2024 (12) TMI 778 - HC - Income Tax

Reopening of assessment u/s 147 against dead assessee - HELD THAT - The provisions of Section 148A r.w.s. 148 as applicable in the facts of the present case (AY 2015-16) rests on a foundation that no notice u/s 148 could have been issued without a prior show cause notice being issued to an assessee and hearing being granted to the assessee on such show cause notice and an order passed thereon, as clearly seen from the legislative scheme u/s 148A of the IT Act. All this is certainly not possible to be undertaken against a dead person and/or even against a non existing entity refer Principal Commissioner of Income-Tax, New Delhi vs. Maruti Suzuki India Ltd. 2019 (7) TMI 1449 - SUPREME COURT . Once such mandatory legal compliance itself could not be achieved, on such sole ground, the notice issued u/s 148 preceded by earlier actions is required to be held to be non-est and void ab initio. We are in complete agreement with the view taken by the Courts in the decisions which are referred for the petitioner, which echo such principles that the department cannot maintain issuance of the notice as impugned to a dead person. In the present case, admittedly, the concerned assessee expired on 21 March 2020, the show cause notice u/s 148A (b) was issued on 24 March 2022 and an order thereon was passed on 14 April 2022 u/s 148A (d), as also the impugned notice u/s 148 was also issued on 14 April 2022. All this has happened after the said assessee had expired. Petition deserves to be allowed.

Summary

Issues:
Challenge to action by respondents against deceased individual under Section 148 of the Income Tax Act, 1961.

Detailed Analysis:

1. Legal Challenge:
The petitioner challenges the action taken by the respondents against the deceased individual, Mrs. Meena Anil Wakade, through notices under Section 148 and 148A of the Income Tax Act, 1961. The petitioner argues that the notices issued after Mrs. Wakade's death are non-existent and illegal, supported by a Death Certificate as evidence.

2. Legal Precedents:
The petitioner cites various legal precedents, including Bhupendra Bhikhalal Desai, Alamelu Veerappan, Savita Kapila, Devendra, Sumit Balkrishna Gupta, and others. These cases emphasize that actions against deceased individuals are invalid, and the legal heirs cannot be bound by such actions.

3. Respondents' Position:
The respondents, through their counsel, do not contest the petitioner's contentions. They acknowledge that the notices should not have been issued to a deceased person, Mrs. Meena Wakade.

4. Judicial Analysis:
The Court agrees with the petitioner's arguments, emphasizing the fundamental principle of jurisprudence that individuals must have a reasonable opportunity to defend themselves. As Mrs. Meena Wakade was deceased, she could not defend the actions taken against her, rendering the notices and orders non-existent and void ab initio.

5. Legal Compliance:
The Court highlights that the provisions of Section 148A in conjunction with Section 148 require a show cause notice and a hearing before issuing a notice under Section 148. Such compliance is impossible in the case of a deceased individual, as seen in the case of Principal Commissioner of Income-Tax v. Maruti Suzuki India Ltd.

6. Decision and Future Action:
The Court allows the petition, declaring the notices as non-existent and void ab initio. However, it clarifies that the Revenue can issue a fresh notice for reassessment against the legal heirs if the statutory requirements under Section 147/148 of the IT Act are met, including the limitation period.

7. Conclusion:
The Court makes the rule absolute in favor of the petitioner, with no costs awarded. The judgment ensures that actions against deceased individuals are not legally sustainable, emphasizing the importance of due process and legal compliance in tax matters.