2024 (8) TMI 1370 - HC - Income Tax

Reassessment proceedings against dead person - HELD THAT - We note the pertinent observations in the case of Savita Kapila 2020 (7) TMI 441 - DELHI HIGH COURT wherein, while dealing with the identical question, it has been held that the pre-requisite of issuing a notice in the name of the correct person and not in the name of a dead person is sine qua non for acquiring the jurisdiction and initiating the action u/s 148 of the Act. Thus, the action u/s 148 cannot be initiated on the factum as the impugned notices were issued to a dead person. Furthermore, present is a case where the petitioner had already intimated the Revenue about the death of the assessee and yet it proceeded to reopen the assessment under Section 148 of the Act. The course as adopted is clearly reflective of complete non-application of mind. Assessee appeal allowed.

Summary

Issues Involved:

1. Validity of notices issued under Section 148A(b) to a deceased person.
2. Validity of assessment orders passed under Sections 147 read with 143.
3. Consistency in Revenue's actions for different assessment years.
4. Legal obligations of legal heirs in tax proceedings.

Issue-Wise Detailed Analysis:

1. Validity of Notices Issued Under Section 148A(b) to a Deceased Person:

The primary issue is whether the impugned notices dated 31.03.2021 and 19.04.2021 issued under Section 148A(b) of the Income Tax Act, 1961, are valid when issued to a deceased person. The petitioner argued that such notices are void-ab-initio as they were issued in the name of a dead person, which is a sine qua non for acquiring jurisdiction under Section 148 of the Act. The petitioner relied on the decisions in Savita Kapila v. Asst. CIT and Vikram Bhatnagar v. CIT, which held that issuing a notice to a deceased person is invalid and void. The court agreed with this position, citing that the issuance of a notice under Section 148 of the Act is the foundation for reopening an assessment, and such notice should be issued in the name of the correct person.

2. Validity of Assessment Orders Passed Under Sections 147 Read with 143:

The petitioner contended that the assessment orders dated 31.03.2022 and 20.07.2022 were passed without jurisdiction as they were based on notices issued to a deceased person. The court noted that the Revenue had already dropped proceedings for the assessment years 2010-11 and 2012-13 on similar grounds. The court emphasized that the assessment orders were invalid due to the lack of a valid notice under Section 148, which is a jurisdictional requirement. The court cited previous judgments, including Savita Kapila v. Asst. CIT, which held that the issuance of notice to a dead person is a substantive illegality and not a procedural violation.

3. Consistency in Revenue's Actions for Different Assessment Years:

The court observed that the Revenue had consistently dropped proceedings for previous assessment years (2010-11 and 2012-13) on the grounds that notices were issued to a deceased person. The court emphasized the principle of consistency as enunciated by the Supreme Court in Radhasoami Satsang, Saomi Bagh, Agra v. CIT, stating that the Revenue should not have proceeded with the action under Section 148 for the assessment year 2013-14, given the unchanged factual matrix. The court highlighted that the Revenue's actions were reflective of complete non-application of mind.

4. Legal Obligations of Legal Heirs in Tax Proceedings:

The court also addressed the issue of the legal obligations of the legal heirs in tax proceedings. It noted that the petitioner had already informed the Revenue about the death of the assessee and the surrender of the old PAN. The court held that there is no statutory obligation on the part of legal representatives to immediately intimate the death of an assessee to the Income-tax Department or to surrender the PAN registration. The court cited Alamelu Veerappan, which held that the absence of a statutory provision makes it difficult to cast such a duty upon legal representatives.

Conclusion:

The court concluded that the impugned notices dated 31.03.2021 and 19.04.2021 under Section 148A(b), the assessment order dated 31.03.2022 passed under Sections 147 read with 143, the order dated 20.07.2022 passed under Section 148A(d), and the consequential notice of the even date issued under Section 148 of the Income Tax Act, 1961, for the assessment year 2013-14 are set aside and quashed. The court accorded liberty to the Revenue to proceed in accordance with law against the legal heirs of the assessee if otherwise permissible. The writ petitions were allowed and disposed of, along with any pending applications.