The relevant facts of the present case are that information was received by the Assessing Officer that in Financial Year 2011-12, the assessee had cash deposits of Rupees Ten Lakhs (Rs. 10,00,000/-) in his bank account, time deposits of Rupees Eleven Lakhs Five Thousand Five Hundred Eighty Six (Rs. 11,05,586/-) and receipts of Rupees Twenty Five Thousand Four Hundred Fourteen (Rs. 25,414/-) as per Form 26AS. It was noticed that no return had been filed and the source of the deposits and receipts remained unexplained. Accordingly, the case was selected for income escaping assessment. However, the assessee’s father was already expired. Notice for assessment was issued in the name of the deceased and sent at his last known address known to the department. Said notice could not and was never served upon assessee’s father. A show-cause notice was issued to the deceased to explain why a penalty under section 271(1)(b) should not be imposed for failure to comply with a notice issued under section 142(1). Pursuant to another notice issued under section 133(6) to the banks of the deceased, AO obtained the contact details of the assessee. Assessee informed that her father had passed away and uploaded the death certificate confirming the same on the Income-tax portal. AO passed an order imposing a penalty upon the deceased through the legal heir for non-compliance of notice issued to the deceased. Thereafter a show-cause notice was issued to the assessee directing them to file the return and produce relevant documents. Proceedings were transferred to PAN of the assessee and on the same date, the assessment order was passed in her name making additions.
Delhi High Court held that in the absence of a statutory provision it was difficult to cast a duty upon a legal representative to intimate the factum of death of the assessee to the income tax department. Therefore, whether the PAN record was updated or not or whether the Department was made aware by the legal representatives or not is irrelevant.
Court held that the issuance of a notice under Section 148 is the foundation for the reopening of an assessment. Consequently, to reopen an assessment, 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. Consequently, the legal heirs are under no statutory obligation to intimate the death of the assessee to the revenue.
Therefore, notice issued for assessment and all the consequential orders passed or proceedings initiated were liable to be quashed.
SAVITA KAPILA LEGAL HEIR OF LATE SHRI MOHINDER PAUL KAPILA vs. ASSISTANT COMMISSIONER OF INCOME TAX
Decision in favour of: AssesseeHIGH COURT OF DELHI