2019 (1) TMI 353 - HC - Income Tax

Reopening of assessment - notice issued to the assessee long after he had passed away - heir of the deceased informed the Assessing Officer that the assessee has passed away and, therefore, the notice under section 148 of the Act is invalid - whether the notice under section 148 of the Act issued against the deceased assessee can be said to be in conformity with or according to the intent and purposes of the Act? - curable defect for the Revenue to invoke Section 292B Held that - The notice under section 148 which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has not complied with the same. The legal representative not having waived the requirement of notice under section 148 of the Act and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of section 292B of the Act would not be attracted and hence, the notice under section 148 of the Act has to be treated as invalid. In the absence of a valid notice, the AO has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding under section 147 of the Act pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained. - Decided against revenue

Issues Involved:
1. Validity of Notice Issued to a Deceased Person
2. Applicability of Section 159 of the Income Tax Act
3. Applicability of Section 292B of the Income Tax Act
4. Jurisdictional Authority of the Assessing Officer

Detailed Analysis:

1. Validity of Notice Issued to a Deceased Person:
The petitioner challenged the notice dated 28.03.2018 issued under section 148 of the Income Tax Act, 1961, to his deceased father. The petitioner argued that a notice issued to a dead person is invalid and void. The petitioner cited precedents, including Rasid Lala v. Income Tax Officer, where the court held that such notices are null and void. The petitioner maintained that the notice should have been issued to the legal heirs, and the proceedings initiated under section 147 of the Act cannot be valid without a valid notice under section 148.

2. Applicability of Section 159 of the Income Tax Act:
The respondent contended that under section 159(2)(b) of the Act, the legal representative of the deceased is deemed to be an assessee, and the proceedings can be continued against the legal representative. The respondent argued that the legal heir, having received the notice and participated in the proceedings, cures any defect in the notice. The court, however, noted that section 159(2)(a) applies only if the proceedings were initiated before the death of the assessee, which was not the case here. Therefore, the notice under section 148 should have been issued directly to the legal representative.

3. Applicability of Section 292B of the Income Tax Act:
The respondent argued that the defect in issuing the notice to a deceased person is curable under section 292B of the Act, which states that no notice shall be invalid merely by reason of any mistake, defect, or omission if it is in substance and effect in conformity with the intent and purpose of the Act. The court, however, differentiated this case from others where legal representatives participated in the proceedings. Here, the petitioner consistently objected to the notice and did not submit to the jurisdiction by filing a return of income, thus not waiving the requirement of a valid notice.

4. Jurisdictional Authority of the Assessing Officer:
The court emphasized that a notice under section 148 is a jurisdictional notice, and a valid notice is a condition precedent for the Assessing Officer to exercise jurisdiction under section 147 of the Act. The court held that a notice issued to a dead person is invalid unless the legal representative submits to the jurisdiction without raising any objection. Since the petitioner did not waive his right to a valid notice and objected from the inception, the provisions of section 292B were not applicable. Consequently, the notice under section 148 issued to the deceased was invalid, and the Assessing Officer had no authority to continue the proceedings.

Conclusion:
The court allowed the petition, quashing the notice dated 28.03.2018 and all proceedings pursuant thereto. The court ruled that the notice issued to a dead person is invalid and cannot confer jurisdiction on the Assessing Officer. The Assessing Officer must issue a fresh notice to the legal representative, provided it is within the limitation period. The rule was made absolute with no order as to costs.

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