LATE SMT. DAYAWANTI DEVI,NEW DELHI vs. DCIT, NEW DELHI

Apart from raising 15 Grounds of Appeal, the Assessee has also filed an additional Grounds of appeal contending that, the notice u/s 143(3) of the Income Tax Act, 1961 (‘Act’ for short) has been issued in the name of dead person, therefore, the impugned assessment order is invalid and both the order of the Assessing Officer and the order of the CIT(A) suffers infirmity.

The Ld. Counsel for the Assessee submitted that the Assessee Smt. Dayawanti Devi died on 09/01/2007,whereas the assessment proceedings have been initiated by the A.O. by issuing notice u/s 143(2) of the Act on 26/10/2007, wherein the A.O. issued notice in the name Dayawanti Devi Vs. DCIT of ‘Smt. Dayawanti Gupta’ who was no more as on the date of issuance of the said notice and pursuant to the said notice issued against a dead person, the assessment proceedings are initiated and framed in the name of the Assessee represented by her legal heir. The Ld. Counsel relied on the following judicial pronouncements and submitted that the orders of the Lower Authorities deserves to be quashed. i. Savita Kapila vs. ACIT, 273 taxman 148, Hon'ble Delhi High Court (Please see para 38 and page no 6 and 7 of the compilation of case laws) ii. Rajender Kumar Sehgal vs. ITO 260 taxman 412 Hon'ble Delhi High Court (Please see page no. 13 of the compilation of case laws) iii. Vipin Walia vs. ITO, 238 taxman 1, Hon'ble Delhi High Court (Please see page no. 19 of the compilation of case laws) iv. Late. Sh. Lal Chand verma through legal heir vs. Union of India and Ors. W.P.(C) 8184/2023 dated 08.01.2025. 5. Per contra, the Ld. Departmental Representative submitted that the Assessee has filed the Additional Grounds of Appeal after lapse of several years and the said ground has not been raised before any of the Lower Authorities or before this Tribunal at the time of filing the present Appeal. The Ld. Departmental Representative further submitted that, though the notice has been addressed to the Assessee, the said notice has been duly served to the legal representative of the Assessee and based on the service of the said notice, the legal heir of the Assessee Dayawanti Devi Vs. DCIT participated in the assessment proceedings and the Department has quantified the proper tax payable by the Assessee, therefore, now the legal representative of the Assessee cannot question the same on technicalities. Further submitted that since the legal representative of the Assessee has participated and co-operated in the assessment proceedings the notice issued by the A.O. shall be deemed to be valid as contemplated u/s 292BB of the Act. The Ld. Departmental Representative relying on the orders of the Lower Authorities, sought for dismissal of the Additional Grounds filed by the Assessee.

We have heard both the parties on the additional Grounds of appeal and perused the material available on record. The questions arise for consideration as to whether the notice issued by the A.O. u/s 143(2) of the Act against the dead person is a valid notice and whether the assessment proceedings initiated pursuant to the notice issued u/s 143(2) of the Act against the dead person is valid nor not.

It is not in dispute that the Assessee Smt. Dayawanti Devi died on 09/01/2007 and the notice u/s 143(2) of the Act has been issued on 26/10/2007 addressing to the Assessee Smt. Dayawanti Gupta. Thus as on the date of issuance of notice u/s 143(2) of the Act, the Assessee was no more. It is also not in dispute that the said notice has been Dayawanti Devi Vs. DCIT received by the legal representative of the Assessee Smt. Sunita Gupta who participated in the assessment proceedings and suffered an assessment order, wherein the A.O. computed the income of the deceased Assessee at Rs. 67,54,880/- as against declared income of Rs. 4,12,150/-. Since as on the date of issuance of notice u/s 143(2) of the Act, the Assessee Smt. Sunita Gupta was no more, therefore, the said notice issued 143 (2) of the Act cannot be construed to have been served on the Assessee. Since the said notice has been issued against the dead person, the same has to be treated as non-est. The legislature while drafting the income tax Act, provided the procedure to be followed in the case of death of the Assessee in Chapter XV under and Section 159 (1)(b) of the Act contemplates that any proceedings which could have been taken against the deceased if he survived, may be taken against the legal representative. Admittedly, in the present case, the A.O. has not issued any notice u/s 143(3) of the Act against the legal representative, thus violated the provision of Section 159(1)(b) of the Act.

