2025 (7) TMI 1116 - AT - Income Tax

Section 147 reopening assessment invalid when notices issued to deceased person instead of legal heirs

The ITAT Delhi held that reopening assessment proceedings under section 147 against a deceased person is invalid when notices are issued in the dead ... Reopening of assessment u/s 147 against dead person - statutory requirement imposing an obligation to legal heir to intimate the death of the assessee - HELD THAT:- In the case of Alamelu Veerappan Vs. ITO [2018 (6) TMI 760 - MADRAS HIGH COURT] as held that in the absence of statutory mandate no responsibility could be cast upon the survivor of the assessee to intimate the fact of his/her demise to the tax department. It was held that there is no statutory requirement imposing an obligation to legal heir to intimate the death of the assessee. In order to undertake the proceeding in respect of a deceased person the legal heir needs to be identified and notices are required to be served upon such legal heirs being deemed assessee, in their names and in the capacity as legal heirs of the deceased and that particular notices are required to be served within the statutory time limit prescribed, in the absence of which the proceeding particularly when the notices for assumption of jurisdiction issued u/s 148 of the Act admittedly being issued in the name of the deceased person the entire proceeding is vitiated and thus, liable to be quashed. The requirement of issuance of notice to correct person and not to a dead person is not merely a procedural requirement but a condition precedent to the impugned notice being valid in law. Thus, under the present facts and circumstances of the matter the notice u/s 148 of the Act having been issued admittedly in the name of the dead person, the entire proceeding is void-ab-initio and therefore, quashed. Appeals of the assessee are allowed. ISSUES: Whether a notice issued under Section 148 of the Income Tax Act in the name of a deceased assessee is valid and confers jurisdiction to reopen assessment proceedings.Whether the failure to serve notice on the legal heir of the deceased assessee within the prescribed time vitiates the assessment proceedings.Whether penalty proceedings under Section 271(1)(c) of the Act can be sustained when the underlying assessment proceedings are invalid due to defective notice issuance.Whether delay in filing an appeal can be condoned based on explanation of non-communication of the order to the assessee. RULINGS / HOLDINGS: The notice under Section 148 issued in the name of the deceased assessee is invalid and the entire proceeding is 'void-ab-initio' as the 'requirement of issuing of notice to a correct person and not to a dead person is not merely a procedural requirement but is a condition precedent to the impugned notice being valid in law.'Failure to serve notice on the legal heir of the deceased within the prescribed time amounts to a breach of the 'principle of natural justice' and statutory mandate, thereby vitiating the assessment proceedings.Penalty proceedings under Section 271(1)(c) cannot be sustained when the assessment proceedings themselves are quashed for invalid notice issuance.The delay in filing the quantum appeal was condoned as the explanation for delay was found to be genuine and was not objected to by the Revenue, supported by an affidavit affirmed by the legal heir. RATIONALE: The Court applied statutory provisions under Sections 147, 148, 142(1), 144, and 271(1)(c) of the Income Tax Act, emphasizing the mandatory nature of issuing valid notices to the correct person as a condition precedent for jurisdiction.Precedents relied upon include the jurisdictional High Court's decision in Savita Kapila Vs. ACIT, which held that notice must be issued to the correct person and not a deceased individual, and Alamelu Veerappan Vs. ITO, which clarified there is no statutory obligation on legal heirs to intimate the death of the assessee to the tax authorities.The Court recognized that the absence of statutory mandate to notify the department of the assessee's death places the onus on the department to identify and serve notices on legal heirs within statutory time limits.The Court found no report or explanation from the department regarding the validity of the notice issued to the deceased, reinforcing the conclusion that the proceedings were invalid.The condonation of delay was justified by the facts that the previous counsel failed to communicate the appellate order to the assessee and the explanation was supported by affidavit, reflecting adherence to principles of fairness.