2020 (12) TMI 1115 - AT - Income Tax

Reopening of assessment u/s 147 - notice was issued on the deceased person - applicability of section 292BB - Whether notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission? - HELD THAT - In the present case Notice as well as assessment orders both for all these three years were passed in the name of the Deceased assessee. In view of above facts and the decision in SAVITA KAPILA, LEGAL HEIR OF LATE SHRI MOHINDER PAUL KAPILA 2020 (7) TMI 441 - DELHI HIGH COURT respectfully following the same, we quash the assessment orders passed in all these three appeals and allow Ground No. 1 and 2 of all the three appeals.

Summary

Issues Involved:
1. Re-opening of the assessment under Section 148 of the Income Tax Act, 1961, issued in the name and under the PAN number of a deceased assessee.
2. Validity of assessment orders passed in the name of a deceased person.
3. Legal requirement for legal heirs to inform the Income Tax Department about the death of an assessee.
4. Applicability of Section 292BB of the Income Tax Act.

Detailed Analysis:

1. Re-opening of the assessment under Section 148 of the Income Tax Act, 1961, issued in the name and under the PAN number of a deceased assessee:

The appeals concern the re-opening of assessments for the years 2008-09, 2009-10, and 2010-11, issued in the name of a deceased person, Shri Subhash Chandra Agarwal, who passed away on December 4, 2014. Notices under Section 148 were issued posthumously, and subsequent assessment orders were also framed in his name and PAN. The legal heir, Ms. Lalita Agarwal, informed the Revenue about the death on January 23, 2015, but the notices and assessments continued to be issued in the deceased's name.

2. Validity of assessment orders passed in the name of a deceased person:

The Tribunal found that issuing notices and passing assessment orders in the name of a deceased person is invalid. This conclusion is supported by the decision in Savita Kapila Vs. ACIT, where the Delhi High Court held that there is no legal requirement for legal representatives to report the death of an assessee to the Income Tax Department. Consequently, any notice issued under Section 148 to a deceased person is null and void, and all subsequent proceedings based on such notice are invalid.

3. Legal requirement for legal heirs to inform the Income Tax Department about the death of an assessee:

The Tribunal emphasized that there is no statutory obligation on legal heirs to inform the Income Tax Department about the death of an assessee. This was reinforced by the Delhi High Court's decision in Savita Kapila, which stated that the absence of such a statutory requirement means that the issuance of notice to a deceased person cannot be rectified by the legal heirs' failure to inform the department.

4. Applicability of Section 292BB of the Income Tax Act:

Section 292BB, which deals with the validity of notices in certain circumstances, was found inapplicable in cases where notices are issued to a deceased person. The Tribunal cited the Delhi High Court's ruling that Section 292BB applies to an assessee and not to a legal representative. Therefore, the legal heirs cannot be held responsible for procedural defects in notices issued to a deceased person.

Conclusion:

The Tribunal quashed the assessment orders for all three years, following the precedent set by the Delhi High Court in Savita Kapila. The Tribunal held that the notices and subsequent assessment orders issued in the name of a deceased person are invalid. Consequently, all proceedings based on such notices are null and void. The appeals were allowed, and the other grounds were not adjudicated as they became redundant.

Order Pronounced:

The order was pronounced in the open court on December 28, 2020.