The Juri ictional High Court in the case of Savita Kapila Vs. ACIT 273 Taxman 148 held as under: “32. This Court is of the view that in the absence of a statutory provision it is difficult to cast a duty upon the legal representatives to intimate the factum of death of an assessee to the income tax department. After all, there may be cases where the legal Dayawanti Devi Vs. DCIT representatives are estranged from the deceased assessee or the deceased assessee may have bequeathed his entire wealth to a charity. Consequently, whether PAN record was updated or not or whether the Department was made aware by the legal representatives or not is irrelevant. In Alamelu Veerappan (supra) it has been held "nothing has been placed before this Court by the Revenue to show that there is a statutory obligation on the part of the legal representatives of the deceased assessee to immediately intimate the death of the assessee or take steps to cancel the PAN registration." 33. The judgment in Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited (supra) offers no assistance to the respondents. In Pr. Commissioner of Income Tax v. Maruti Suzuki India Limited (supra) the Supreme Court was dealing with Section 170 of the Act, 1961 (succession to business otherwise than on death) wherein notice under Section 143(2) of the Act, 1961 was issued to non-existing company. In that case, Department by very nature of transaction was aware about the amalgamation. However, the said judgment nowhere states that there is an obligation upon the legal representative to inform the Income Tax Department about the death of the assessee or to surrender the PAN of the deceased assessee. The relevant portion of the said judgment is reproduced hereinbelow:- "35. In this case, the notice under Section 143(2) under which juri iction was assumed by the assessing officer was issued to a non-existent company. The assessment order was issued against the amalgamating company. This is a substantive illegality and not a procedural violation of the nature adverted to in Section 292B. xxxx xxxx xxxx xxxx 39. In the present case, despite the fact that the assessing officer was informed of the amalgamating company having ceased to exist as a result of the approved scheme of amalgamation, the juri ictional notice was issued only in its name. The basis on which juri iction was invoked was fundamentally at odds with the legal principle that the amalgamating entity ceases to exist upon the approved scheme of amalgamation. Participation in the proceedings by the appellant in the circumstances cannot operate as an estoppel against law. This position now holds the field in view of the judgment of a co-ordinate Bench of two learned judges which dismissed the appeal of the Revenue in Spice Enfotainment has been followed in the case of the respondent while dismissing the Special Leave Petition for AY 2011-2012. In doing so, this Court has relied on the decision in Spice Enfotainment. 34. Consequently, the legal heirs are under no statutory obligation to intimate the death of the assessee to the revenue. SECTION 292B OF THE ACT, 1961 HAS BEEN HELD TO BE INAPPLICABLE VIZ-A-VIZ NOTICE ISSUED TO A DEAD PERSON IN RAJENDER KUMAR SEHGAL (SUPRA), CHANDRESHBHAI JAYANTIBHAI PATEL (SUPRA) AND ALAMELU VEERAPPAN (SUPRA). 35. This Court is of the opinion that issuance of notice upon a dead person and non-service of notice does not come under the ambit of mistake, defect or omission. Consequently, Section 292B of the Act, 1961 does not apply to the present case. 36. In Skylight Hospitality (supra) notice was issued to Skylight Hospitality Pvt. Ltd. instead of Skylight Hospitality LLP. In that factual context, this Court had observed, "Noticeably, the appellant having received the said notice, had filed without prejudice reply/letter dated April 11, 2017. They had objected to the notice being issued in the name of the company, which had ceased to exist. However, the reading of the said letter indicates that they had understood and were aware, that the notice was for them. It was relied and dealt with by them." The Supreme Court while dismissing the SLP had also observed "In the peculiar facts of this case, we are convinced that wrong name given in the notice was merely a clerical error which could be corrected under Section 292B of the Income Tax Act." 37. In any event, Section 292B of the Act, 1961 has been held to be inapplicable viz-a-viz notice issued to a dead person in Rajender Officer. She had merely uploaded the death certificate of the deceased assessee. In Commissioner of Income Tax-VIII, Chennai Vs. Shri M. Hemanathan, 2016 (4) TMI 258 - Madras High Court it has been held "In the case on hand, the assessee was dead. It was the assessee's son, who appeared and perhaps cooperated. Therefore, the primary condition for the invocation of Section 292BB is absent in the case on hand. Section 292BB is in place to take care of contingencies where an assessee is put on notice of the initiation of proceedings, but who takes advantage of defective notices or defective service of notice on him. It is trite to point out that the purpose of issue of notice is to make the noticee aware of the nature of the proceedings. Once the nature of the proceedings is made known and understood by the assessee, he should not be allowed to take advantage of certain procedural defects. That was the purpose behind the enactment of Section 292BB. It cannot be invoked in cases where the very initiation of proceedings is against a dead person. Hence, the second contention cannot also be upheld.”

It is the contention of the Ld. Department's Representative that the notice addressed in the name of the Assessee has been received by the Dayawanti Devi Vs. DCIT legal representative of the Assessee and the legal representative has participated and co-operated in the assessment, therefore, as per Section 292BB of the Actthe legal heir of the Assessee cannot raised the said ground of issuance of notice in the name of dead person in this belated stage. The said contention of the Ld. Department's Representative cannot be agreeable, as it is well settled law that the provisions of Section 292BB of the Act are applicable only to the Assessee, but not to the legal heirs of the Assessee. Therefore, the Department of Revenue cannot take shelter under the provision of Section 292BB of the Act. Thus, we are of the considered opinion that the Ld. A.O. committed grave error in issuing notice u/s 143(2) of the Act in the name of deceased Assessee and also committed error in framing the assessment based on the said defective notice. Therefore, we set aside the assessment order and the order of the Ld. CIT(A) by allowing the additional Ground of Appeal of the Assessee.

Since, we have allowed the Additional Ground and quashed the assessment order, other grounds of Appeal on the merits requires no adjudication.

Since, we have set aside the assessment order for Assessment Year 2006-07, order of penalty passed pursuant to the assessment order is Dayawanti Devi Vs. DCIT also liable to be set aside. Accordingly, we delete the impugned penalty imposed for the Assessment Year 2006-07. 12. In the result, Appeals of the Assessee in ITA No. 1639/Del/2010 and ITA No. 1263/Del/2014 are allowed.