2024 (8) TMI 367 - HC - Income Tax

Reopening notices addressed in the name of assessee expired - validity of proceedings against the legal representatives - Application of Section 159 - HELD THAT - The legal representative stands conferred with not just the right to contest those proceedings, but also assert the extent to which the ultimate liability is liable to be liquidated. This reinforces the requirement of a notice being formally issued to the legal representative of the deceased assessee. We are, however, in this particular batch faced with a situation where the respondents neither adopted any corrective measures nor did they consciously take a decision to invoke the aforenoted statutory provision to continue proceedings against the legal representatives. The impugned action appears to have been mechanically continued in ignorance of the salutary provisions which stand embodied in Section 159. Reopening notice against deceased assessee setaside - We, however, accord liberty to the Revenue to proceed further and against the legal heirs of the assessees, if otherwise permissible in law.

Issues Involved:
1. Validity of reassessment notices issued to deceased assessees.
2. Legal provisions concerning the continuation of proceedings against legal representatives.
3. Application of Section 159 of the Income Tax Act, 1961.
4. Judicial precedents relevant to issuing notices to deceased assessees.

Issue-wise Detailed Analysis:

1. Validity of Reassessment Notices Issued to Deceased Assessees:
The writ petitions challenge the reassessment actions under the Income Tax Act, 1961, on the principal ground that the notices were addressed to assessees who had already expired. It was contended that the fact of death had been duly intimated to the department, yet the notices were neither amended nor addressed to the legal representatives. The court, referencing the case of Savita Kapila v. Asst. CIT, reiterated that issuing a notice to a deceased person is a jurisdictional defect, rendering such notices null and void. The court emphasized that the issuance of a notice under Section 148 of the Act is foundational for reopening an assessment, and such notice must be issued in the name of the correct person, not a deceased individual.

2. Legal Provisions Concerning the Continuation of Proceedings Against Legal Representatives:
The respondents argued, citing Section 159 of the Income Tax Act, that the proceedings could continue against the legal representatives of the deceased assessees. Section 159(2) allows for the continuation or initiation of assessment, reassessment, or recomputation against the legal representative. However, the court noted that this requires the legal representative to be formally notified and made aware of the intent to continue proceedings. The liability of the legal representative is limited to the extent of the estate's capability to meet the liability, reinforcing the need for proper notice.

3. Application of Section 159 of the Income Tax Act, 1961:
The court observed that in the present cases, the respondents neither took corrective measures nor invoked Section 159 to continue proceedings against the legal representatives. The proceedings were mechanically continued without considering the statutory provisions of Section 159, which mandate notifying the legal representatives and allowing them to contest the proceedings and assert the extent of liability.

4. Judicial Precedents Relevant to Issuing Notices to Deceased Assessees:
The court referred to several judicial precedents, including Pradeep Jain vs. Income Tax Officer and Vikram Bhatnagar v. CIT, which held that notices issued to deceased persons are invalid. The court distinguished the facts of the present cases from the Supreme Court decision in Commissioner of Income Tax, Shillong vs. Jai Prakash Singh, where the legal representative was fully aware and participated in the proceedings, thus waiving any irregularities.

Conclusion:
The court quashed the impugned notices and assessment orders issued to the deceased assessees, allowing the Revenue the liberty to proceed against the legal heirs if permissible by law. The petitions were disposed of on these terms, emphasizing the necessity of issuing notices to the correct persons and following statutory provisions for continuing proceedings against legal representatives.

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