Can Notice under Section 148 of the Income Tax Act be issued to a dead person?
Section 147 of the Income Tax Act deals with provisions of “income escaping assessment”. The grounds or reasons which led to formation of the belief that income chargeable to tax has escaped assessment must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. However, can notice under Section 148 pertaining to “income escaping assessment” be issued to a dead person? A similar issue was raised before the ITAT in the case of Lalita Agarwal vs ACIT.
Writ petition had been filed seeking a direction to the respondent to quash the notice issued to the deceased-assessee (husband of the petitioner) and all the consequential proceedings emanating passed by the respondent.
Facts of the Case:
- Shri Subhash Chandra Agarwal passed away on 4th December, 2014.
- On 16th January, 2015 the Income Tax Officer, Investigation, issued a query letter in the name of deceased person Shri Subhash Chandra Agarwal raising certain queries.
- Legal heir of Late Shri Subhash Chandra Agarwal, the wife of the assessee, Ms. Lalita Agarwal informed the Revenue about the demise submitting the copy of death certificate.
- Such letter was duly acknowledged by the Revenue.
- Subsequently, a notice under Section 148 was issued on the deceased person.
- Subsequently assessment order was passed in the hands of legal heir.
- Later, once again notice for Assessment Year 2009-10 was issued in the name of the deceased.
- An assessment order under Section 144 read with Section 147 was also passed in the name of the deceased.
- Assessee challenged those assessment orders which were passed in the name of the deceased.
Proceedings of Commissioner of Income Tax (Appeals) [CIT(A)]
- The assessee challenged the same before the CIT (Appeals) who held that in the present case the Assessing Officer was not having any knowledge of assessee being deceased on the date of issue of notice under Section 148 of the Act.
- Therefore, he rejected the arguments of the assessee on that ground.
Observations of Income Tax Appellate Tribunal (ITAT)
- ITAT observed that the issue before them was squarely covered by the decision of Savita Kapila (supra) wherein it was held that there was no legal requirement that legal representative should report death of an assessee to the Income Tax Department.
- Therefore, the order of the CIT (A) in sustaining the assessment order was not correct.
- The sustenance of a notice under section 148 was the foundation stone on which subsequent re- assessment proceedings were built up.
- To acquire the valid jurisdiction necessarily such notices were to be addressed to the correct person and not to a deceased
- As in the present case proceedings were not initiated/pending against the assessee when he was alive and after his death the legal representative did not step into the shoes of the deceased-assessee, section 159 did not apply to the present case.
- Section 159 applies to a situation where proceedings are initiated/pending against the assessee when he is alive and after his death the legal representative steps into the shoes of the deceased- assessee.
- This court is of the view that in the absence of a statutory provision it was 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 representatives were estranged from the deceased- assessee or the deceased-assessee could have bequeathed his entire wealth to a charity.
- Consequently, whether the Department was made aware by the legal representatives or not was irrelevant.
- Section 292BB applicable to an assessee and not to a legal representative.
- Further, in the present case one of the legal heirs of the deceased-assessee, i.e., the petitioner, had neither co-operated in the assessment proceedings nor filed return or waived the requirement of section 148 or submitted to jurisdiction of the Assessing Officer.
- She had merely uploaded the death certificate of the deceased-assessee.
- Keeping in view the aforesaid, the present writ petition was allowed by the ITAT and the impugned notice and all consequential orders/ proceedings passed/initiated thereto were quashed.
To conclude, the arguments advanced by the respondent were no longer an untouched matter and were consistently rejected by different High Courts including this jurisdictional court. In view of consistent, uniform and settled position of law, to accept the submissions of the respondent would amount to unsettling the “settled law”
ITAT also found no reason to take a different view. There was a value which the court must abide by in promoting the interest of certainty in tax litigation. Not doing so would only result in uncertainty and displacement of settled expectations.
There was a significant value which must attach to observing the requirement of consistency and certainty. Individual affairs are conducted and business decisions are made in the expectation of consistency, uniformity and certainty. To detract from those principles is neither expedient nor desirable.