2022 (11) TMI 914 - HC - Income Tax

Validity of assessment - notice u/s 143(2) was issued against the dead person - HELD THAT - The death of the Assessee was duly communicated by his legal heirs (the Petitioner herein). The ITR also duly disclosed that the same has been filed by the legal representative. In ignorance of the said facts available on the record the scrutiny proceedings have been wrongly conducted in the name of the deceased Assessee without bringing on record all his legal heirs as per the requirement of law. In the present case, the jurisdictional notice u/s 143(2) was issued against the dead person and the assessment order has also been passed against the dead person on his PAN without bringing on record all his legal representatives, therefore, the said assessment order and the subsequent notices are null and void and are liable to be set aside. Consequently, the impugned notice issued u/s 143(2) and the impugned assessment order is set aside along with all consequential proceedings and notices.

Summary

Issues involved:
Assessment order validity under Section 143(3) of the Income Tax Act, 1961, notice of demand under Section 156, penalty notice under Section 270 A, scrutiny assessment proceedings initiation notice under Section 143(2) for Assessment Year 2018-19, legal representation in case of deceased Assessee, jurisdictional error in issuing notices to deceased Assessee, legal heirs not brought on record, assessment order passed in name of deceased Assessee, validity of subsequent notices, legal precedent on notices issued to deceased Assessee, applicability of Section 159 of the Income Tax Act, 1961, legal representative's role in assessment proceedings, consequences of incorrect jurisdictional notices.

Detailed Analysis:

1. The petitioner challenged the assessment order, notice of demand, penalty notice, and scrutiny assessment initiation notice issued for Assessment Year 2018-19 under the Income Tax Act, 1961. The petitioner, son of the deceased Assessee, filed as a legal representative after the Assessee's demise. The jurisdictional notice under Section 143(2) was issued in the name of the deceased Assessee without mentioning legal heirs or PAN numbers. Subsequent notices attempted to rectify this by adding "Through Legal Heir," which was deemed impermissible.

2. The assessment order was passed in the name of the deceased Assessee for the entire Financial Year 2017-18, despite the Assessee's death on 10th March 2018. The petitioner argued that the notices and assessment order were illegal and lacked jurisdiction due to not bringing all legal heirs on record.

3. The respondent acknowledged the issue, citing a judgment that emphasized the importance of issuing notices to the correct person for assessment validity. The court referred to legal precedents highlighting that a notice issued against a deceased Assessee is invalid unless legal representatives submit to jurisdiction without objection.

4. The court analyzed the legal provisions and precedents, emphasizing that Section 159 of the Act applies when proceedings are initiated against the Assessee when alive, and legal representatives step in after death. Since this was not the case, Section 159 did not apply. The judgment highlighted that legal heirs are not obligated to inform the tax department of the Assessee's death.

5. The court concluded that the jurisdictional notice and assessment order issued against the deceased Assessee without all legal representatives on record were null and void. The impugned notice and assessment order were set aside, allowing the Revenue to take lawful steps with the petitioner's right to challenge them in accordance with the law. The writ petition was disposed of accordingly.