Facts of the Case

The writ petition formed part of a batch of cases challenging reassessment proceedings initiated under the Income-tax Act, 1961 against assessees who had already passed away prior to issuance of notices or orders.

In the present matter, notices and/or assessment actions were issued in the name of deceased persons, including the case concerning Smt. Smriti Bhatia as legal representative of Late Sh. Ankur Bhatia. The petitioners contended that despite the fact of death being communicated to the Income-tax Department, the authorities neither corrected the notices nor issued fresh notices to the legal representatives.

Issues Involved

  1. Whether reassessment notices issued in the name of a deceased assessee are valid in law.
  2. Whether the Income-tax Department can continue proceedings without issuing notice to legal representatives.
  3. Scope and applicability of Section 159 of the Income-tax Act concerning liability of legal representatives.
  4. Whether failure to substitute legal heirs vitiates jurisdiction.
  5. Whether such defect is procedural or goes to the root of jurisdiction.

Petitioner’s Arguments

  • Notices were issued to persons who were no longer alive, rendering them incapable of service.
  • Jurisdiction under Sections 147/148 cannot be assumed without a valid notice to the correct person.
  • The Department had already been informed of the death, yet failed to issue notices to legal representatives.
  • Issuance of notice to a dead person is not a curable defect and renders proceedings void ab initio.
  • Section 159 does not dispense with the requirement of issuing notice to legal representatives.

Respondent’s Arguments (Revenue)

  • Under Section 159 of the Income-tax Act, legal representatives are liable to discharge tax liabilities of the deceased.
  • The statute permits continuation or initiation of proceedings against legal heirs.
  • Proceedings should not fail merely because the notice was issued in the name of the deceased.
  • Reliance was placed on judicial precedents where irregularities were treated as curable if legal representatives were aware of proceedings.

 Court Order / Findings

1. Notice to Deceased Person is Jurisdictionally Invalid

Issuance of notice to a dead person cannot confer jurisdiction on the Assessing Officer. A valid notice is a condition precedent for reassessment.

2. Requirement of Notice to Legal Representative

Section 159 enables proceedings against legal heirs but does not dispense with the requirement of formally issuing notice to them.

3. Non-Application of Mind by Authorities

Despite being informed of the death, the Department mechanically proceeded without corrective action or invocation of Section 159.

4. Liability of Legal Representatives is Limited

Legal heirs are liable only to the extent of the estate inherited. They must therefore be specifically notified and given opportunity to contest.

5. Defect Not Curable Under Section 292B

Issuing notice to a dead person is not a mere procedural defect but a substantive illegality affecting jurisdiction.

6. Distinction from Cases Where Proceedings Continue Validly

Authorities relied on precedents where legal representatives participated in proceedings knowingly; such facts were absent here.

Important Clarification

  • Proceedings pending at the time of death may continue, but only after bringing legal representatives on record.
  • Fresh proceedings must be initiated directly against legal heirs where the assessee has died before issuance of notice.
  • There is no statutory obligation on legal representatives to proactively inform the Department of death, though in many cases such intimation had been given.
  • Awareness of death without corrective action reflects non-application of mind.

Final Outcome

The Delhi High Court quashed all impugned notices and assessment orders issued in the name of deceased assessees, including the case of Smt. Smriti Bhatia as legal representative of Late Sh. Ankur Bhatia.

Link to download the order -   https://www.mytaxexpert.co.in/uploads/1772176548_SMTSMRITIBHATIALEGALREPRESENTATIVEOFLATESHANKURBHATIAVsASSISTANTCOMMISSIONEROFINCOMETAXANR.pdf 

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