2023 (7) TMI 694 - HC - Income Tax

Reopening of assessment u/s 147 - notices were issued in the name of deceased Assessee - Scope of alternative statutory remedy - HELD THAT - It is well settled law that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition in at least three contingencies, namely, where the writ petition has been filed for enforcement of the Fundamental Rights or where there has been a violation of the principles of natural justice or where the order or notice or proceedings are wholly without jurisdiction or vires of an Act is challenged. In the present case, the notice dated 31.03.2021 u/s 148 was issued to deceased assessee after the date of his death (08.07.2020) and thus inevitably the said notice could never have been served upon him. Consequently, the jurisdictional requirement u/s 148 service of notice was not fulfilled. Scope of invocation of Section 292BB - In the case on hand, the assessee was dead. It was the assessee s son, who appeared and perhaps cooperated. Therefore, the primary condition for the invocation of Section 292BB is absent in the case on hand. Thus this Court holds that the notice and all consequential proceedings in the name of the deceased assessee are null and void and consequentially the impugned notice dated 31.03.2021 u/s 148 of the Income Tax Act is quashed - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 on a deceased person.
2. Jurisdictional validity of reassessment proceedings initiated on a deceased person.
3. Applicability of Section 292BB of the Income Tax Act, 1961 in cases where notices are issued to deceased persons.

Summary:

Issue 1: Validity of Notice Issued on a Deceased Person
The petitioner challenged the notice issued under Section 148 of the Income Tax Act, 1961 on a deceased person, arguing that such a notice is wholly without jurisdiction. The court observed that the notice dated 31.03.2021 was issued after the death of the assessee on 08.07.2020, making it unenforceable in law. The court referred to precedents such as the Delhi High Court's decision in Mrs. Sripathi Subbaraya Manohara Vs. Principal Commissioner of Income Tax, which held that there is no statutory obligation on legal heirs to inform the tax department of the death of an assessee. Consequently, the notice was deemed invalid.

Issue 2: Jurisdictional Validity of Reassessment Proceedings
The court noted that the reassessment proceedings initiated under Section 147 read with Section 144 of the Income Tax Act, 1961, were also on a deceased person, rendering them null and void. The court emphasized that the jurisdictional requirement under Section 148, which mandates the service of notice, was not fulfilled. The court cited multiple judgments, including those from the Madras High Court and the Gujarat High Court, which consistently held that proceedings initiated on a deceased person are unenforceable.

Issue 3: Applicability of Section 292BB
The respondents argued that the petitioner's participation in the proceedings invoked Section 292BB, which deems notices valid if the assessee cooperates. However, the court clarified that Section 292BB applies only when the assessee is alive and has participated in the proceedings. Since the notices were issued to a deceased person, Section 292BB was inapplicable. The court referenced the Madras High Court's decision in Commissioner of Income Tax Vs. M. Hemanathan, which distinguished between procedural defects and foundational errors, affirming that notices issued to deceased persons fall under the latter category.

Conclusion:
The court concluded that the notice and all consequential proceedings in the name of the deceased assessee are null and void. The impugned notice dated 31.03.2021 under Section 148 of the Income Tax Act was quashed, and all actions in furtherance thereto were prohibited. The petition was allowed, and the rule was made absolute with no costs.