returns and thereby waived objections. Consequently, continuation of proceedings pursuant to the invalid notice is without jurisdiction and the Assessing Officer may issue a fresh notice to the legal representative if not barred by limitation. [Paras 15, 16, 17, 18, 19]The notices issued to the deceased and consequential proceedings are invalid; the Assessing Officer has no jurisdiction to proceed on the basis of those notices and they are quashed, leaving the department free to issue a fresh notice to the legal representative if permissible by limitation.Final Conclusion: Writ allowed; impugned notices issued to the deceased and all consequential proceedings are quashed and set aside for want of a valid jurisdictional notice, the Assessing Officer having no authority to proceed thereon. Issues Involved:1. Validity of notice issued under Section 148 of the Income Tax Act to a deceased person.2. Applicability of Section 159 and Section 292B of the Income Tax Act in the context of notices issued to deceased persons.3. Jurisdiction of the Assessing Officer in continuing proceedings based on invalid notices.Issue-wise Detailed Analysis:1. Validity of Notice Issued Under Section 148 to a Deceased Person:The primary issue was whether a notice issued under Section 148 of the Income Tax Act to a deceased person is valid. The court noted that the original assessee had expired on 22.11.2020, and the impugned notice under Section 148 was issued on 31.03.2021, addressed to the deceased assessee. The court cited the case of Chandreshbhai Jayantibhai Patel Vs. Income Tax Officer, which established that a notice issued to a deceased person is invalid unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection. Since the legal representative in this case did not waive the requirement of notice under Section 148 and did not submit to the jurisdiction, the notice was deemed invalid.2. Applicability of Section 159 and Section 292B of the Income Tax Act:The court examined the provisions of Section 159, which deals with the liability of legal representatives, and Section 292B, which addresses procedural defects in notices. It was highlighted that Section 159(2)(b) allows proceedings to be initiated against the legal representative if the deceased had survived. However, since the notice under Section 148 was issued to the deceased and not to the legal representative, it was deemed invalid. The court also noted that Section 292B could not cure this defect as the notice was not in conformity with or according to the intent and purpose of the Act. The court distinguished this case from others where legal representatives had participated in the proceedings, emphasizing that in this case, the legal representative had consistently objected to the validity of the notice.3. Jurisdiction of the Assessing Officer:The court concluded that the Assessing Officer did not have the jurisdiction to continue proceedings based on an invalid notice. The legal representative had not submitted to the jurisdiction by filing a return in response to the notice. Therefore, the proceedings initiated by the Assessing Officer against the deceased assessee were not tenable in the eye of law and were required to be quashed and set aside.Conclusion:The court allowed the writ application, quashing the impugned notices and terminating the consequential proceedings. The judgment emphasized that notices issued to deceased persons without proper issuance to legal representatives are invalid and do not confer jurisdiction upon the Assessing Officer.