NOTICE ISSUED IN THE NAME OF DECEASED PERSON FOR REASSESSMENT

[Mr. M. GOVINDARAJAN]

Section 148 of the Income Tax Act, 1961 (‘Act’ for short) provides that  before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period,  as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139.

The issue to be discussed in this case whether the issue of notice to the deceased assessee for the purpose of re-assessment is valid in law, with reference to decided case laws.

In ‘Rasid Lala V. Income Tax Officer’ – 2016 (12) TMI 1282 - GUJARAT HIGH COURT the reassessment proceedings had been initiated against a dead person.  The High Court held that the reassessment proceedings having been initiated against  the dead person and that too after a long delay, even if section 159 of the Act is attracted, in that also, the notice was required to be issued against and in the name of the heir of the deceased assessee.  The Court further held that in the facts and circumstances of the case, section 159 of the Act would not be of any assistance to the Revenue and accordingly, set aside the impuged noticed issued under section 148 of the Act.

In ‘Jaydeepkumar Dhirajlal Thakkar V. Income Tax Officer’ – 2018 (2) TMI 439 - GUJARAT HIGH COURT the petitioner is the son of late Shri Dhirajlal Dayaljibhai Thakkar, who was engaged in the business of general merchant, commission agent and commodity broker, besides finance under the name and style of M/s D.M. Finance.  He passed away on 19.08.2012.  The Department issued notice dated 30.03.2017 to Shri Dhirajlal Dayaljibhai Thakkar, a dead person for re-assessment.    The petitioner, being the legal heir of the deceased person and legal representative has filed the present writ petition under Article 226 of the Constitution of India and challenged the notice dated 30.03.2017 issued by the Department.

The petitioner submitted the following before the High Court-

• Shri Dhirajlal Dayaljibhai Thakkar had passed away on 19.08.2012 during the course of the assessment proceedings and the petitioner had been brought on record as his legal heir.
• The communication dated 05.02.2013 the petitioner informed the Department about the death of his father on 19.08.2012 and submitted certain documents.
• In the appeal proceedings before the Commissioner (Appeals) the petitioner has been shown as legal heir of late Shri Dhirajlal Dayaljibhai Thakkar.
• Against the order of Commissioner (Appeals), the Department filed appeal before the Tribunal in which the petitioner has been shown to be the legal heir.
• It is, therefore, well within the knowledge of the Department that the petitioner’s father passed away and that the petitioner is the heir and legal representative of Shri Dhirajlal Dayaljibhai Thakkar.
• In these circumstances, the impugned notice under section 148 of the Act which has been issued against a dead person is bad in law.
• In view of section 159 of the Income Tax Act the Department was required to issue the notice to the present petitioner and that the impugned notice issued in the name of the deceased father of the petitioner is, of nullity and is, therefore, required to be quashed and set aside.

The Department submitted the following before the High Court contesting the submissions of the petitioner-

• The notice under section 148 is a computer generated notice and is based on PAN of the deceased assessee.
• At the time when the transaction took place in 2010-11 Shri Dhirajlal Dayaljibhai Thakkar was alive and he passed away only on 19.08.2012.
• In view of the provisions of section 159 the proceedings would not stand vitiated.
• Having regard to the provisions of section 292B read with section 292BB of the Act, the notice cannot be treated as invalid as the legal heir of the assessee had participated in the appellate proceedings which are pending.
• The impugned notice does not suffer any legal infirmity warranting interference by the High Court.

In response to the submission of the Department in regard to section 292BB of the Act, the petitioner filed a rejoinder in which he relied on the decision of Madras High Court in ‘Commissioner of Income Tax V. M. Hamanathan’ –2016 (4) TMI 258 - MADRAS HIGH COURT in which the High Court held that section 292BB would apply on to two of proceedings-

• proceedings, in which, the assessee had appeared; and
• any inquiry, in which, the assessee had co-operated

The High Court observed that in the case on hand, the assessee was dead and it was the assessee’s son, who appeared and perhaps co-operated and therefore the primary condition for the invocation of section 292BB of the Act is absent.   The petitioner submitted that the provisions of section 292BB of the Act would not be applicable and that the petitioner deserves to be allowed by setting aside the impugned notice.

The High Court considered the arguments put forth by both sides.  The High Court observed that the father of the petitioner passed away on 19.08.2012.  The petitioner has informed the Revenue authorities about the same in the year 2013.  The authorities were very well aware that the petitioner is the heir and legal representative of the deceased assessee, despite which, more than four years after the death of the assessee, the impugned notice has been issued in the name of the petitioner’s deceased father.

The High Court analyzed the provisions of section 159 and Section 292BB of the Act  The High Court observed that on a plain reading of section 159 it is apparent that for the purpose of making an assessment, including assessment, reassessment or re-computation under section 147, of the income of the deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section (1) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative.   The High Court held that in the light of the provisions of section 159 the proceedings are required to be initiated against a legal representative and not against the deceased.  The impugned notice under section 148 of the Act issued by the Department is therefore not in consonance with the provisions of section 159 of the Act.

The High Court observed that Section 292BB of the Act provides that where an assessee appears in any proceeding and co-operates in any inquiry relating to an assessment or re-assessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of the Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under the Act that the notice was-

• not served upon him; or
• not served upon him in time; or
• served upon him in an improper manner.

The proviso to that section provides that nothing contained in the section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.  In the present case, the petitioner has raised objection before the completion of the reassessment and therefore the provisions of section 292BB would not be applicable.

The High Court held that the impugned notice under section 148 of the Act having been issued against a dead person is a nullity and cannot be sustained.  The High Court allowed the petition.