2024 (1) TMI 1343 - HC - Income Tax

Reopening of assessment u/s 147 - notices were issued against the dead person - HELD THAT - The issue with regard to issuance of notice for reassessment under Section 148 of the Act is no more res integra in view of the decision of this Court in the case of Bhupendra Bhikhalal Desai 2021 (3) TMI 892 - GUJARAT HIGH COURT wherein the notice issued under Section 153C of the Act against a dead person is held to be defective and consequently quashed and set aside. 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 notices issued to deceased persons.
3. The procedural requirements under Section 159 of the Income Tax Act concerning legal representatives.
4. Availability of alternative remedies and the jurisdiction of the court to entertain the petition.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income Tax Act to a Deceased Person:

The primary issue in this case was the validity of the notice issued under Section 148 of the Income Tax Act, 1961, for reopening the assessment in the name of a deceased person, Smt. Hiraben Premchandbhai Patel. The petitioner, acting as the legal representative of the deceased, contended that the notice was invalid as it was issued after the death of Smt. Hiraben Premchandbhai Patel. The court referred to several precedents, including Bhupendra Bhikhalal Desai vs. ITO and Alamelu Veerappan vs. The Income Tax Officer, which established that a notice issued in the name of a deceased person is not valid and cannot confer jurisdiction upon the Assessing Officer. The court concluded that the notice was invalid and thus, the proceedings initiated under it were without authority of law.

2. Applicability of Section 292B of the Income Tax Act:

The respondent-Assessing Officer argued that the defect in the notice could be cured under Section 292B of the Act, which allows for procedural defects to be overlooked if the notice is in substance and effect in conformity with the Act. However, the court held that the issuance of a notice to a dead person is not a mere procedural defect but a jurisdictional error. The court emphasized that Section 292B cannot be invoked to validate a notice that is fundamentally defective and void ab initio, as it affects the jurisdiction of the Assessing Officer.

3. Procedural Requirements Under Section 159 of the Income Tax Act:

Section 159 of the Act deals with the assessment of the income of deceased persons through their legal representatives. The court noted that for proceedings to be valid under this section, they must be initiated against the legal representative of the deceased. In this case, the proceedings were initiated in the name of the deceased, and the legal representative had not waived their right to a valid notice. Therefore, the court held that the proceedings could not be continued based on an invalid notice issued to a deceased person.

4. Availability of Alternative Remedies and Jurisdiction of the Court:

The respondent argued that the petitioner had an alternative remedy available under the law by appealing to the CIT (Appeals) and the Appellate Tribunal. However, the court decided to entertain the petition, citing the fundamental jurisdictional defect in the notice issued under Section 148. The court emphasized that when a notice is issued to a deceased person, it is not a mere procedural lapse but a substantive defect that goes to the root of the matter, thus warranting intervention by the court.

Conclusion:

The court quashed the impugned notices dated 31.03.2021 issued under Section 148 of the Income Tax Act, as they were issued in the name of a deceased person, rendering them invalid and without jurisdiction. The court's decision reinforced the legal principle that notices issued to deceased individuals are unenforceable, and defects of such nature cannot be cured under Section 292B of the Act. The petitions were allowed, and the proceedings initiated under the invalid notices were set aside.