Bombay HC Declares Notices And Proceedings In Name Of Deceased Assessee Under Income Tax Act As Null And Void

While stating that if the concerned officers followed the settled law and refrained from issuing null and void notices, it would be beneficial not only for the citizens but also for the already overburdened courts in the country, the Bombay High Court ruled that all notices and consequential proceedings under the Income Tax Act in the name of a deceased assessee were null and void.

The Division Bench of Justice Dhiraj Singh Thakur and Justice Kamal Khata observed that “The impugned notice for reopening the assessment was issued on a dead person. There are several judgments of different High Courts holding that the notice issued on a dead person or reopening of assessment of a dead person is null and void in law and the requirement of issuing a notice to a correct person is not merely a procedural requirement but a condition precedent for a notice to be valid in law”.

Advocate Dharan V. Gandhi appeared for the Petitioner, whereas Advocate Devvrat Singh appeared for the Respondent.

The case involved the Petitioner, who was the legal heir of the Late Smt. Usha B. Sanghvi (the deceased assessee). The petitioner was aggrieved by the notice issued under Section 148A(b) of the Income Tax Act, the order under Section 148A(d), and the notice issued under Section 148, all in the name of the deceased assessee. Additionally, the Principal Commissioner of Income Tax had approved the Assistant Commissioner of Income Tax Circle to re-open the assessment of the deceased. The petitioner had sought relief from these actions taken by the tax authorities.

After considering the submission, the Bench referred to the judgment in Principal Commissioner of Income Tax, New Delhi vs Maruti Suzuki India Ltd. [(2019) 107 taxmann.com 375(SC)], wherein the Supreme Court had ruled that issuing a notice and passing an order in the name of an old entity was legally invalid.

The Bench, therefore, reiterated that such an error cannot be cured under Section 292B of the Income Tax Act, as the same constituted a substantive illegality and not a mere procedural violation.

The Bench also examined the decision rendered in CLSA India Private Limited vs The Deputy Commissioner of Income Tax & Ors., wherein it was held that the stand of the revenue that the reassessment was justified since the PAN in the name of the non-existent entity had remained active does not create an exception in favour of the revenue to dilute in any manner the principles enunciated by the Apex Court in Saraswati Industrial Syndicate Limited v. Commissioner of Income Tax [4186 ITR 278 (SC)].

Therefore, observing that since the department was aware of the demise of the assessee and since the ITBA system is undergoing a change and being updated with new functionalities and modalities, the High Court quashed the notices issued under Sections 148 and 148A(b).

Cause Title: Dhirendra Bhupendra Sanghvi v. Assistant Commissioner of Income Tax Circle – 27(3) and Ors. [Neutral Citation No.: 2023:BHC-AS:17405-DB]

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