2022 (12) TMI 184 - HC - Income Tax

Reopening of assessment u/s 147 - notice against dead assessee - no notice issued to legal representative - asseessee had expired about 6 years back. - HELD THAT - he assessment order was passed taking into account the fact that the assessee had expired. - The plea of the respondent authorities that they were not intimated regarding the death of the assessee Smt. Shobha Mehta, is factually incorrect. It is not in dispute that the notice of re-assessment u/s 148 was issued to the assessee Smt. Shobha Mehta who had expired about 6 years back. No notice whatsoever was issued to the legal representative/s of the assessee before undertaking the reassessment proceedings. Thus, the impugned re-assessment and the assessment order having been passed against the dead assessee, is invalid and the same cannot be sustained in the eyes of law. WP allowed.

Summary

Issues:
Challenge to reassessment notice and assessment order under the Income Tax Act due to the death of the original assessee, lack of notice to legal heir, and violation of natural justice.

Analysis:
The writ petition challenged the reassessment notice and assessment order issued under the Income Tax Act due to the demise of the original assessee, Late Smt. Shobha Mehta, and the lack of prior notice to the legal heir, Shri Kanhaiya Lal Mehta. The petitioner contended that the proceedings were flawed as the notice was issued to the deceased assessee, and the authorities were already aware of the demise. The petitioner's counsel argued that the respondent's claim of being unaware of the death was baseless, citing past communication to the Income Tax Authorities regarding the demise in 2015-16. The counsel relied on legal precedents, including judgments from the Rajasthan High Court and the Gujarat High Court, emphasizing that notice to a deceased person renders the proceedings invalid due to the affected party's absence.

The respondent's counsel opposed the petitioner's submissions, asserting that the authorities were unaware of the assessee's death. However, it was acknowledged that the notice was received by the deceased's husband, who informed about the demise. The respondent contended that there was no violation of natural justice or statutory requirements in the proceedings, urging the dismissal of the writ petition.

Upon careful consideration of the arguments and available records, the Court found that the Income Tax Authorities were indeed informed of the assessee's death during previous proceedings for the assessment year 2015-16. The assessment order issued then also acknowledged the demise. Consequently, the claim by the respondent authorities of being uninformed about the death was deemed factually incorrect. As the reassessment notice and assessment order were directed towards a deceased assessee without serving notice to the legal representative, the Court declared them invalid and struck them down, citing that such actions could not be sustained in law.

Therefore, the High Court declared the reassessment notice and assessment order invalid, emphasizing the necessity of proper notice and adherence to legal procedures. The writ petition was allowed, with no costs imposed on either party.