DEEP SUDHIRBHAI SHETH (LEGAL HEIR OF SUDHIR HIMMATLAL SHETH),AHMEDABAD vs. ITO, WARD 3(2)(1), AHMEDABAD, AHMEDABAD

1 The Assessing Officer has noted that the assessee, an individual stated to be proprietor of M/s. Shubhlaxmi Jewellers, did not file the return of income for A.Y. 2016-17. On examination of information available on departmental records, the Assessing Officer recorded that during the relevant previous year the assessee had undertaken the following financial transactions:

2 On the footing that the assessee had undertaken financial transactions much beyond the taxable limit and had nevertheless not filed a return of income, the case was reopened under section 147 after recording reasons and obtaining the approval of the competent authority.

3 During the reassessment proceedings, a notice under section 148 was issued on 18.03.2023. Thereafter, notice under section 143(2) and several notices under section 142(1) along with questionnaires were issued on different dates. The Assessing Officer has tabulated the chronology of notices, including show cause notices under section 144 and centralised reminder communication, and has recorded that no compliance was made by the assessee to any of these statutory notices. According to the Assessing Officer, in spite of sufficient opportunities, the assessee 3 did not furnish the requisite details and, therefore, the true and fair income of the assessee could not be ascertained.

4 In view of the complete non-compliance, the Assessing Officer proceeded to complete the assessment ex parte under section 144 read with sections 147 and 144B, determining the total income at Rs. 59,44,380/- as against “NIL” income in the absence of any return.

5 Being aggrieved, the assessee carried the matter in appeal before the CIT(A). During the appellate proceedings, the assessee filed detailed written submission. It was submitted that the assessee was an individual who had not filed return of income for A.Y. 2016-17 and that the assessee had expired on 23.05.2016. A copy of the death certificate was furnished. It was pointed out that all the notices remained unattended for the simple reason that the assessee had already expired much prior to issuance of the first notice under section 148. 2.6 On this factual foundation, it was contended that the notice under section 148 dated 18.03.2023 and the consequential assessment framed under section 147 read with section 144 in the name of the deceased assessee are invalid in the eyes of law. It was asserted that issuance and service of a valid notice on the assessee is a condition precedent for a valid assessment or reassessment, and that a notice issued on a dead person is a nullity.

7 The CIT(A) recorded that the assessee filed Death Certificate as additional evidence under Rule 46A of the Income-tax Rules, 1962. Taking note of the fact that the assessment order has been passed ex parte under section 144, the CIT(A) concluded that that, 4 in the interest of justice, the matter needs to be set aside to the file of the Assessing Officer. Accordingly, without adjudicating specifically on the juri ictional challenge to the notice under section 148 issued in the name of the deceased assessee.

During the course of hearing before us, the learned Authorised Representative (AR) appearing for the assessee reiterated the factual matrix already placed on record. It was submitted that the reassessment proceedings were initiated by issuing notice under section 148 in the name of an assessee who had admittedly expired on 23.05.2016. The learned AR emphasised that the very foundation of the reassessment was void ab initio for want of a valid notice, as no proceedings under section 147 can be initiated or continued against a non-existent person. It was further submitted that, despite elaborate written submissions and detailed judicial authorities placed before the first appellate authority, the learned CIT(A) did not adjudicate the specific juri ictional ground relating to the validity of the notice issued under section 148 in the name of the deceased assessee. Instead, without deciding the core issue, the learned CIT(A) proceeded to set aside the assessment to the file of the Assessing Officer for fresh examination after considering the additional evidence filed under Rule 46A. The learned AR, therefore, urged that the reassessment proceedings be held to be invalid and the impugned order of the learned CIT(A), to the extent it remits the matter without adjudicating the juri ictional challenge, be set aside.

1 The learned Departmental Representative (DR), on the other hand, supported the order passed by the learned CIT(A). It was submitted that the legal heir had never intimated the fact of the 5 assessee’s demise to the Department, nor was any request made for substitution of the legal representative in the Department’s records. The learned DR further submitted that the legal heir had also failed to file the last return of income of the deceased assessee and had not initiated the process of cancelling the PAN even though the assessee had expired on 23.05.2016. According to the learned DR, in the absence of any intimation or compliance on the part of the legal heir, the Assessing Officer could not be faulted for issuing the notice under section 148 in the name of the deceased assessee, and the learned CIT(A) was justified in restoring the matter for a fresh examination of the issues after considering the additional evidence.

