2019 (7) TMI 604 - HC - Income Tax

Reopening of assessment u/s 147 - notice against dead person - curable defect u/s 292B - HELD THAT - Issue raised are covered by the decision of this Court in the case of Chandreshbhai Jayantibhai Patel vs. ITO 2019 (1) TMI 353 - GUJARAT HIGH COURT . It was held that in view of the provisions of section 159(2)(b) it is permissible for the AO to issue a fresh notice under section 148 of the Act against the legal representative, provided that the same is not barred by limitation; he, however, cannot continue the proceedings on the basis of an invalid notice issued under section 148 of the Act to the dead assessee. Further held that the notice u/s 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 and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of section 292B would not be attracted and hence, the notice under section 148 has to be treated as invalid. In the absence of a valid notice, AO has no authority to assume the jurisdiction under section 147 of the Act and, hence, continuation of the proceeding u/s 147 pursuant to such invalid notice, is without authority of law. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 to a deceased person.
2. Applicability of Section 292B of the Income Tax Act, 1961 to cure defects in the notice.
3. Legal representative's role and obligations under Section 159 of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of Notice Issued to a Deceased Person:
The primary issue was whether a notice issued under Section 148 of the Income Tax Act, 1961 to a deceased person could be considered valid. The petitioner, being the legal heir of the deceased, argued that the notice issued to a dead person is invalid. The court noted that the notice dated 30.03.2019 was issued to Smt. Nanduben Ratilal Patel, who had passed away on 15.03.2018. The court referenced its earlier decision in Chandreshbhai Jayantibhai Patel vs. Income-tax Officer, which clarified that a notice issued to a deceased person is invalid unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection.

2. Applicability of Section 292B of the Income Tax Act:
The Revenue argued that under Section 292B of the Act, a notice would not become invalid merely due to some mistake or defect. They contended that the notice issued to a deceased person could be considered valid under this section. However, the court emphasized that Section 292B does not apply to jurisdictional notices like those under Section 148. The court stated, "A notice issued under section 148 of the Act against a dead person is invalid, unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection." Since the legal representative did not waive his right to a notice under Section 148, the notice could not be deemed valid under Section 292B.

3. Legal Representative's Role and Obligations:
The court examined Sections 159(2)(b) and 159(3) of the Income Tax Act, which state that legal representatives of the deceased are deemed to be assessees and are responsible for the deceased's tax obligations. However, the court clarified that for initiating proceedings under Section 147, a valid notice under Section 148 must be issued to the legal representative. In this case, the notice was issued to the deceased, and the legal representative immediately objected and did not submit to the jurisdiction by filing a return of income. The court held, "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."

Conclusion:
The court concluded that the notice issued under Section 148 to a deceased person was invalid, and the proceedings initiated based on such notice were without authority of law. The impugned notice dated 30.03.2019 and all proceedings pursuant thereto were quashed and set aside. The writ application was allowed, and the rule was made absolute with no order as to costs.