Delhi HC quashes reassessment notices under Section 148 issued to deceased assessee for salary income lacking jurisdiction

The Delhi HC quashed reassessment notices issued under Section 148 to a deceased assessee regarding salary income. The court held that notices issued in the name of a dead person lack jurisdiction and cannot initiate proceedings under Section 148. Following precedent from Savita Kapila case, proper notice to the correct person is essential for acquiring jurisdiction. Additionally, since tax was already deducted at source from the salary income as evidenced by Form-16, and the employer is responsible for TDS payments under Sections 204 and 205, reassessment action for tax demand cannot be initiated against the deceased assessee or legal representatives. The impugned notices and orders dated 21.03.2024 were set aside and the appeal was allowed.

---

---

Issues:
Validity of notice under Section 148 of the Income Tax Act issued to a deceased assessee, Bar of limitation under Section 149(1)(b) of the Act, Applicability of Section 159 of the Act to legal representatives, Jurisdictional requirement for initiating action under Section 148, Reassessment based on TDS information, Responsibility of employer for TDS payments, Consequences of tax deduction at source on reassessment.

Analysis:

The judgment concerns a Writ Petition challenging a notice under Section 148-A(b) of the Income Tax Act, 1961, issued to the legal heir of a deceased assessee for the Assessment Year 2020-21. The deceased assessee's return of income could not be filed, leading to the notice for reassessment. The petitioner contended that the salary income of the deceased had already been subjected to TDS, rendering no income chargeable to tax. Despite this, the Revenue proceeded with the reassessment, prompting the petitioner to challenge the validity of the notices.

The Court referred to precedents, including the case of Savita Kapila v. Assistant Commissioner of Income Tax, emphasizing the importance of issuing notices in the name of the correct person and not a deceased individual for jurisdictional validity under Section 148. It highlighted that a notice against a dead person is invalid, affecting the Assessing Officer's jurisdiction for assessment or reassessment. The judgment also noted the bar of limitation under Section 149(1)(b) and the inapplicability of Section 159 of the Act in cases where legal representatives do not step into the deceased assessee's shoes.

Furthermore, the Court addressed the reassessment based on TDS information, emphasizing the employer's responsibility for TDS payments and the consequences of tax deduction at source on reassessment. It noted that since tax had already been deducted and deposited for the deceased's salary income, reassessment leading to tax demand against the assessee or legal representatives was unwarranted. Citing a previous case, the Court concluded that the impugned notices were unsustainable and set them aside, allowing the petition in favor of the petitioner.

---