This article looks to answer very specific question whether a notice issued by the Assessing Officer to the dead person is valid and if so then can the legal representative can be held liable for the notice issued in the name of the dead person under the provision of the Income Tax Act, 1961.
Before examining the aspects of the validity of the notice issued to a dead person by the Assessing Officer, it is pertinent to understand when the Assessing Officer is authorised to issue notice in order to initiate the assessment proceeding under the Income Tax Act, 1961.
The following Sections that authorise Assessing Officer to issue notice for initiating assessment proceeding are-
I. Section 143: The Assessing Officer send notice under this section for any errors/ incorrect claims/ inconsistencies in return filed by the Assessee or wherein the submissions made by the Assessee was not satisfied by the Assessing Officer.
II. Section 148: The Assessing Officer shall issue a notice under this section before making the assessment, re-assessment and re-computation under the section 147 of the act, wherein he is in possession of any information which suggest that the income chargeable to tax has been escaped assessment in the case of the Assessee in the relevant assessment year subject to the provision of section 148A and the Assessing Officer has obtained prior approval of the Specified Authority to issue such notice.
III. Section 153A: The Assessing Officer shall issue notice under this section in case wherein search or requisition proceeding has been conducted at the premises of the Assessee in accordance with the Section 132 of the Act.
IV. Section 153C: The Assessing Officer shall issue notice under this section in case wherein the books of accounts or document or assets has been seized from search or requisition proceeding initiated belonging to the person other than the person referred in Section 153A
POWER TO TAX A DEAD PERSON
In order to levy tax on the income earned by the Assessee there has to be a charging Section which gives the authority to tax certain income under the any of the heads specified under the Income Tax Act. After death, though the Assessee does not exist however his liability shall subsists even after his death. The enabling provision in this regard is Section 159 of the Income Tax Act, 1961.
Section 159 - Liability in Special Cases:
(1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.
(2) For the purpose of making an assessment (including an 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),—
(a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased;
(b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and
(c) all the provisions of this Act shall apply accordingly.
(3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.
(4) Every legal representative shall be personally liable for any tax payable by him in his capacity as legal representative if, while his liability for tax remains undischarged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of or parted with.
(5) The provisions of sub-section (2) of section 161, section 162, and section 167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative.
(6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub-section (5), be limited to the extent to which the estate is capable of meeting the liability.
INTERPRETATION OF SECTION 159
The bare reading of the provision contained in the Section 159 clearly states that the in order to make an assessment including an assessment, re-assessment or re-computation under Section 147 of the act and for the purpose any sum in the hands of the legal representative-
i. The legal representative shall be liable to pay the tax as if it is levied in the hands of the deceased Assessee. The legal representative of the deceased shall, for the purpose of this Act, be deemed to be an assessee.
ii. In case of any assessment including assessment, re-assessment, or re-computation was initiated against the deceased before his death then it shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage it was stood as on the death of the deceased.
iii. The legal representative shall be liable to the extent of estate of the deceased and shall not be personally held liable for any tax, interest, penalty dues.
Note: It is important to note that the legal representative and legal heirs are different. In case of intestate death (no valid will) of a person, the estate deceased fall on to the legal heirs is the legal representative and held liable under Section 159 but in case of testate death (there is a will) there could be a possibility that the beneficiary can be other than legal heirs or there can be multiple beneficiaries then in such case the executors of the will shall be chargeable to tax as per the Section 168 of the Act.
Dispute: Section 159 of the act clearly establishes that any proceeding initiated against the deceased shall be deemed to be initiated, processed and continued against the legal representative. The legal representative shall be confined to the extent to which the estate of the deceased is capable to meeting the liability. The dispute arises when the Assessing Officer issues the notice in the name of the deceased after the death of the person and can the legal representative be held liable for the compliance of the notice. In such case the notice issued can be held valid? And can the Assessing Officer contend that they had no knowledge about the death of the assessee?
JUDICIAL PROUNCEMENTS
Some of the judicial pronouncements dealing with the issues under this regards are:-
I. Late Bhupendra Bhikhalal Desai (Since Decd.) Through Legal Heir Raju Bhupendra Desai Vs ITO
The relevant para of the Gujurat High Court’s judgement is reproduced: “29. Ultimately, in view of the aforesaid, the only proposition of law that is applicable in the present litigation is that a notice, be it under Section 148 of the Act or Section 153C of the Act, issued to a dead person, is unenforceable in law. If such is the legal position, the Revenue cannot contend that as they had no knowledge about the death of the assessee, they are entitled to plead that the notice is not defective.”
II. Alamelu Veerappan vs Income Tax Officer, Non corporate Ward-2(2), Chennai
The relevant pare of the Madras High Court’s is reproduced wherein both the notices issued u/s 147 and u/s 153C of the act was held as unenforceable in the eye of law: “14. The issue, which falls for consideration, is as to whether the impugned notice under Section 148 of the Act issued in the name of the dead person - the said Mr.S.Veerappan is enforceable in law and the subsidiary issue being as to whether the petitioner, being the wife of the said Mr.S.Veerappan, can be compelled to participate in the proceedings and respond to the impugned notice. The fact that the said Mr.S.Veerappan died on 26.1.2010 is not in dispute. If this fact is not disputed, then the notice issued in the name of the dead person is unenforceable in the eye of law…..
16. The settled legal principle being that a notice issued in the name of the dead person is unenforceable in law. If such is the legal position, would the Revenue be justified in contending that they, having no knowledge about the death of the assessee, are entitled to plead that the notice is not defective. In my considered view, the answer to the question should be definitely against the Revenue….
