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2024 (6) TMI 1428 - HC - Income TaxReopening notice against dead person - applicability of Section 159(2)(b) concerning the continuation of proceedings against the legal representative- HELD THAT - The admitted fact being that the notice is issued against a dead person and the assessee has died on 14.10.2022 the notice is invalid in law. In the event the assessee had died even before the issuance of notice u/s 148 of the Act only procedure making it permissible to initiate proceedings is the satisfaction of the test under Section 159(2)(b) of the Act. Notice against the legal representative - The present proceedings under Section 148 of the Act are as regards the assessment year 2016-17 the time limit for the proceedings under Section 148 would be in terms of Section 149(1)(b) proviso. In terms of the proviso there is a bar for issuance of notice under Section 148 in a case for a relevant assessment year before 01.04.2021 and in the present case as the assessment year 2016-17 falls within the applicability of the proviso and proceedings would have been initiated within 31.03.2023 within the outer limit of 6 years from the end of assessment year 2016-17 as against the legal representative. Accordingly at this stage while setting aside the notice under Section 148 of the Act question of granting liberty would be contrary to the mandate of time prescribed under Section 149(1)(b) proviso. No doubt it is the contention of learned counsel for the revenue that intimation if given within time the revenue would have initiated fresh proceedings against the legal representatives. Taking note of the order in the case of Alamelu Veerappan 2018 (6) TMI 760 - MADRAS HIGH COURT as well as Savitha Kapila 2020 (7) TMI 441 - DELHI HIGH COURT we find that there is no support for the contention that there is a statutory obligation on the deceased assessee to intimate the department. The observation made in the case of Savitha Kapila 2020 (7) TMI 441 - DELHI HIGH COURT requires endorsement in the present case also. Decided in favour of assessee.
ISSUES PRESENTED and CONSIDERED
The core legal issues considered in this judgment include:
ISSUE-WISE DETAILED ANALYSIS Validity of Notice Issued Against a Deceased Person Relevant Legal Framework and Precedents: The legal framework involves Section 148 of the Income Tax Act, which deals with the issuance of notice for reassessment. The petitioner argued that the notice issued against a deceased person is invalid, citing precedents such as Smt. Vanitha Gopal Shetty Vs. Assistant Commissioner of Income Tax. Court's Interpretation and Reasoning: The Court observed that the notice was issued after the death of the assessee, rendering it invalid. The Court emphasized that proceedings against a deceased person are not permissible unless continued against the legal representative under Section 159(2)(b). Key Evidence and Findings: The death certificate of the assessee was submitted as evidence, confirming the date of death as 14.10.2022, prior to the issuance of the notice on 13.03.2023. Application of Law to Facts: The Court applied Section 159(2)(b), which allows proceedings against the legal representative if they could have been initiated against the deceased if alive. The Court found that the notice was invalid as it was not directed to the legal representative. Treatment of Competing Arguments: The revenue argued that they were unaware of the death and could have initiated proceedings against the legal representative if informed. The Court dismissed this argument, referencing precedents that do not impose a statutory obligation on the deceased to inform the department of their death. Conclusions: The notice and subsequent proceedings were set aside as invalid. Time Limits for Initiating Proceedings Relevant Legal Framework: Section 149(1)(b) of the Act sets time limits for issuing notices under Section 148, with a six-year limit from the end of the relevant assessment year. Court's Interpretation and Reasoning: The Court noted that the assessment year in question was 2016-17, and the notice should have been issued by 31.03.2023. However, since the notice was invalid, the question of time limits was moot. Application of Law to Facts: The Court found that even if the notice were valid, the time limit under Section 149(1)(b) would have been applicable, but the notice was invalid due to being issued to a deceased person. Conclusions: The Court concluded that the time limits under Section 149(1)(b) did not apply due to the invalidity of the notice. Obligation to Inform the Department of Death Relevant Legal Framework and Precedents: The Court referred to the cases of Alamelu Veerappan v. ITO and Savitha Kapila v. Assistant Commissioner of Income Tax, which held that there is no statutory obligation on the deceased to inform the department of their death. Court's Interpretation and Reasoning: The Court endorsed these precedents, finding no legal requirement for the deceased or their representatives to notify the department. Conclusions: The Court rejected the revenue's argument that they were not informed of the death, affirming that no such obligation exists. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court emphasized, "The admitted fact being that the notice is issued against a dead person and the assessee has died on 14.10.2022, the notice is invalid in law." Core Principles Established: The judgment reinforced the principle that notices and proceedings under the Income Tax Act cannot be validly initiated against a deceased individual unless directed towards the legal representative as per Section 159(2)(b). Final Determinations on Each Issue: The Court set aside the notice under Section 148, the assessment order under Section 147 read with Section 144, and all consequential penalty notices and demands. The Court concluded that the proceedings were invalid due to being initiated against a deceased person and not the legal representative.
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