| Heading | : | LEGAL ABSURDITY OF INCOME TAX NOTICES ISSUED TO DECEASED INDIVIDUALS |
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LEGAL ABSURDITY OF INCOME TAX NOTICES ISSUED TO DECEASED INDIVIDUALS
In the realm of taxation, legal absurdities occasionally surface, leaving individuals puzzled by the intricacies of the law. One such perplexing scenario arises when income tax notices are issued to deceased individuals. Common sense suggests that the deceased should be exempt from such obligations, but the legal implications surrounding this issue can be surprisingly complex. This article explores the voidness of income tax notices issued to deceased individuals, shedding light on the legal intricacies that contribute to this absurdity.
When an income tax notice is issued in the name of a deceased person, it is generally considered invalid and legally ineffective. This is because the deceased individual lacks the legal capacity to respond or participate in the proceedings. While Section 292BB protects the revenue department from technical defects, it does not negate the fundamental requirement of issuing a notice to the correct person.
Section which to be refers ( Section 159 and Section 292BB of Income Tax Act) : –
Under the Income-tax Act, 1961 in India, Section 159 addresses the liability of legal representatives of a deceased taxpayer. Where Section 159 empowers legal representatives to act on behalf of the deceased, ensuring the continuity of tax proceedings and compliance. However, when a notice is issued in the name of a deceased person, certain sections of the Income-tax Act come into play which is section 292BB which is as under : –
Section 292BB: Under this section, any technical defects in the issuance of a notice are protected, ensuring that the revenue department can proceed with the proceedings. However, this section does not specifically address the validity of a notice issued to a deceased person.
According to Section 292BB:
“Where an assessee has appeared in any proceeding or cooperated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was –
In essence, Section 292BB establishes that if an assessee has appeared or cooperated in any assessment or reassessment proceedings, any notice required to be served upon them will be deemed to have been duly served in a timely manner. This provision prevents the assessee from raising objections on the grounds that the notice was not served, not served in time, or served improperly.
While Section 292BB addresses the deemed service of notices, it does not specifically address the validity of a notice issued to a deceased person. However, judicial interpretations and legal precedents have established that serving a notice to a deceased person is null and void as the deceased individual lacks the legal capacity to respond or participate in the proceedings. This interpretation aligns with the principle that issuing a notice to the correct person is a fundamental requirement for its validity, as highlighted in various court judgments.
When an income tax notice is issued in the name of a deceased person, it is generally considered invalid and legally ineffective.
[2023] 151 taxmann.com 541 (Bombay) HIGH COURT OF BOMBAY Dhirendra Bhupendra Sanghvi v. Assistant Commissioner of Income-tax, Circle-27(3):
The case involved Dhirendra Bhupendra Sanghvi, who was issued an income tax notice under Section 148 of the Income Tax Act, 1961. The notice was issued on the basis of information that Sanghvi had received undisclosed income from his business.
Sanghvi challenged the validity of the notice, arguing that it was issued without any reasonable belief that he had not disclosed his true income. He also argued that the notice was issued beyond the time limit prescribed by law.
The High Court of Bombay upheld Sanghvi’s challenge and quashed the income tax notice. The Court held that the tax authorities had not shown any reasonable belief that Sanghvi had not disclosed his true income. The Court also held that the notice was issued beyond the time limit prescribed by law.
The Court’s decision in the Dhirendra Bhupendra Sanghvi case is a welcome relief for taxpayers who have been issued income tax notices without any reasonable basis. The decision ensures that taxpayers will not be liable to pay taxes on income that they have not actually received.
Here are some of the key takeaways from the case:
The tax authorities must have reasonable belief that the assessee has not disclosed his or her true income before issuing an income tax notice under Section 148 of the Income Tax Act.
The tax authorities must issue an income tax notice within the time limit prescribed by law.
If the tax authorities fail to show reasonable belief or fail to issue the notice within the time limit, the notice will be invalid.
The Dhirendra Bhupendra Sanghvi case is a valuable precedent for taxpayers who have been issued income tax notices without any reasonable basis. If you have been issued an income tax notice, you should consult with a tax advisor to discuss your options.
The High Court of Gujarat ruled that a notice issued under section 148 of the Income-tax Act, 1961, against a deceased person is invalid unless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection. The original assessee, ‘JHP’, had passed away, and the Assessing Officer issued a notice in their name to reopen the assessment. The petitioner, as the heir and legal representative of ‘JHP’, informed the Assessing Officer about the death and submitted the death certificate. However, the Assessing Officer considered the objections raised by the petitioner as participation in the proceedings, citing the provisions of section 292B, and continued with the reassessment. The court held that the petitioner’s communication about the death of the assessee cannot be considered as participation in the proceedings, and thus, the notice issued under section 148 was deemed invalid. This ruling favored the assessee.
The High Court of Delhi dealt with a situation where a notice under section 148 of the Income-tax Act, 1961, was issued to the original assessee who had already passed away. The department continued with the proceedings under section 147 in the name of the petitioner, who was the legal heir of the original assessee. The petitioner argued that the proceedings initiated were barred by limitation. The court held that if the department intended to proceed under section 147, they should have done so within the period of limitation by issuing a notice to the legal representative of the deceased assessee. Beyond that date, the department could not proceed by issuing a notice to the legal representatives of the assessee. Therefore, the subsequent proceedings under section 147 against the petitioner were deemed to be misconceived and were quashed. This ruling favored the assessee.
The Income Tax Appellate Tribunal (ITAT) Visakhapatnam Bench addressed the issue of a notice issued to a deceased assessee. The tribunal ruled that when proceedings are initiated against a deceased assessee, a notice issued in the name of the deceased person cannot bind the legal heirs unless a proper notice is issued to them. Therefore, any notice issued in the name of a deceased person is considered invalid and cannot be enforced in law. This ruling favored the assessee.
The Supreme Court of India dealt with a situation where a notice was issued to a deceased person. The assessee had informed the revenue authorities that his father, in whose name the notice was issued, had already passed away. Despite being aware of this fact, the Assessing Officer issued a notice in the name of the deceased person to reopen the assessment. The assessee filed a petition contending that the notice was without jurisdiction as it was issued against a dead person. The High Court held that no valid notice could be issued against a dead person and ordered the quashing of the impugned notice. The Supreme Court dismissed the Special Leave Petition filed against the High Court’s order, thus favoring the assessee.
The court, after careful consideration of the provisions and legal precedents, arrived at the following conclusions:
Consequently, the court ordered the quashing and setting aside of the impugned notice issued under Section 148, the order under Section 148A(d), and the notice under Section 148A(b). Furthermore, the court prohibited any further actions or proceedings based on these invalidated notices.
The court concludes that the notice and all consequential proceedings in the name of the deceased assessee are null and void. Consequently, the impugned notice, order, and subsequent actions are quashed and set aside. The court stresses the importance of adhering to established legal principles and abstaining from issuing notices that are null and void.
This case serves as an important precedent, reaffirming the significance of issuing notices to the correct person in income tax proceedings. By upholding fairness and integrity within the tax system, this ruling contributes to a more equitable tax administration, easing compliance, and reducing litigation. It highlights the need for tax authorities to exercise caution and ensure proper procedures are followed to maintain the trust and confidence of taxpayers in the taxation system.