18. In such circumstances, the question would be as to whether Section 159 of the Act would get attracted. The answer to this question would be in the negative, as the proceedings under Section 159 of the Act can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being otherwise, the provisions of Section 159 of the Act have no application.
19. The Revenue seeks to bring their case under Section 292 of the Act to state that the defect is a curable defect and on that ground, the impugned notice cannot be declared as invalid.
20. The language employed in Section 292 of the Act is categorical and clear. The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. Undoubtedly, the issue relating to limitation is not a curable defect for the Revenue to invoke Section 292B of the Act.
21. All the above reasons are fully supported by the decision in the case of Vipin Walia. In that case, the notice dated 27.3.2015 was issued under Section 148 of the Act to the assessee, who died on 14.3.2015. The validity of the said notice was put to challenge. The Income Tax Officer took a stand that since the intimation of death of the a ssessee on 14.3.2015 was not received by her, the notice was issued on a dead person. However, the fact regarding the death of the assessee could not be disputed by the Department. The Department continued the proceedings under Section 147/ 148 of the Act and at that stage, the son of the deceased approached the High Court of Delhi. The High Court of Delhi pointed out that what was sought to be done by the Income Tax Officer was to initiate proceedings under Section 147 of the Act against the deceased assessee for the assessment year 2008-09, for which, the limitation for issuance of notice under Section 147/148 of the Act was 31.3.2015 and on 02.7.2015 when the notice was issued, the assessee was already dead and if the Department intended to proceed under Section 147 of the Act, it could have done so prior to 31.3.2015 by issuing the notice to the legal heirs of the deceased and beyond that date, it could not have proceeded in the matter even by issuing notice to the legal representatives of the assessee. The decision in Vipin Walia fully supports the case of the petitioner herein.
22. The decision in the case of Vipin Walia was followed in the decision of the High Court of Gujarat in the case of Rasid Lala, in which, the re-assessment proceedings were initiated against the dead person, that too, after a long delay. The Court pointed out that even if the provisions of Section 159 of the Act are attracted, in that case also, the notice was required to be issued against and in the name of the heirs of the deceased assessee and under the said circumstances, Section 159 of the Act shall not be of any assistance to the Revenue.”
III. Sumit Balkrishna Gupta Vs. Asstt. Commissioner of Income Tax, Circle 16(2) Mumbai & Ors., (2019) 2 TMI 1209
The relevant para of the Bombay High Court stated that the issuance of a notice under Section 148 of the Act is the foundation for reopening of an assessment. Consequently, the sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. The relevant portion of the judgement is extracted for your reference-
"7. The issue of a notice under Section 148 of the Act is a foundation for reopening of assessment. The sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not a merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. Thus, a notice which has been issued in the name of the dead person is also not protected either by provisions of Section 292B or 292BB of the Act. This is so as the requirement of issuing a notice in the name of correct person is the foundational requirement to acquire jurisdiction to reopen the assessment. This is evident from Section 148 of the Act, which requires that before a proceeding can be taken up for reassessment, a notice must be served upon the assessee. The assessee on whom the notice must be sent must be a living person i.e legal heir of the deceased assessee, for the same to be responded. This in fact is the intent and purpose of the Act. Therefore, Section 292B of the Act cannot be invoked to correct a foundational / substantial error as it is meant so as to meet the jurisdictional requirement. Therefore, both the impugned notice dated 29.3.2018 and the impugned order dated 13.11.2018 are quashed and set aside. It is made clear that this order will not prohibit the Revenue from issuing a fresh notice for reassessment, if requirement of Sections 147/148 of the Act are satisfied, including the limitation period therein.”
IV. Urmilaben Anirudhhasinhji Jadeja Vs ITO (2020) 420 ITR 226 / 273 Taxman 481 (Guj) (HC)
The relevant para of the Gujurat High Court’s judgement is reproduced: “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 judgmentdebtor. We also take notice of the fact that in Sri Durga Enterprises (supra), the assessee had not only responded to the notice under Section 148 of the Act within one month but, on the basis of the return filed earlier, participated in the proceedings till the matter reached the FAA and was disposed of.
24. In such circumstances referred to above, none of the three decisions on which reliance has been placed on behalf of the Revenue would make any difference.
25. In the overall view of the matter, we are convinced that the proceedings are not tenable in law.”
CONCLUSION
It is settle principle in law in law that a notice is to be issued in the name of the correct person and any notice issued in the name of a dead person is non est in law and void ab initio. The Assessing Officer issuing notice for initiating the assessment proceedings to a person who does not even exist is non est in law and void ab initio. In such situation, the legal representative cannot be held liable as initiating of the assessment proceedings by the Assessing Officer in the name of the dead person is unenforceable in law. Though the Section 292B of the Income Tax Act, 1961 states that the no return of income, assessment, notice, summons or other proceeding shall not be invalid in the event of any mistake, defect, or omission, if such notice is issued in conformity or in accordance with the intent and purpose of the Income Tax Act, 1961. It is clear that Section 292B of the Act is categorical and it is meant so as to meet the jurisdictional requirements under the Income Tax Act, 1961. Issuing of the notice is the very first requirement for the initiating of the assessment proceeding and to acquire the jurisdiction. The Assessing Officer cannot plead u/s 292B of the Act as it cannot be invoked to correct the substantial errors as it is meant so as to meet the jurisdictional requirements. Thus, with detailed reading and scrutiny of the following judgement it can be concluded that the Assessing Officer issuing the notice in the name of a dead person is non est in law and void-ab-initio.
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