2024 (8) TMI 760 - HC - Income Tax

Notice for re-opening assessment issued to a deceased person - Scope of specific provisions which would enable the Authority which has issued such notice, to withdraw the notice - HELD THAT - In Alamelu Veerappan V/s. Income Tax Officer 2018 (6) TMI 760 - MADRAS HIGH COURT it was held that there is no provision which casts a statutory obligation on the part of the legal representatives of the deceased to immediately intimate the death of the assessee or take steps to cancel the PAN registration. It cannot be debated upon that it is the duty of the Department to ensure that it s notice is issued and executed on a person to whom it is intended to be served. If the Department gets knowledge after issuance of such a notice that the concerned assessee has passed away, there must be a mechanism to recall such a notice since, it would be a wasteful exercise to spend time for attempting to serve such a notice on a dead person, in as much as, it would not advance the case of either of the parties since a dead person would not be answerable to or respond to the notice and the legal heirs, unless served with a notice, would have no authority to reply to the said notice. Writ Petition is allowed. The impugned notice stands quashed and set aside for having been issued to a dead person.

Summary

Issues:
Challenge to show cause notice for re-opening assessment due to being issued to a deceased person under Income Tax Act.

Analysis:
The petitioner, a widow, challenged a show cause notice issued under Section 148-A (b) of the Income Tax Act for re-opening assessment for the year 2020-2021, along with the consequential order and notice issued by Respondent No.2. The petitioner's husband had passed away due to Covid-19, and the notices were issued in his name after his demise. The petitioner contended that the entire proceeding was flawed as the initial notice was served on a deceased person. The High Court focused on the effect of issuing a notice to a dead person, emphasizing the need for proper service to advance the case. The Department acknowledged no specific provision to withdraw such notices but highlighted the authority of the CBDT to issue instructions under Section 119 for effective administration.

The petitioner cited judgments from other High Courts, such as the Delhi High Court and Madras High Court, emphasizing that legal representatives are not statutorily obligated to inform the tax department of the assessee's death. The court recognized the duty of the Department to ensure accurate service of notices and the impracticality of serving a notice on a deceased person. It recommended the CBDT to issue instructions for recalling notices issued to deceased individuals to avoid unnecessary legal proceedings.

Consequently, the High Court allowed the writ petition, quashing the impugned notice issued to the deceased person. It granted liberty to the Department to issue a fresh notice to the appropriate legal representative. The court kept contentions open regarding the replacement notice, considering the lack of prior knowledge about the demise. The court directed the Department to present the order to the CBDT for compliance with the recommendation to issue instructions for recalling notices served to deceased individuals under Section 119 of the Income Tax Act.