BHAVNABEN SANMUKHBHAI PATEL L/H OF LATE SANMUKHBHAI KESHAVBHAI PATEL vs. THE INCOME TAX OFFICER WARD 2(3)(4)

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SCA/20437/2018HC GujaratGJHC24077472201812 July 2022Bench: HONOURABLE MR. JUSTICE N.V.ANJARIA,HONOURABLE MR. JUSTICE BHARGAV D. KARIA6 pages
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What did the High Court hold?

The High Court held that assessment proceedings cannot be initiated against a dead person. The Court referred to its own Division Bench decision in Urmilaben Anirudhhasinji Jadeja vs. Income Tax Officer, Ward 7(1)(3) and a co-ordinate Bench decision in Chandreshbhai Jayantibhai Patel vs. Income Tax Officer. These decisions established that a notice issued to a dead assessee under Section 148 is a nullity. The Court clarified that while proceedings may be continued if legal representatives actively participate, mere intimation of the assessee's death to the assessing officer does not constitute participation. The Court specifically addressed Section 292BB of the Act, holding that it does not apply to cases where notices are issued to dead assessees, as such notices are fundamentally invalid and contrary to the intent and purpose of the Act. The Court found no facts suggesting the petitioner participated in the proceedings. Therefore, the impugned notice dated March 26, 2018, issued in the name of the deceased assessee was held to be illegal and unsustainable. The assessment order passed pursuant to it was also rendered invalid. The petition was allowed, and the notice was set aside.

What were the facts?

The petitioner, Bhavnaben Sanmukhbhai Patel, as the legal heir of the deceased Sanmukhbhai Keshavbhai Patel, filed a petition under Article 226 of the Constitution. The petition challenged a notice dated March 26, 2018, issued by the Income Tax Officer (ITO) Ward 2(3)(4) under Section 148 of the Income Tax Act, 1961, for Assessment Year 2011-2012. The notice proposed to re-assess income that had allegedly escaped assessment. The key fact is that the notice was issued in the name of Sanmukhbhai Keshavbhai Patel, who had died on September 9, 2014. The petitioner informed the ITO about the death and requested the notice be dropped. Despite this, the ITO issued a notice under Section 142(1) to the petitioner and subsequently passed an assessment order dated December 14, 2018, in the petitioner's name. The petitioner contended that the notice issued to a dead person was invalid and any subsequent assessment order was consequently illegal.

What were the issues?

1. Whether a notice issued under Section 148 of the Income Tax Act, 1961, in the name of a deceased person is valid, and consequently, whether any assessment order passed pursuant to such a notice can be sustained against the legal heir? The petitioner argued that the notice dated March 26, 2018, issued under Section 148 of the Act in the name of the deceased Sanmukhbhai Keshavbhai Patel was invalid ab initio because it was issued to a dead person. Therefore, any subsequent proceedings, including the assessment order dated December 14, 2018, passed against the legal heir, were illegal and liable to be quashed. The petitioner relied on the principle that assessment proceedings cannot be initiated against a dead person. The revenue, through the respondent ITO, contended that the proceedings could be maintained. While not explicitly detailed in the judgment, the revenue likely relied on provisions like Section 292BB of the Act, which deems notices valid if the assessee appears or cooperates in proceedings, precluding objections to service. The judgment mentions the revenue raised various contentions, including those based on Section 292BB.

Which sections of the Income-tax Act were involved?

Section 148,Section 147,Section 142(1),Section 292BB

AI-generated summary — verify with the full judgment below

C/SCA/20437/2018 ORDER DATED: 12/07/2022 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 20437 of 2018 ========================================================== BHAVNABEN SANMUKHBHAI PATEL L/H OF LATE SANMUKHBHAI KESHAVBHAI PATEL Versus THE INCOME TAX OFFICER WARD 2(3)(4) ========================================================== Appearance: MR. TUSHAR HEMANI, SR. ADV. WITH MS VAIBHAVI K PARIKH(3238) for the Petitioner(s) No. 1 MRS KALPANAK RAVAL(1046) for the Respondent(s) No. 1 ========================================================== CORAM:HONOURABLE MR. JUSTICE N.V.ANJARIA and HONOURABLE MR. JUSTICE BHARGAV D. KARIA

Date : 12/07/2022

ORAL ORDER (PER : HONOURABLE MR. JUSTICE N.V.ANJARIA) Heard learned senior advocate Mr. Tushar Hemani with learned advocate Ms. Vaibhavi Parikh for the petitioner and learned advocate Mr. Nikunt Raval for the respondent authorities. 2. The petitioner Bhavnaben Sanmukhbhai Patel-legal heir of deceased Sanmukhbhai Keshavbhai Patel by filling present petition under Article 226 of the Constitution has prayed to set aside notice dated 26.3.2018 issued by the Assessing Officer under section 148 of the Income Tax Act, 1961 in respect of the Assessment Year 2011-2012 stating that for the reasons to believe, the income chargeable to tax for the Page 1 of 6

