Delhi High Court
Delhi High Court
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Notice issued to a dead person under Section 148 of the Income Tax Act not valid in law: Delhi High Court

The judgment was passed by a Division Bench of Justices Manmohan and Sanjeev Narula.

Aditi Singh

The Delhi High Court has held that a notice issued to a dead person under Section 148 of the Income Tax Ac to re-open income tax assessment is not valid in law. (Savita Kapila vs ACIT)

The judgment was passed by a Division Bench of Justices Manmohan and Sanjeev Narula.

 Justices Manmohan and Sanjeev Narula
Justices Manmohan and Sanjeev Narula

The Case:

The Assessing Officer found that in Financial Year 2011-12, certain income of the Assessee, Mohinder Paul Kapila had escaped assessment.

Accordingly, in March 2019, Mohinder Paul Kapila was selected for proceedings under Section 147/148 of the Income Tax Act 1961.

While the Notice was issued on March 31, 2019 i.e. on the last date of limitation, the Assessee had passed away in December 2018.

This notice, as well as the ones issued subsequently, thus could not be served upon the Assessee.

Later that year, the Assessing Officer traced a legal heir of the Assessee and imposed a penalty upon the Assessee through legal heir under Section 271(1)(b) for non-compliance of notices.

While the legal heir uploaded the death certificate of the Assessee onto the Department's system, the Assessing Officer directed the legal heir to file the return and produce relevant documents.

Before the High Court, the legal heir i.e. the Petitioner argued that the proceedings could not be sustained as the notice under Section 148 was issued subsequent to the death of the Assessee and the statutory requirement of service had not been fulfilled.

The Petitioner also submitted that the proceedings were barred by limitation as per Section 149(1)(b).

The Department sought the dismissal of the writ petition on the ground that these issues should be agitated before the Appellate Commissioner under Section 246A.

It was stated that in terms of Section 159, a legal representative was liable for the liabilities of a deceased assessee and therefore, the present assessment proceedings were not null and void.

The Department contended that it was not obliged under the law to suo motu maintain such record of life and death of 44.50 crore PAN cardholders in the country and thus, it was incumbent upon the legal representatives of the late Assessee to intimate about his death.

It was stated that the Department had acted bona fide at the time of issuance of notice under Section 148 of the Act as it had no knowledge of the death of the assessee and any defect would be curable under Section 292B.

Findings:

The Court stated that it was well-settled law that an alternative statutory remedy did not operate as a bar to the maintainability of a writ petition in at least three contingencies. These are:

- When the writ petition is filed for the enforcement of any of the Fundamental Rights or there is a violation of the principles of natural justice.

- Where the order or notice or proceedings are wholly without jurisdiction.

- Where the vires of an Act is challenged.

The Court thus observed,

"The fact that an assessment order has been passed and it is open to challenge by way of an appeal, does not denude the petitioner of its right to challenge the notice for assessment if it is without jurisdiction."

The Court then proceeded to examine if the Assessing Officer had the requisite jurisdiction and observed that the issuance of a notice under Section 148 was the foundation for the reopening of an assessment.

The Court iterated,

The sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not merely a procedural requirement but is a condition precedent to the impugned notice being valid in law.
Delhi High Court

The Court noted that in the present case, the notice was issued to the Assessee after his death and thus "inevitably the said notice could never have been served upon him".

"Consequently, the jurisdictional requirement under Section 148 of the Act, 1961 of service of notice was not fulfilled in the present instance", the Court concluded.

It further held that notice issued to the Petitioner was also beyond the period of limitation under Section 149(1)(b).

The Court further analysed Section 159 and said that the section applied to a situation where proceedings are initiated/pending against an Assessee when he is alive and after his death, the legal representatives step into his shoes.

Since that is not the present factual scenario, Section 159 would not apply to the present case, the Court said.

The Court also clarified that in the absence of a statutory provision, there could be no duty upon the legal representatives to intimate the factum of death of an assessee to the income tax department.

As far as the application of Section 292B was concerned, the Court said that the issuance of notice upon a dead person and non-service of notice did not come under the ambit of mistake, defect or omission.

The Court also held that mere uploading of the death certificate by the Petitioner would not amount to submitting to the jurisdiction of the Assessing Officer in terms of Section 292BB.

To conclude, the Court remarked that the arguments advanced by the Department were no longer res Integra and had been consistently rejected by different High Courts.

In view of the consistent, uniform and settled position of law, to accept the submissions of the respondent would amount to unsettling the "settled law‟, the Court said.

The writ petition was accordingly allowed and the notice and all consequential orders/proceedings were quashed.

Advocates Siddharth Ranka, Mishal Johri appeared for the Petitioner.

The Income Tax Department was represented by Standing Counsel Zoheb Hossain.

Read the Judgement:

Savita Kapila v. ACIT.pdf
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