Invalid reassessment notice to deceased person's legal heirs; timely service crucial for jurisdiction

The Tribunal held that the reassessment notice issued to a deceased person was invalid as it was not served on the legal heirs within the prescribed period. The Tribunal emphasized the importance of serving notices to the correct person for jurisdictional requirements under Section 147/148 of the Income-tax Act, 1961. The Tribunal found the proceedings against the legal heir to be barred by limitation and highlighted that Section 292B does not rectify the illegality of issuing notices to a deceased person. Consequently, the Tribunal allowed the appeals, quashing the lower tax authorities' orders.

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Issues Involved:
1. Validity of reassessment notice issued to a deceased person.
2. Service of notice to legal heirs and jurisdiction under Section 147/148 of the Income-tax Act, 1961.
3. Applicability of Section 159 and Section 292B of the Income-tax Act, 1961.

Summary:

1. Validity of Reassessment Notice Issued to a Deceased Person:
The primary issue raised by the assessee was that the reassessment notice under Section 147/148 of the Income-tax Act, 1961 was issued to the deceased Charan Singh and not to his legal heirs within the prescribed period. The Tribunal noted that the Assessing Officer (AO) had issued notices on 22.3.2017 and 30.3.2017, after the death of Charan Singh on 2.12.2011. These notices were later served upon the legal heir, Satyaveer Singh, on 8.11.2017. The Tribunal found this procedure erroneous and held that the AO should have ensured that reassessment proceedings could be initiated against the correct person from the outset. The Tribunal relied on the judgment of the Hon'ble Delhi High Court in Savita Kapila L/H of Late Shri Mohinder Paul Kapila Vs. ACIT (2020) 426 ITR 502 (Del.), which held that a notice issued to a deceased person is null and void.

2. Service of Notice to Legal Heirs and Jurisdiction Under Section 147/148:
The Tribunal observed that the AO had failed to serve the notice to the legal heirs within the period prescribed by law, which is a jurisdictional requirement under Section 148. The Tribunal emphasized that the issuance of a notice under Section 148 to the correct person is a condition precedent for acquiring jurisdiction to reopen an assessment. The Tribunal highlighted that the legal representative, Satyaveer Singh, had not been served any notice during the period of limitation, making the proceedings against him barred by limitation as per Section 149(1)(b) of the Act.

3. Applicability of Section 159 and Section 292B:
The Tribunal addressed the applicability of Section 159, which pertains to the liability of the legal representative to pay any sum the deceased would have been liable to pay. The Tribunal clarified that Section 159 applies only if proceedings were initiated or pending against the deceased when alive, which was not the case here. The Tribunal also discussed Section 292B, which deals with mistakes, defects, or omissions in notices, and concluded that it does not apply to notices issued to a deceased person. The Tribunal cited multiple judgments, including Rajender Kumar Sehgal and Alamelu Veerappan, to support its conclusion that Section 292B cannot rectify the fundamental illegality of issuing a notice to a deceased person.

Conclusion:
The Tribunal held that the AO had exercised jurisdiction in an erroneous manner by issuing notices to a deceased person and subsequently serving them on the legal heir without proper adherence to the legal requirements. The Tribunal allowed the appeals of the assessee, quashing the impugned orders of the lower tax authorities. The judgment underscores the importance of issuing reassessment notices to the correct person and within the prescribed period to maintain the validity of the proceedings.

Order pronounced in open court on 21.06.2023.

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