C/SCA/20437/2018 ORDER DATED: 12/07/2022 Assessment Year under consideration has escaped assessment within the meaning of section 147 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 3. Therefore, the Assessing Officer has proposed to assess/re-assess the income of the addressee of the notice. The notice was issued in the name of Sanmukhbhai Keshavbhai Patel. 4. Learned senior advocate for the petitioner invited the attention of the Court to the impugned notice issued under section 148 of the Income Tax Act, 1961 to point out that the same has been issued in the name of Sanmukhbhai Keshavbhai Patel, who died on 09.09.2014. It was pointed out that in view of the fact that notice had been issued to a dead person, the petitioner herein had addressed a communication dated 24.04.2018 to the respondent pointing out that since the notice was issued in the name of a dead person, the same was required to be filed. 4.1 It was submitted that thereafter the Assessing Officer issued notice under section 142(1) of the Act to the petitioner, who once again, requested the authority to drop the notice, as the same was issued to a dead person. It was submitted that the Assessing Officer, despite the fact Page 2 of 6

C/SCA/20437/2018 ORDER DATED: 12/07/2022 that the impugned notice under section 148 of the Act has been issued to a dead person, persisted on continuing with the assessment pursuant thereto and framed assessment by order dated 14.12.2018 in the name of the petitioner. It was submitted that the impugned notice, having been issued against a dead person, was invalid and that pursuant to the notice issued to the dead person, any assessment order could not have been passed against the legal heir-the petitioner herein. 5. The question whether the income tax authorities can subject a dead person to the assessment proceeding, is no longer res integra. 5.1 The Division Bench of this Court in Urmilaben Anirudhhasinji Jadeja Vs. Income Tax Officer, Ward 7(1)(3) [(420) ITR 226], addressed the very issue. The Court considered various decisions of the Supreme Court and the High Court, touching the aspects of the issue, and held that there cannot be any assessment against a dead person. In that case also, notice was issued to the dead assessee under Section 148 of the Income Tax Act, 1961. 5.2 While holding that the proceedings would be nullity against the dead assessee, the rider was provided that in cases where legal representatives participate in the assessment or re-assessment Page 3 of 6

C/SCA/20437/2018 ORDER DATED: 12/07/2022 proceedings, the proceedings may be maintained and continued. It was at the same time held that mere intimation by the legal representative to the assessing officer that the noticee is dead, would not amount the heir participating in the proceedings. In Urmilaben Anirudhhasinji Jadeja (supra), while the revenue raised various contentions seeking a proposition that the proceedings against the dead assessee would be maintained, the Court negatived them all. 5.2.1 One of the contentions was based on Section 292BB of the Act. The said provision contemplates that the notice shall be deemed to be valid in certain circumstances. It mentions that where an assessee has appeared in any proceedings or cooperated in any inquiry relating to assessment or re-assessment, it shall be deemed that a notice required to be served under the Act has been duly served upon him. Such assessee, it is provided, shall be precluded from taking any objection about the service of the service of the notice and manner of the service. 5.2.2 The Division Bench held that the said provision would not apply in cases where notices are gone to the dead assessee and the proceedings are started against a dead assessee. It was observed and held in paragraph 23 thus, "The purport of Section 292BB of the Act is that in the event of any Page 4 of 6

C/SCA/20437/2018 ORDER DATED: 12/07/2022 mistake, defect or omission in the notice or other proceedings, if the same is in conformity with or according to the intent and purpose of the Act, the notice cannot be termed as invalid. To put it in other words, the notice should be in conformity with and in accordance with the intent and purpose of the Act. In our opinion, a case in which notice is issued to a dead person could be termed as nullity. It is something like a safeguard passing a decree against a dead person which cannot be executed through the legal representatives of the judgment-debtor." 5.3 Similar view was taken by the co-ordinate Bench of this court in Chandreshbhai Jayantibhai Patel vs. Income Tax Officer [(2019) 101 taxmann.com 362 (Gujarat)]. 6. The facts of the case do not offer any fact or circumstances to suggest that the legal representative of the deceased assessee in any manner submitted to the jurisdiction of the income tax authorities or in any way participated in the proceedings so as to persuade the court to hold otherwise. 6. In view of the above, the present petition deserves to be allowed. It is hereby allowed by holding that the impugned notice, which was against the dead assessee could not be sustained. 6.1 Resultantly, the notice dated 26.03.2018 issued in the name of Sanmukhbhai Keshavbhai Patel, as a dead person, by the income tax Page 5 of 6

C/SCA/20437/2018 ORDER DATED: 12/07/2022 department, is held to be illegal. 7. The Notice dated 26.03.2018 issued by the income tax authorities is set aside. The income tax authorities shall not proceed against the said dead assessee. Rule is made absolute. (N.V.ANJARIA, J) (BHARGAV D. KARIA, J) C.M. JOSHI Page 6 of 6

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