2022 (9) TMI 777 - HC - Income Tax

Validity of re-opening of assessment u/s 147 - re-assessment notice issued to the original assessee who had expired long back - assessee has been addressed through her legal representative - Plea of the respondent authorities that they were not intimated regarding the death of the assessee - HELD THAT - A perusal of the orders passed in the earlier round of proceedings u/s 143(3) of the Income Tax Act for the assessment year 2015-16 would clearly indicate that the Dy. Commissioner of Income Tax, Circle-2, Udaipur had been intimated regarding the death of the assessee. The assessment order dated 21.12.2017 (Annexure-P/5) was passed taking into account the fact that the assessee had expired. Thus, the plea of the respondent authorities that they were not intimated regarding the death of the assessee Smt. Shobha Mehta, is factually incorrect. It is not in dispute that the notice of re-assessment under Section 148 of the Income Tax Act was issued to the assessee Smt. Shobha Mehta who had expired about 6 years back. No notice whatsoever was issued to the legal representative/s of the assessee before undertaking the reassessment proceedings. Thus, the impugned re-assessment and the assessment order having been passed against the dead assessee, is invalid and the same cannot be sustained in the eyes of law. Hence, the impugned re-assessment notice issued by the respondent under Section 148 are herewith declared invalid and are struck down. - Decided in favour of assessee.

Summary

Issues:
Challenging reassessment notice and assessment order under the Income Tax Act due to the death of the original assessee, lack of notice to legal heir, violation of natural justice, and statutory mandate.

Analysis:
The writ petition was filed to challenge the reassessment notice and assessment order issued under the Income Tax Act by the respondent ACIT. The petitioner contended that the proceedings were invalid as the re-assessment notice was issued to the deceased original assessee, and no prior notice of reopening the assessment proceedings was given to the legal heir. The petitioner argued that the respondent's claim of not being aware of the death of the assessee was incorrect, citing previous communication to the Income Tax Authorities regarding the demise of the assessee. The petitioner relied on relevant case laws to support the argument that the notice issued to a deceased person is invalid as the affected party must be involved in the proceedings.

The respondent opposed the petitioner's submissions, claiming that the Income Tax authorities were unaware of the death of the assessee. However, it was acknowledged that the notice was received by the deceased's husband, who informed the authorities about the death. The respondent argued that there was no violation of natural justice or statutory mandate in the proceedings, urging the dismissal of the writ petition.

Upon careful consideration of the submissions and reviewing the record, the Court found that the Income Tax Authorities were indeed informed about the death of the assessee in previous proceedings. It was established that the notice of reassessment was issued to a deceased person without any notice to the legal representatives, rendering the reassessment and assessment order invalid in the eyes of the law. Consequently, the Court declared the reassessment notice and assessment order as invalid and struck them down, allowing the writ petition in favor of the petitioner.

In conclusion, the Court's decision highlighted the importance of providing notice to legal representatives in cases involving deceased taxpayers to ensure procedural fairness and compliance with statutory requirements. The judgment emphasized the need for authorities to act in accordance with the law and respect the rights of legal heirs in such matters to uphold the principles of natural justice.