2019 (9) TMI 356 - HC - Income Tax

Reopening of assessment u/s 147 - notice issued in the name of a dead person - curable defect u/s 292B - Notice deemed to be served on legal representative or not - HELD THAT - The case on hand is not falling under clause (a) of subsection (2) of Section 159 of the Act, and in such circumstances, the proceedings pursuant to the notice under Section 148 of the Act issued to a dead person cannot be continued against the legal representatives. We are not impressed by the submissions canvassed on behalf of the Revenue that the writ-applicant having participated in the proceedings cannot turn around and submit that the proceedings cannot continue as the notice was issued to a dead person. The purport of Section 292B of the Act is that in the event of any mistake, defect or omission in the notice or other proceedings, if the same is in conformity with or according to the intent and purpose of the Act, the notice cannot be termed as invalid. the notice should be in conformity with and in accordance with the intent and purpose of the Act. In our opinion, a case in which notice is issued to a dead person could be termed as nullity. It is something like a safeguard passing a decree against a dead person which cannot be executed through the legal representatives of the judgment-debtor. We also take notice of the fact that in Sri Durga Enterprises 2014 (2) TMI 1297 - KARNATAKA HIGH COURT the assessee had not only responded to the notice under Section 148 of the Act within one month but, on the basis of the return filed earlier, participated in the proceedings till the matter reached the FAA and was disposed of. None of the three decisions on which reliance has been placed on behalf of the Revenue would make any difference - the proceedings are not tenable in law. - Decided in favour of assessee

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act to a deceased person.
2. Applicability of Section 292B of the Income Tax Act to cure defects in the notice.
3. Participation of legal representatives in the proceedings initiated against a deceased person.

Summary:

1. Validity of the Notice Issued Under Section 148 to a Deceased Person:
The primary issue was whether a notice issued under Section 148 of the Income Tax Act to a deceased person is valid. The petitioner argued that the notice issued to the deceased was invalid and without jurisdiction. The court noted that the notice dated 28th March 2018 was issued to the deceased, and despite being informed of the death, the respondent continued the proceedings without issuing a fresh notice to the legal representatives. The court referred to the precedent set in Chandreshbhai Jayantibhai Patel v. Income Tax Officer, which held that a notice issued to a dead person is invalid unless the legal representative submits to the jurisdiction without raising any objection. The court concluded that the notice issued to the deceased was invalid and could not be continued against the legal representatives.

2. Applicability of Section 292B to Cure Defects in the Notice:
The respondent argued that the defect in the notice could be cured under Section 292B of the Income Tax 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, held that Section 292B does not apply to a jurisdictional notice like one issued under Section 148. The court emphasized that a notice issued to a dead person cannot be considered in conformity with the intent and purpose of the Act and thus cannot be cured under Section 292B. The court cited the decision in Rasid Lala v. Income Tax Officer, which supported this view.

3. Participation of Legal Representatives in the Proceedings:
The respondent contended that the legal representative had participated in the proceedings, thereby curing the defect in the notice. The court examined the facts and found that the legal representative had merely informed the Assessing Officer about the death of the assessee and had not filed any return or participated in the proceedings. The court distinguished this case from others where legal representatives had filed returns and actively participated in the proceedings. The court concluded that merely informing the Assessing Officer of the death does not amount to participation in the proceedings.

Conclusion:
The court held that the notice issued under Section 148 to a deceased person was invalid and could not be continued against the legal representatives. The defect in the notice could not be cured under Section 292B, and the legal representative's mere intimation of the death did not constitute participation in the proceedings. Consequently, the court quashed the impugned notice and all consequential proceedings.