Ramchand Through Legal Heir, Sh. Chander Mohan v. Income Tax Officer, ITA No.1525/DEL/2024 (A.Y.2011-12), ITAT Delhi
The ITAT Delhi has quashed the reassessment proceedings and assessment order issued under Section 148 of the Income Tax Act, 1961, in the name of a deceased individual. This case reaffirms the settled legal principle that income tax proceedings cannot be initiated or continued against a non-existent entity.
Background of the Case
The appeal was filed against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre, Delhi, concerning the assessment year 2011-12. The appeal faced a delay of 164 days, but after reviewing the condonation application, ITAT accepted the appeal, finding the delay to be genuine and unintentional.
The case revolved around the reassessment proceedings initiated against the original assessee, Shri Ramchand, who had passed away on January 31, 2018. The deceased’s legal heir, Om Prakash, duly informed the Assessing Officer (AO) about the death on February 26, 2018, enclosing the death certificate. Despite receiving this information, the AO proceeded to issue a notice under Section 148 in the name of the deceased on March 29, 2018.
Proceedings and ITAT’s Observations
- Non-Recognition of Death Notification
- The AO was repeatedly informed about the death of Shri Ramchand but continued to issue notices, including a Section 142(1) notice on May 23, 2018.
- The assessment order dated November 28, 2018, was eventually passed in the name of “Late Shri Ramchand through Legal Heir Smt. Bhagwati Devi.”
- Legal Position on Notices to Deceased Persons
- The ITAT emphasized that tax proceedings initiated in the name of a deceased individual are void ab initio.
- Referring to the Supreme Court’s ruling in PCIT vs. Maruti Suzuki India Limited (265 Taxman 515), the ITAT reiterated that an assessment order issued in the name of a non-existent entity is without jurisdiction and must be set aside.
ITAT’s Ruling
The tribunal held that:
- The AO erred in issuing a notice under Section 148 in the name of a dead person.
- The assessment order, even if addressed as “Late Shri Ramchand through L/H Smt. Bhagwati Devi,” remained legally untenable.
- The entire assessment proceedings were quashed for being without jurisdiction.
Key Takeaways for Taxpayers
- Legal Heirs Should Notify the Tax Authorities Promptly
- If an assessee passes away, their legal representatives should inform the AO in writing and provide a death certificate.
- Notices Issued to Deceased Persons are Invalid
- If an assessment notice is issued in the name of a deceased person, legal heirs should challenge its validity before tax authorities.
- Tribunals and Courts Uphold Legal Precedents
- The ITAT’s decision follows multiple rulings where courts have declared that proceedings against a non-existent entity lack legal standing.
Conclusion
The ITAT’s decision reinforces the principle that income tax proceedings must be conducted against a legal entity. Tax authorities should ensure proper verification before issuing notices to avoid unnecessary litigation. Legal heirs should remain vigilant and seek timely legal recourse if faced with similar issues.