2024 (9) TMI 1569 - HC - Income Tax

Order Against Deceased Set Aside for Violating Natural Justice; Legal Heirs Must Be Involved & Notified Properly.

Sitaram Raikwar (Since Deceased) Through LRS Smt. Kusumlata Raikwar Versus National Faceless Appeal Center (NFAC) And Others

Sitaram Raikwar (Since Deceased) Through LRS Smt. Kusumlata Raikwar Versus National Faceless Appeal Center (NFAC) And Others - 2024:MPHC - JBP:45420 Issues:1. Challenge to order under Section 250 of the Income Tax Act, 1961 passed against a deceased person.2. Legal heirs' liability to discharge deceased assessee's liabilities.3. Violation of principles of natural justice in not hearing legal heirs.4. Validity of notices served on a deceased assessee.5. Applicability of alternative statutory remedy in challenging orders.Detailed Analysis:The High Court of Madhya Pradesh heard a petition filed by the legal heirs of a deceased individual challenging an order passed under Section 250 of the Income Tax Act, 1961 by the National Faceless Appeal Centre (NFAC). The dispute pertained to the assessment year 2018-19, with the petition contending that the order was unsustainable as it was directed against a deceased person, supported by the submission of the death certificate. The respondents did not dispute this fact but argued that under Section 159 of the Act, legal heirs are obligated to discharge the deceased assessee's liabilities. However, the court emphasized that under the principle of natural justice, legal heirs must be heard if they are to discharge the liabilities. Notably, there was no evidence to show that notices were served on the appellant or returned unserved with a mention of the assessee's demise, indicating a failure to involve the legal heirs in the proceedings.The court referred to a judgment by the High Court of Delhi in the case of Savita Kapila vs. Assistant Commissioner of Income Tax, highlighting that an alternative statutory remedy does not bar a writ petition in cases involving a violation of natural justice. Additionally, a judgment by the Gujarat High Court emphasized the importance of a valid notice under Section 148 of the Act for jurisdictional purposes, stating that a notice issued against a deceased assessee is invalid unless the legal representative submits to the jurisdiction without objection. Therefore, the court set aside the impugned order and remanded the matter back to the NFAC with directions to decide the appeal afresh, emphasizing the necessity for the petitioner to appear before the NFAC.In conclusion, the court disposed of the petition in favor of the legal heirs, stressing the importance of adhering to principles of natural justice and ensuring proper involvement of legal representatives in cases involving deceased assessees to maintain the validity and fairness of the proceedings.