LATE BHARTI HARENDRA MODI BY HER LEGAL HEIR NIKHIL HARENDR MODI vs. INCOME TAX OFFICER, WARD 3(1)(2), VADODARA

Facts

The assessee, Late Bharti Harendra Modi, passed away on May 20, 2017. The Income Tax Officer, Ward 3(1)(2), Vadodara, issued a notice dated March 29, 2019, under Section 148 of the Income Tax Act, 1961, to the deceased assessee for Assessment Year 2012-13. The notice was issued based on information from an Annual Information Return (AIR) indicating the deceased had sold an immovable property for Rs. 82,89,000/- and had not filed a return. The petitioner, the legal heir of the deceased, challenged the notice by way of a writ petition, arguing that a notice issued to a dead person is void ab initio. The Revenue contended that the notice was valid under Section 159 read with Section 2(7) and Section 292B of the Act, deeming it issued to the legal representative and not invalid due to a technical defect.

Held

The High Court held that the notice issued under Section 148 of the Income Tax Act, 1961, to a deceased person is invalid if the legal representative does not waive their right to a notice and does not submit to the Assessing Officer's jurisdiction. The Court distinguished the present case from precedents where legal representatives had participated in proceedings, thereby waiving the defect. In this case, the petitioner had objected to the validity of the notice from the inception and had not participated in the proceedings by filing a return. The Court found that a notice under Section 148 is a jurisdictional notice, and its absence or invalidity affects the Assessing Officer's jurisdiction under Section 147. Therefore, Section 292B, which cures defects, is not attracted when a jurisdictional notice is fundamentally flawed by being issued to a dead person and the legal representative does not waive this defect. The Court applied the decision in Rasid Lala v. Income Tax Officer, Ward-1(3)(6) (supra). Consequently, the impugned notice and all proceedings pursuant thereto were quashed and set aside. The Court noted that it is permissible for the Assessing Officer to issue a fresh notice under Section 148 against the legal representative, provided it is not barred by limitation, but they cannot continue proceedings based on an invalid notice.

Key Issues

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, to a deceased person is invalid and liable to be quashed, or if it can be considered valid in substance and effect under Section 292B of the Act, especially when the legal heir objects to its validity. (Mixed question of law and fact, turning on Sections 148, 159, and 292B of the Income Tax Act, 1961). Assessee's Contention: The notice issued to a deceased person is void ab initio and unjust, as any notice issued to a non-existent person is invalid. The petitioner relied on the decision in Chandreshbhai Jayantibhai Patel vs. Income-tax Officer [(2019) 101 taxmann.com 362 (Gujarat)]. Revenue's Contention: The notice is not erroneous, arbitrary, illegal, or without jurisdiction. The Assessing Officer has jurisdiction to issue the notice. The notice against a deceased person should be deemed to have been issued against his/her legal representative under Section 159 r.w. Section 2(7). Furthermore, Section 292B of the Act states that a notice shall not be invalid merely by reason of any mistake, defect, or omission if it is in substance and effect in conformity with the intent and purpose of the Act. The Revenue also argued that the notice was issued within the six-year limitation period.