No statutory obligation upon legal heirs to intimate death of assessee to ITD

There is no statutory obligation upon legal heirs to intimate death of assessee to the Income Tax Department

In a recent judgment, Hon’ble High Court Karnataka held that there is no statutory obligation upon legal heirs to intimate death of assessee to the Income Tax Department.

ABCAUS Case Law Citation:
ABCAUS 4132 (2024) (07) HC

The instant petition had been filed challenging the correctness of the order passed under Section 147 read with Section 144 of the Income Tax Act, 1961 (the Act).

The case of the petitioner was that the assessee had passed away and the notice under Section 148 of the Act was issued subsequent to the demise of the assessee and the proceedings pursuant there to, were after the death of the assessee.

It was submitted that while notice is issued under section 148 of the Act against a dead person, such notice being invalid, all consequential proceedings including the assessment order under Section 147 read with Section 144 of the Act and proceedings for penalty were required to be set aside. Reliance was placed on the order of the Hon’ble High Court.

It was further submitted that procedure to be followed under Section 159(2)(b) of the Act is as regards an assessee who has died before the initiation of proceedings and in terms of the same, proceedings are permissible as regards the legal representative, if it is permissible as against the deceased.

On the other hand, the Revenue contended that unless there is an intimation of the death of the assessee, department would be unaware of such factum of death.

The Hon’ble High Court observed that the admitted fact was that the notice was issued against a dead person and the notice was invalid in law. In the event the assessee had died even before the issuance of notice under Section 148 of the Act, only procedure making it permissible to initiate proceedings is the satisfaction of the test under Section 159(2)(b) of the Act.

In the light of the provisions of section 159, the Hon’ble High Court opined that question of continuing with fresh proceedings against the deceased which liberty is sought for by the revenue would be permissible only if proceedings could have been taken against the deceased if he had survived.

The Hon’ble High Court further noted that the time limit for the proceedings under Section 148 would be in terms of Section 149(1)(b) proviso. In terms of the proviso there is a bar for issuance of notice under Section 48 in a case for a relevant assessment year before 01.04.2021 and in the present case proceedings would have been initiated within the outer limit of 6 years from the end of relevant assessment year as against the legal representative. Therefore, at this stage while setting aside the notice under Section 148 of the Act, question of granting liberty would be contrary to the mandate of time prescribed under Section 149(1)(b) proviso.

The Hon’ble High Court also observed that the contention of the revenue that intimation of death of the assessee if given within time, the revenue would have initiated fresh proceedings against the legal representatives. However, taking note of the order passed by Hon’ble Delhi High Court, Madras High Court, the Hon’ble High Court found that there is no support for the contention that there is a statutory obligation on the deceased assessee to intimate the department.

Accordingly, the Hon’ble High Court set aside the notice issued under Section 148 of the Act and the orders pursuant there to along with penalty notices. 

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