2024 (12) TMI 779 - HC - Income Tax

Reopening notice against deceased Assessee - HELD THAT - We find ourselves in agreement with the submissions as made on behalf of the petitioner. As Supreme Court has held it to be the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose right or interests are being affected should be given a reasonable opportunity to defend himself (see UMC Technologies Private Limited vs. Food Corporation of India Anr 2020 (11) TMI 966 - SUPREME COURT . This basic jurisprudential principle becomes applicable when any action of such nature were being initiated against Mr. Gene Gracious. Once Mr. Gene Gracious is a dead person there was no question of his defending such action or being heard so as to accord any sanctity to such order, and the consequential notice u/s 148 of the IT Act. The entire action under clause (b) and clause (d) of Section 148A were of no consequence being non-est. In this situation even the legal heirs cannot be bound by such order which is non-est, void ab initio. Also the provisions of Section 148A read with Section 148 as applicable in the facts of the present case (AY 2015-16) rests on a foundation that no notice under Section 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 under section 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 under Section 148 preceded by earlier actions is required to be held to be non-est and void ab initio. Department cannot maintain issuance of the notice as impugned to a dead person. Decided in favour of assessee.

Summary

Issues:
Challenge to action by respondents against deceased individual under Income Tax Act.

Analysis:
The judgment concerns the challenge by the petitioner against the action taken by the respondents under the Income Tax Act against a deceased individual, Mr. Gene Gracious. The petitioner argued that the notices issued after the death of Mr. Gene Gracious were non-est and illegal, supported by various legal precedents. The respondents did not contest this contention, acknowledging that the notices should not have been issued to a deceased person.

The court agreed with the petitioner's submissions, emphasizing the fundamental principle of jurisprudence that a person must have a reasonable opportunity to defend themselves when their rights are being affected. As Mr. Gene Gracious was deceased, he could not defend against the actions taken, rendering the notices and orders against him non-est and void ab initio. The court highlighted that the legal heirs also cannot be bound by such void orders.

Furthermore, the court analyzed the provisions of Section 148A along with Section 148 of the IT Act, noting that the issuance of notices without prior show cause notice and hearing, as mandated by the legislative scheme, was not possible against a deceased individual. Citing legal precedents, the court held that the notices issued to a dead person were legally unsustainable and void ab initio due to the lack of mandatory legal compliance.

Considering the timeline of events where the notices were issued after the death of Mr. Gene Gracious, the court allowed the petition, declaring the impugned notices as non-est and void ab initio. However, the court clarified that the Revenue could issue a fresh notice for reassessment against the legal heirs if the requirements under the IT Act, including the limitation period, were met.

In conclusion, the court allowed the petition, making it clear that the impugned notices were invalid due to being issued to a deceased individual and emphasizing the importance of legal compliance and the rights of individuals, even after their demise.