2021 (9) TMI 1233 - HC - Income Tax

Validity of Reopening of assessment u/s 147 - notice as admittedly issued only in the name of the deceased person and not in the name of the legal representatives - HELD THAT - In Savita Kapila 2020 (7) TMI 441 - DELHI HIGH COURT this Court has held that the sine qua non for acquiring jurisdiction to reopen an assessment is that notice under Section 148 of the Act should be issued to a correct person and not to a dead person. This Court further held that Section 159 of the Act applies to a situation where the proceedings are initiated/pending against the assessee when he is alive. Section 159(3) of the Act can come to the aid of the respondent only if the notice is issued in the name of the legal representative of the deceased as an assessee. In the present case, notice is admittedly issued only in the name of the deceased person and not in the name of the legal representatives and therefore, no reliance can be placed by the respondent on Section 159(3) of the Act. Accordingly, the impugned notice dated 30.03.2019 is quashed and set aside. All proceedings consequent to the impugned notice are also set aside.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 issued in the name of a deceased person.

Analysis:
The petitioner filed a petition challenging a notice dated 30.03.2019 issued under Section 148 of the Income Tax Act, 1961 in the name of the deceased husband of the petitioner. The petitioner contended that since the husband had passed away on 26.07.2014, the notice issued in his name was invalid. The petitioner supported her claim by presenting the death certificate of her deceased husband.

The respondent, however, argued that as per sub-Section 3 of Section 159 of the Act, a legal representative of the deceased assessee is deemed to be an assessee for the purposes of the Act. Therefore, the respondent claimed that the notice was valid and could proceed against the legal heirs of the deceased.

The Court examined the arguments presented by both parties and referred to a previous judgment in Savita Kapila vs. Assistant Commissioner of Income Tax. The Court held that for jurisdiction to reopen an assessment, the notice under Section 148 must be issued to the correct person and not to a deceased individual. The Court clarified that Section 159 of the Act applies when proceedings are initiated against the assessee while alive.

It was noted that in the current case, the notice was issued only in the name of the deceased person and not in the name of the legal representatives. Therefore, the Court concluded that the respondent could not rely on Section 159(3) of the Act. Consequently, the Court quashed and set aside the impugned notice dated 30.03.2019, along with all proceedings following the notice.

In the final decision, the petition was allowed, and no costs were imposed. The Court ordered the immediate uploading of the order on the website and also directed the forwarding of a copy of the order to the respective counsel via email.