2018 (6) TMI 760 - HC - Income Tax

Reopening of assessment u/s 147 - notice issued against dead person - period of limitation - assessment against spouse after death of assessee - Held that - On being intimated about the death, the Department sent the notice to the petitioner - his spouse to participate in the proceedings. This notice was well beyond the period of limitation, as it has been issued after 31.3.2017. If we approach the problem sans complicated facts, a notice issued beyond the period of limitation i.e. 31.3.2017 is a nullity, unenforceable in law and without jurisdiction. Thus, merely because the Department was not intimated about the death of the assessee, that cannot, by itself, extend the period of limitation prescribed under the Statute. Nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration. Proceedings under Section 159 of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being otherwise, the provisions of Section 159 of the Act have no application The language employed in Section 292B of the Act is categorical and clear. The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. Undoubtedly, the issue relating to limitation is not a curable defect for the Revenue to invoke Section 292B of the Act. - Decided against revenue

Summary

Issues:
Validity of notice issued under Section 148 of the Income Tax Act in the name of a deceased person and whether the petitioner, as the deceased's wife, can be compelled to participate in the proceedings.

Analysis:

Issue 1: Validity of Notice Issued in the Name of Deceased Person
The petitioner challenged the notice issued under Section 148 of the Income Tax Act in the name of her deceased husband, arguing that it was void and unenforceable as it was issued to a dead person. The petitioner's counsel relied on legal precedents, including the decision in CIT Vs. Amarchand N.Shroff, to support the claim that income tax assessment cannot be made in the name of a deceased person. The counsel also cited cases like Shaikh Abdul Kadar Vs. ITO and Mrs. Kesar Devi Vs. CIT to emphasize that issuing a notice under Section 148 to a dead person is illegal. The court examined these arguments and held that a notice issued in the name of a dead person is unenforceable in law, emphasizing that the defect in such a notice goes to the root of jurisdiction under Section 147 of the Act.

Issue 2: Compelling Petitioner to Participate in Proceedings
The Revenue argued that the notice issued in the deceased's name was valid as the petitioner did not report the death to the department and the PAN registration was not canceled. They contended that the notice was issued within the period of limitation and subsequently continued with the petitioner as the legal heir. The court, however, rejected this argument, stating that a notice issued beyond the limitation period is a nullity and without jurisdiction. The court emphasized that the legal principle dictates that a notice issued in the name of a dead person is unenforceable in law, regardless of the department's knowledge of the death. The court referenced Section 292 of the Act and legal precedents like Vipin Walia to support the conclusion that the impugned notice was without jurisdiction and could not be enforced against the petitioner.

In conclusion, the court held that the impugned notice was wholly without jurisdiction and allowed the writ petition, quashing the proceedings. The judgment highlights the legal principle that notices issued in the name of deceased persons are unenforceable in law, emphasizing the importance of jurisdictional integrity in tax assessment proceedings.