2025 (2) TMI 123 - AT - Income Tax

Notice u/s 143(3) issued in the name of dead person - Scope of provision of Section 292BB - participation of legal heirs - HELD THAT - Since as on the date of issuance of notice u/s 143(2) of the Act the Assessee Smt. Sunita Gupta was no more therefore the said notice issued 143 (2) of the Act cannot be construed to have been served on the Assessee. Contention of DR that the notice addressed in the name of the Assessee has been received by the legal representative of the Assessee and the legal representative has participated and co-operated in the assessment therefore as per Section 292BB the legal heir of the Assessee cannot raised the said ground of issuance of notice in the name of dead person in this belated stage. The said contention of DR cannot be agreeable as it is well settled law that the provisions of Section 292BB are applicable only to the Assessee but not to the legal heirs of the Assessee. Therefore the Department of Revenue cannot take shelter under the provision of Section 292BB. Thus AO committed grave error in issuing notice u/s 143(2) in the name of deceased Assessee and also committed error in framing the assessment based on the said defective notice. Decided in favour of assessee.

ISSUES PRESENTED and CONSIDERED

The core legal issues considered in this judgment are:

1. Whether the notice issued by the Assessing Officer (A.O.) under Section 143(2) of the Income Tax Act, 1961, to a deceased person is valid.

2. Whether the assessment proceedings initiated and framed based on a notice issued to a deceased person are valid.

3. The applicability of Sections 292B and 292BB of the Income Tax Act in the context of notices issued to deceased persons and the participation of legal heirs in assessment proceedings.

ISSUE-WISE DETAILED ANALYSIS

1. Validity of Notice Issued to a Deceased Person

Relevant Legal Framework and Precedents: The legal framework involves Sections 143(2), 159(1)(b), 292B, and 292BB of the Income Tax Act. Relevant precedents include the cases of Savita Kapila vs. ACIT, Rajender Kumar Sehgal vs. ITO, Vipin Walia vs. ITO, and Late Sh. Lal Chand Verma through legal heir vs. Union of India and Ors.

Court's Interpretation and Reasoning: The Court emphasized that a notice issued to a deceased person is non-est, meaning it is void and has no legal effect. The Court referred to Section 159(1)(b), which allows proceedings against legal representatives if the deceased were alive. However, in this case, no notice was issued to the legal representative, violating this provision.

Key Evidence and Findings: It was undisputed that the notice under Section 143(2) was issued after the death of the assessee, Smt. Dayawanti Devi, and addressed to her instead of her legal representative.

Application of Law to Facts: The issuance of the notice to a deceased person was treated as non-est. The Court found that the A.O. did not comply with the statutory requirement to issue a notice to the legal representative.

Treatment of Competing Arguments: The Department argued that the notice was served to the legal representative, who participated in the proceedings, making it valid under Section 292BB. The Court rejected this argument, clarifying that Section 292BB applies to the assessee, not to legal representatives.

Conclusions: The notice issued to the deceased was invalid, and the assessment proceedings based on such a notice were void.

2. Applicability of Sections 292B and 292BB

Relevant Legal Framework and Precedents: Section 292B addresses procedural defects, while Section 292BB pertains to the participation of the assessee in proceedings, potentially curing defects in notice service. The Court referenced the judgments in Savita Kapila and others.

Court's Interpretation and Reasoning: The Court held that Section 292B does not apply to notices issued to deceased persons, as this is a substantive illegality, not a procedural defect. Section 292BB was deemed inapplicable to legal representatives, as it is intended for the assessee.

Key Evidence and Findings: The legal representative, Smt. Sunita Gupta, received the notice and participated in the proceedings, but this did not validate the defective notice.

Application of Law to Facts: The Court found that the participation of the legal representative did not cure the defect of issuing a notice to a deceased person. Section 292BB could not be invoked as the legal representative was not the original assessee.

Treatment of Competing Arguments: The Department's reliance on Section 292BB was dismissed, with the Court reiterating that it applies only to the assessee, not legal heirs.

Conclusions: The provisions of Sections 292B and 292BB did not validate the notice or the subsequent assessment proceedings.

SIGNIFICANT HOLDINGS

Preserve Verbatim Quotes of Crucial Legal Reasoning:

"The said notice issued 143 (2) of the Act cannot be construed to have been served on the Assessee. Since the said notice has been issued against the dead person, the same has to be treated as non-est."

"The provisions of Section 292BB of the Act are applicable only to the Assessee, but not to the legal heirs of the Assessee."

Core Principles Established:

1. Notices issued to deceased persons are void and have no legal effect.

2. Legal representatives are not obligated to inform the tax department of the death of the assessee.

3. Sections 292B and 292BB do not cure the defect of issuing notices to deceased persons.

Final Determinations on Each Issue:

The assessment order and the order of the CIT(A) were set aside due to the invalidity of the notice issued to the deceased. The penalty order was also quashed, as it was based on an invalid assessment order.

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