2010 (12) TMI 623 - AT - Income Tax

Notice u/s 148 - Date of issue versus date of service - date of filing of return 29.10.1998 - date of expiry of notice u/s 148 31.3.2005 - AO issued notice as on 21.3.2005 to assessee - assessee was died as on 17.11.2002 - AO served notice u/s 148 to daughter-in-law of deceased on 30.5.2005 - whether notice served as on 30.5.2005 is valid - Held that - (i) The assessment order passed, in view of the issue of notice on the dead person, is void and the CIT(Appeals), in my opinion, was correct in law and in facts holding the assessment order as void. - (ii) The CIT(A) was not correct in law in concluding that the notice u/s. 148 has not been served on proper person, as section 149 only requires the issuance of the notice within the limitation period and notice can be served on the proper persons subsequently. - In other words notice could be validly served beyond the time-limit prescribed under section 149 of the Income-tax Act. - Decided in favor of revenue.

Issues Involved:
1. Validity of the assessment order declared void by CIT(A).
2. Validity of the notice issued under section 148 to a deceased person.
3. Validity of service of notice under section 148 beyond the period of limitation.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Order Declared Void by CIT(A):
The primary issue was whether the CIT(A) erred in declaring the assessment order void and a nullity. The assessment order was challenged on the grounds that the notice under section 148 was issued to a deceased person, Shri Sikandar Lal Jain, who had died on 17.11.2002. The Assessing Officer (AO) initiated proceedings under section 147 and issued the notice under section 148 in the name of the deceased on 21.03.2005, which was served on the deceased's daughter-in-law, Smt. Vandana Jain, on 30.05.2005. The CIT(A) quashed the assessments, holding that the proceedings initiated under section 147 were void as the notice was issued to a deceased person. The Third Member concurred with the Judicial Member, holding that the issuance of notice to a deceased person is invalid, rendering the reassessment proceedings void.

2. Validity of the Notice Issued Under Section 148 to a Deceased Person:
The notice under section 148 was issued to Shri Sikandar Lal Jain, a deceased person. The Third Member examined whether such a notice could be deemed valid. It was determined that a notice issued to a deceased person cannot be considered valid as the deceased cannot be regarded as an individual under the definition of 'assessee' per section 2(7) of the Income-tax Act. The legal heirs are deemed to be the assessee under section 159, and the notice must be issued to them. The Third Member cited several cases, including Shaikh Abdul Kadar v. ITO and CIT v. Suresh Chandra Jaiswal, to support the view that a notice issued to a deceased person is invalid and cannot confer jurisdiction for reassessment.

3. Validity of Service of Notice Under Section 148 Beyond the Period of Limitation:
The issue was whether the service of notice under section 148 beyond the period of limitation prescribed under section 149 invalidates the proceedings. The Third Member agreed with the Accountant Member that the issuance of the notice within the limitation period is essential, but its service can be validly done beyond the limitation period. The Supreme Court's decision in R.K. Upadhyaya v. Shanabhai P. Patel was cited, which held that once a notice is issued within the prescribed period of limitation, jurisdiction becomes vested in the AO to proceed to reassess, and the service of the notice can occur subsequently.

Conclusion:
Based on the majority opinion, the appeals of the revenue were dismissed. The assessment order was declared void due to the invalidity of the notice issued to a deceased person. However, it was held that the service of notice beyond the period of limitation does not invalidate the proceedings.

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