2024 (10) TMI 924 - AT - Income Tax

Reassessment proceedings against deceased person - HELD THAT - The factum of demise of assessee was already conveyed to the income tax department/revenue when survey u/s 133 was conducted. We also find that digital notice u/s 148 of the Act was issued on a dead assessee despite knowledge of fact to the revenue regarding death of assessee. We also note that the revenue did not take any step u/s 159 of the Act to bring on record the legal representatives of the deceased assessee. As decided in the case of Smt. Madhuben Kantilal Patel 2023 (2) TMI 272 - GUJARAT HIGH COURT held that where the legal heirs of the assessee deceased had supplied information of death to the revenue and despite reopening notice issued subsequently u/s 148 in the name of deceased was illegal and thus liable to be set aside. Similarly, in the case of Savita Kapila 2020 (7) TMI 441 - DELHI HIGH COURT has quashed the notice u/s 148 of the Act on a dead person. Assessee appeal allowed.

Summary

Issues:
Notice u/s 148 issued on deceased person, Validity of notice, Legal representatives' obligation, Applicability of previous judgments.

Analysis:
The appeal before the Appellate Tribunal ITAT Chennai challenged the order of the Commissioner of Income Tax(Appeal) for Assessment Year 2017-18. The primary issue raised was the validity of the notice dated 18.02.2020 issued under section 148 on the deceased person and the subsequent proceedings. The deceased assessee, who was the sole proprietor of a business, had passed away, and the unaccounted stock found after her demise was admitted as income. Despite the knowledge of the assessee's death, a notice u/s 148 was issued digitally on the deceased. The revenue did not take steps to bring the legal representatives on record as per section 159 of the Act.

The Tribunal referred to previous judgments, including one by the Hon'ble High Court, which held that issuing a notice u/s 148 on a deceased person, when the revenue was aware of the death, rendered the notice illegal and liable to be set aside. In line with the precedents, the Tribunal declared the notice dated 18.02.2020 as null and void, setting aside all consequential orders and proceedings. The Tribunal concluded that the notice issued on the deceased assessee was a nullity, and therefore, the appeal filed by the legal representative of the assessee was allowed.

The judgment highlighted the importance of following legal procedures, especially concerning deceased taxpayers, and emphasized the obligation of the revenue to acknowledge the demise of an assessee and involve the legal representatives appropriately. By invalidating the notice issued on the deceased without bringing the legal representatives on record, the Tribunal upheld the principles established in previous court decisions. Ultimately, the Tribunal's decision to set aside the notice and subsequent proceedings underscored the significance of adhering to legal requirements and respecting the rights of the deceased assessee and their legal representatives.