Section 292BB not applicable to legal representative. Notice u/s 148 in the name of deceased assessee invalid

Section 292BB not applicable to legal representative. High Court quashed reopening notice issued in the name of deceased assessee.

ABCAUS Case Law Citation:
ABCAUS 3332 (2020) (07) HC

Important case law relied upon by the parties:
Pr. Commissioner of Income Tax vs. Maruti Suzuki India  Limited, (2019) 416 ITR 613 (SC)
Braham Prakash vs. ITO 2004 (9) TMI 49 (Delhi).
Vipin Walia vs. ITO 2016 (2) TMI 524 (Delhi
Smt. Sudha Prasad vs. Chief Commissioner of Income Tax, (2005) 275 ITR 135 (Jharkhand
Skylight Hospitality LLP vs. Assistant Commissioner of Income Tax, Circle-28(1), New Delhi, (2018) 405 ITR 296 (Delhi)
Rajender Kumar Sehgal vs.ITO 2018 (12) TMI 697 (Delhi)

The Petitioner had filed a writ petition seeking quashing of the notice issued to the deceased-assessee (father of the petitioner) u/s 148 of the Income Tax Act, 1961(the Act).

In the instant case, the Assessing Officer (AO) with reference to the deceased-assessee received information of cash deposits in bank, time deposits  and other receipts as per Form 26AS. The assessee had not filed return of income.

According to the AO, the source of the said deposits and receipts remained unexplained & had escaped assessment. Accordingly, his case was selected u/s 147/148 of the Act and after recording of reasons and approval of PCIT.

Since the said assessee had already deceased three months before the date of issue of the said notice (followed by more notices) but none could not be served on the assessee.

Even a show cause notice (SCN) was also issued in the name of the deceased Assessee to explain why penalty u/s 271(1)(b) of  the Act should not be imposed for failure to comply with notice issued under Section 142(1) of the Act.

In pursuance to the notice  issued under Section 133(6) of the Act to the banks of the deceased assessee, a telephone number was traced which happened to be of the daughter of the assessee who informed that her father had passed away.

She also uploaded the his death certificate confirming the death of her father on the E-Portal of the Income Tax Department.

However, Assessing Officer passed an order  imposing penalty u/s 271(1)(b) upon the deceased-assessee through legal heir for non-compliance  of  notices issued to the deceased assessee.

A final show-cause notice was issued to the Assessee, through legal heir, directing to file the return and produce relevant documents. Proceedings were also transferred  to  the PAN of the legal heir of the deceased assessee and the very same day the impugned assessment order was passed in her name and PAN making ad addition and demand was raised.

Before the Hon’ble High Court, the Petitioner argued that since  the impugned notice under Section 148 of the Act, 1961 was issued subsequent to  the death of the assessee, the statutory  requirement of service u/s 148 of the Act had not  been fulfilled.

The Revenue contended that under Section 159 of the Act, the legal representative is liable for the liabilities  of the  deceased-assessee  and therefore it could not be said that the present assessment proceedings were null and void merely because impugned notice u/s 148 of the Act was issued completely unaware of the fact that the assessee had died.

It was also argued that Revenue was not obliged to maintain register of births and deaths all PAN card holders in the country. Therefore, it was incumbent upon the legal representatives of the late assessee to intimate about his death to the revenue.

It was further submitted that the proviso to Section  292BB of  the Act would be attracted to the present  case  and the petitioner would be prevented from questioning  the validity of the notice since she had cooperated by  uploading the death certificate of the deceased-assessee.

Notice  u/s 148 against a dead  person is  invalid

The Hon’ble High Court stated that the sine qua non for acquiring jurisdiction to reopen an assessment is that notice under section 148 should be issued to a correct person and not to a dead person. consequently, the jurisdictional requirement u/s 148 of the act, 1961 of service of notice was not fulfilled in the present instance.

The Court stated that, a notice issued under Section 148  of the Act against a dead person is invalid, unless the legal representative submits to the jurisdiction of the   Assessing Officer without raising any objection.

Section159 applies where proceedings are initiated or pending against the assessee when he is alive 

The Hon’ble High Court stated that Section 159 of the Act, applies to a situation where proceedings are initiated /  pending against the assessee when he is alive and after  his death the legal representative steps into the shoes of the deceased assessee. Hence Section 159 of the Act, did not apply to the present case.

No obligation upon legal heirs to intimate death of assessee

The Court also held that there is no statutory requirement imposing an obligation upon legal heirs to  intimate  the death of the assessee

The Hon’ble High Court also opined that issuance of  notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission.  Consequently, Section 292B of the Act, did not apply to the present case.

Section 292BB applicable to an assessee and not to a  legal representative

The Court opined that Section 292BB of the Act is applicable to an assessee and not to a legal representative. Further, in the present case one of the legal heirs of the deceased assessee, i.e. the petitioner, had neither cooperated in the assessment proceedings nor filed return or waived the requirement of Section 148 or submitted to jurisdiction of the Assessing Officer.  She had merely uploaded the death certificate of the deceased assessee.

Accordingly, writ petition was allowed and the impugned   notice and all consequential orders/proceedings passed/initiated were quashed.

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