Notice u/s 143(2) issued in the name of dead person, assessment completed through legal heirs set aside

Notice u/s 143(2) issued in the name of dead person, assessment completed in the name of the deceased assessee through legal heirs set aside as invalid

ABCAUS Case Law Citation:
ABCAUS 3174 (2019) (10) HC

Important case law relied upon by the parties:
CIT vs M Hemanathan
Savithriammal v. State of Tamil Nadu
Bimla Devi Vs ITO

Validity of Notice u/s 143(2) issued in the name of dead person

In the instant case, the Assessing Officer (AO) had issued the notice u/s 143(2) in the name of the deceased assessee. On the basis of the said notice, the AO framed the assessment in the name of deceased person through his legal heirs.

The CIT(A) upheld the assessment. The CIT(A) rejected the ground of invalidity of the assessment order on the contention that the legal heir of assessee had not informed the AO about the death of assessee before the issue of Notice u/s 143(2) / 142(1) of the Act.

Aggrieved, the assessee approached the Tribunal and challenged the validity of the assessment on the ground that notice under section 143(2) of the Act was not properly served upon the assessee, instead, it was served upon the deceased person. Therefore, it was claimed that the entire assessment framed under section 143(3) of the Act was bad in law as the notice issued under section 143(2) was not sustainable in the eyes of law.

It was submitted that there is no provision under the Income Tax Act, for the legal heir to voluntarily inform the Assessing officer about the death of assessee. Also, there is no mechanism under the Act, wherein the department will give prior intimation that assessee would be issued notice u/s 143(2), so that the legal heir can inform the AO about the death of assesses before issue of such notice.

The assessee further submitted that the notice/s were addressed to the person, who admittedly, was dead at that time and had been so dead for a long time. The Assessing Officer knew from the information and records submitted during first hearing that Assessee was not living, and he also knew who his legal representatives were. In these circumstances, it was incumbent on the Assessing Officer to cause the notice to be issued to the legal representatives.

It was argued that It had been held in catena of judgments that the Notices under section 143(2) or Section 148 are jurisdictional notice and when issued in the name of dead person will render the assessment void and cannot be cured by Section 292BB.

The Tribunal though noted that undisputedly the assessment was completed in the name of the deceased assessee through its legal heirs, found no infirmity in the assessment.

Regarding the validity of the notice issued upon the deceased assessee, the Tribunal observed that return was filed by the assessee and thereafter it was also processed under section 143(1) of the Act. By that time assessee was alive. Thereafter the AO issued a notice under section 143(2) upon the deceased assessee and in response thereto, the legal heirs of the assessee along with authorized representatives appeared before the AO. After obtaining the relevant information, the AO completed the assessment in the name of deceased assessee through his legal heirs.

The Tribunal stated that there was nothing on record to demonstrate that after the death of the assessee, the AO was duly informed about the assessee’s demise. Relying upon the return filed by the assessee, the AO had issued a notice under section 143(2) of the Act upon the deceased assessee and in response thereto, the legal heirs along with authorized representatives appeared and brought this fact to the notice of the AO. The AO thereafter completed the assessment in the name of the deceased assessee through its legal heirs.

Not satisfied by the decision of the Tribunal, the assessee preferred an Income Tax Appeal before the Hon’ble High Court.

The assessee submited that the appellate authorities committed an error in proceeding to hold that the original notice issued under Section 143(2) of the Income Tax Act on a dead person (the assessee) would be sufficient compliance to Section 159 of the Income Tax Act, as the authorised representative of the dead person represented the case and the legal heir of the deceased was brought on record.

The assessee sunmitted that since the original notice was issued against a dead person, the appellate authorities committed an error in proceeding since the notice itself could not have been sustained.  

The Hon’ble High Court stated that it was convinced that the impugned order required to be set aside since the notice itself was issued against a dead person.

Accordingly, the Hon’ble High Court allowed the appeal and the impugned order confirming the order of the Appellate Commissioner was set aside along with the order passed by the Income Tax Officer. The matter was remanded back to the Assessing Officer to redo the entire procedure bearing in mind that the assessee was no more.  

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