2019 (5) TMI 767 - AT - Income Tax

Reassessment proceedings against dead person - Validity of issue of notice u/s 148 on a dead person - - DR argued that communication regarding the death of the assessee was received after serving the notice on the legal representative Hence the same is in accordance with the provisions of section 159 - HELD THAT - In the instant case the proceedings were initiated against the dead person after the death of the assessee hence the notice issued on the dead person cannot make the legal heirs binding unless a proper notice is issued on the legal heirs. After the death of the assessee proceedings must be initiated against the legal heirs to treat the legal heirs as deemed assessee. As per section 159 (2)(b) the AO is free to initiate proceedings against the legal representatives which could have been initiated against the deceased and determine the tax liability of the deceased person and the same is binding on the Legal representatives. Any notice issued in the name of a deceased person is invalid and cannot be enforced in the law. Hon ble Mumbai High Court in the case of Sumit Balkrishna Gupta. v.Assistant Commissioner of Income-tax Circle 16(2) Mumbai 2019 (2) TMI 1209 - BOMBAY HIGH COURT held that the notice issued on a dead person is invalid unenforceable in law - thus notice u/s 148 on a dead person is invalid and accordingly quashed. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act on a deceased person.
2. Validity of the consequent assessment order made in the name of the legal heir.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 on a Deceased Person:

The primary issue in this appeal is the validity of the notice issued under Section 148 of the Income Tax Act on a deceased person. The assessee, Shri Aemala Venkateswara Rao, had expired in 2009, but the notice under Section 148 was issued on 26.03.2012, after his death. The notice was received by his wife, Smt. A. Nirmala Devi, who informed the Assessing Officer (AO) about her husband's death. Despite this, the AO proceeded with the assessment in the name of the legal heir without issuing a proper notice under Section 148 to the legal heir.

The Tribunal referred to Section 159 of the Income Tax Act, which deals with the liability of legal representatives. According to Section 159(2)(a), if proceedings were initiated against a deceased person before their death, they could continue against the legal representative. However, in this case, the proceedings were initiated after the death of the assessee, making the notice issued on the deceased person invalid.

The Tribunal also cited the decision of the Hon'ble Madras High Court in the case of Alamelu Veerappan Vs. ITO, where it was held that a notice issued in the name of a dead person is unenforceable in law. The Tribunal emphasized that the notice must be issued to a living person, i.e., the legal heir, to be valid.

2. Validity of the Consequent Assessment Order Made in the Name of the Legal Heir:

Since the notice under Section 148 was issued on a deceased person and was deemed invalid, the consequent assessment order made under Section 144 read with Section 147 was also considered invalid. The Tribunal annulled the assessment order, stating that the proceedings must be initiated against the legal heirs to treat them as deemed assessees. The Tribunal relied on various case laws, including the decisions of the Hon'ble Mumbai High Court and the Hon'ble Gujarat High Court, which supported the view that a notice issued on a dead person is invalid and cannot be enforced.

Conclusion:

The Tribunal concluded that the notice issued under Section 148 on a dead person is invalid and quashed the notice. Consequently, the assessments made under Section 144 read with Section 147 were annulled. The appeal of the assessee was allowed, and the order was pronounced in the open court on 3rd April 2019.