Reopening assessment without Section 148 notice to legal heir is invalid; reassessment quashed for lack of jurisdiction

The ITAT Delhi held that reopening assessment proceedings against a deceased assessee without issuing a valid notice under Section 148 to the legal heir is invalid. Although a notice under Section 159 was issued to the legal heir, no Section 148 notice was served, which is a mandatory prerequisite for reassessment. The tribunal relied on precedent establishing that jurisdiction to reopen assessments requires proper notice to a living person, i.e., the legal heir. Consequently, the reassessment proceedings and additions made were quashed for lack of jurisdiction. The assessee's appeal was allowed.

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ISSUES:

Whether a notice under Section 148 of the Income Tax Act, 1961 issued in the name of a deceased assessee is valid for initiating reassessment proceedings.Whether the legal heir of a deceased assessee must be issued a fresh notice under Section 148 before reassessment proceedings can be validly continued.Whether the participation of the legal heir in the reassessment proceedings cures the defect of non-issuance of notice under Section 148 in the name of the legal heir.Whether the legal heir has a statutory obligation to inform the Income Tax Department about the death of the original assessee.

RULINGS / HOLDINGS:

The notice under Section 148 issued in the name of the deceased assessee is not enforceable in law and cannot sustain the reassessment proceedings.The mandatory requirement of service of notice under Section 148 on the legal heir of the deceased assessee is foundational to acquire jurisdiction for reassessment; absence of such notice vitiates the proceedings.The participation of the legal heir in the proceedings does not cure the defect arising from non-issuance of notice under Section 148 to the legal heir, as held by the Madras High Court in Alamelu Veerappan Vs. ITO.The legal heir is under no statutory obligation to intimate the death of the original assessee to the Income Tax Department.

RATIONALE:

The Court applied the statutory provisions of Section 148 of the Income Tax Act, 1961, which requires issuance of a notice to the "assessee" before initiating reassessment proceedings. Since the original assessee was deceased, the legal heir becomes the "assessee" for the purpose of reassessment.Precedents from the Madras High Court and Bombay High Court were relied upon to emphasize that jurisdiction cannot be assumed without valid notice to the legal heir, and that participation of the legal heir does not cure jurisdictional defects.The Court distinguished the Madhya Pradesh High Court decision which suggested that participation cures defects, holding that non-issuance of notice to the legal heir remains a fundamental jurisdictional flaw.The Court recognized that the legal heir is not obliged to notify the revenue of the death, placing the onus on the revenue to issue notice to the correct person to validly assume jurisdiction.Consequently, the reassessment proceedings initiated on the basis of notice issued to the deceased without fresh notice to the legal heir were held to be vitiated and liable to be quashed.

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