The Allahabad High Court recently quashed an income tax reassessment case against a man after noting that the proceedings were initiated more than a year after his death [Smt Asha Dubey v. Union of India and Others]..A Bench of Justices Shekhar B Saraf and Abdhesh Kumar Chaudhary held that a reassessment notice issued to a deceased person is void from its inception and cannot be validated by subsequently substituting the deceased with a legal representative.“To tax the dead is a contradiction in terms. Tax laws are made by the living to tax the living. What survives the dead person is what is left behind in the form of such a person's property,” the Court said..To tax the dead is a contradiction in terms. Tax laws are made by the living to tax the living.Allahabad High Court.The ruling came on a petition filed by Asha Dubey whose husband Sanjay Dubey died on January 7, 2024.The Income Tax Department issued a reassessment notice in his name on March 28, 2025. The proceedings arose from a search conducted against the Omaxe group in April 2021.The Department alleged that Dubey had made an unaccounted cash payment of ₹27.44 lakh while purchasing a residential flat in Lucknow. It eventually assessed additional income of ₹69.06 lakh and raised a tax demand of ₹39.67 lakh against his wife as his legal representative.Dubey's wife informed the Department about her husband’s death and objected to the proceedings. The Department rejected her objections and substituted her name in place of the deceased assessee.Dubey's wife (petitioner) challenged this before the High Court.The IT department countered that it had not been informed about Dubey’s death when the notice was issued. It also pointed out that his wife had filed an income tax return in his name after his death and verified it using his Aadhaar OTP..The Court agreed that the petitioner had wrongly filed the return in her husband’s name. It said the Department was free to proceed against her for violation of Section 140 of the Income Tax Act and that the conduct could attract penal consequences under Section 277 for false verification.However, her conduct could not confer jurisdiction on the Department where none existed under the statute, the Bench held.“The revenue cannot be allowed to defend its action and act in an illegal manner by issuing a notice which is void ab initio taking the plea that the petitioner had acted in an illegal manner,” the judgment stated..The Court explained that Section 159 permits proceedings initiated during an assessee’s lifetime to continue against the legal representative after the assessee’s death.If proceedings are sought to be initiated after the assessee has died, a fresh notice must be issued directly to the legal representative within the limitation period, it added.The Court further ruled that issuing a notice to a dead person was a jurisdictional error and not a mere procedural defect capable of being cured under Section 292B.The legal heir’s participation in the proceedings would also not amount to a waiver under Section 292BB (which bars assessees from objecting to IT notices after having cooperated or participated in ensuing proceedings), it said.The Bench rejected the Department’s argument that a fresh notice could be issued beyond the limitation period under Section 150. It clarified that a High Court order quashing an invalid notice would not constitute a “finding” or “direction” permitting the Department to reopen otherwise time-barred proceedings.The Court, however, acknowledged that the lacuna in the law could prejudice the Department and possibly cause a loss to the public exchequer..It, therefore, directed the Senior Registrar to send a copy of the judgment to the Union Finance Ministry so that the government could consider whether Parliament should amend the Income Tax Act and other tax laws to plug the loopholes flagged in this case. "The Parliament may step in, to remove the lacuna by appropriate amendments to the law," it said. .The Court further laid down the following principles governing reassessment proceedings sought to be initiated with respect to the income of deceased taxpayers:A reassessment notice under Section 148 must be issued in the name of the correct person. A notice issued to a deceased person is void from its inception, along with all consequential proceedings. The Income Tax Department can continue proceedings against a legal representative under Section 159 if they were initiated while the assessee was alive. Issuing a notice to a deceased person is a jurisdictional error and not a procedural defect capable of being cured under Section 292B. A legal heir is under no statutory obligation to immediately inform the Income Tax Department about the assessee’s death. Participation by a legal heir in reassessment proceedings issued against a dead person does not validate an otherwise void notice. The statutory estoppel under Section 292BB does not apply to the dead person's legal representative. Equitable considerations or a potential loss to the public exchequer cannot validate reassessment proceedings that do not satisfy the statutory requirements..The petitioner was represented by Advocates Kartikey Dubey and Ramesh Chandra Mishra..The Central government and tax authorities were represented by Advocates Paavan Awasthi and Neerav Chitravanshi..[Read Judgment]