We have examined the rival submissions and have perused the record, including the assessment order passed under section 147 read with section 144 and the impugned appellate order under section 250. The undisputed factual position is that the assessee expired on 23.05.2016. Despite this, the Assessing Officer issued notice under section 148A(b) on 13.02.2023, passed order under section 148A(d) on 18.03.2023, and thereafter issued notice under section 148 on 18.03.2023, all in the name of a person who was no longer in existence. The reassessment was thus sought to be initiated almost seven years after the death of the assessee.

1 The record shows that the legal heir had specifically raised a juri ictional objection before the learned CIT(A), contending that the notice under section 148 issued to a deceased person was a nullity. Reliance was placed on binding judicial precedents holding that reassessment against a dead person is void ab initio. However, the learned CIT(A) did not deal with this foundational challenge. 6 Instead, the learned CIT(A) set aside the matter to the Assessing Officer for a fresh decision after considering additional evidence under Rule 46A, without first determining whether the very initiation of proceedings was legally sustainable.

2 Before us, the learned AR reiterated that the reassessment was void since both the notices under section 148A(b) and section 148 were issued to a person who had already expired, and the learned CIT(A) failed to rule upon this juri ictional issue. The learned DR supported the order of the learned CIT(A) and argued that the legal heir did not intimate the Assessing Officer about the death of the assessee, due to which the Assessing Officer proceeded on the basis of available records.

3 The legal position is well settled that a notice issued under section 148 in the name of a deceased person is invalid and does not vest the Assessing Officer with juri iction. Judicial authorities, including Chandreshbhai Jayantibhai Patel v. ITO [2019] 101 taxmann.com 362 (Gujarat HC) and Savita Kapila v. ACIT [2020] 118 taxmann.com 46 (Delhi HC), have consistently held that reassessment cannot be initiated against a dead person and that section 159 mandates issuance of notice to the legal representative alone. It is further settled that section 292B cannot cure this substantive defect, nor can any alleged failure on the part of the legal heir to intimate the death validate an otherwise void notice. The essential juri ictional requirement of issuing notice to a person existing in law was therefore not met. During the course of hearing, the learned DR could not rebut the binding judicial precedents relied upon by the assessee, nor could he cite any authoritative supporting the case of the revenue. 7 4.4 Further, the Assessing Officer initiated proceedings nearly seven years after the assessee’s death. Basic verification, such as enquiry from the reporting bank or juri ictional record, would have revealed the death, enabling the Assessing Officer to proceed in accordance with section 159. The absence of such verification underscores the juri ictional lapse.

5 The validity of a notice under section 148 cannot depend on whether the legal heir informed the department of the death. Judicial precedents make it clear that the duty to issue valid notice rests solely on the Assessing Officer. Issuing notice to a dead person is a substantive illegality which renders the reassessment void ab initio and not curable by section 292B. Since the legal heir did not waive or submit to juri iction, the defect remains fatal.

6 In view of the consistent judicial precedents, relied on by the assessee, a notice issued to a dead person is void and incapable of conferring juri iction and considering that the learned CIT(A) failed to adjudicate this juri ictional ground, the initiation of reassessment proceedings in the present case is invalid in law.

7 In this background, the learned CIT(A) ought to have first adjudicated the specific juri ictional ground raised before him regarding the validity of the notice issued to a deceased person. Without doing so, he could not have remanded the matter to the Assessing Officer. The impugned order is therefore unsustainable.

8 Consequently, we hold that the notices issued under section 148A(b) and section 148 in the name of the deceased assessee are invalid and void ab initio, and the reassessment proceedings are 8 accordingly quashed. The order of the learned CIT(A) is set aside to this extent.

In the result the appeal of the assessee is allowed.

अपीलाथŎ / The Appellant 2. ŮȑथŎ / The Respondent. 3. संबंिधत आयकर आयुƅ / Concerned CIT 4. आयकर आयुƅ(अपील) / The CIT(A) 5. िवभागीय Ůितिनिध, आयकर अपीलीय अिधकरण / DR, ITAT, 6. गाडŊ फाईल /Guard file.