Facts of the Case

The present writ petition was filed by Amit Garg, the legal heir of the deceased assessee Smt. Vijaya Garg, challenging the validity of reassessment proceedings initiated under the Income Tax Act, 1961.

  • The assessee filed her return of income for AY 2015–16 declaring income of ₹10,00,960, which was accepted under Section 143(3).
  • A notice under the unamended Section 148 was issued on 25.04.2021 alleging escaped income.
  • The assessee passed away on 24.06.2021.
  • The earlier notice was quashed by the High Court following Mon Mohan Kohli v. ACIT.
  • Subsequently, in light of Union of India v. Ashish Agarwal, the Revenue treated the earlier notice as a show cause notice under Section 148A(b) and issued fresh proceedings.
  • Despite being informed about the death of the assessee, the Assessing Officer proceeded and issued notices in the name of the deceased through her legal heir.

Issues Involved

  1. Whether reassessment proceedings initiated under Section 148A(b) in the name of a deceased assessee are invalid?
  2. Whether proceedings initiated during the lifetime of the assessee can be continued against the legal heir under Section 159 of the Income Tax Act?
  3. Whether subsequent correction of the name to include the legal heir cures the defect?

Petitioner’s Arguments

  • The notice dated 01.06.2022 issued under Section 148A(b) in the name of a deceased assessee is void ab initio.
  • It is mandatory that notices be issued to a living person, failing which proceedings are invalid.
  • Reliance was placed on Sangeeta Vig v. ITO, where proceedings against a dead person were held invalid.
  • The continuation of proceedings against a dead person violates principles of natural justice.

Respondent’s Arguments

  • The Revenue contended that the original notice dated 25.04.2021 was issued when the assessee was alive.
  • As per the Supreme Court judgment in Union of India v. Ashish Agarwal, such notices are deemed to be valid show cause notices under Section 148A(b).
  • Under Section 159 of the Act, proceedings validly initiated during the lifetime of the assessee can be continued against the legal representative.
  • The defect, if any, was cured by subsequently issuing notices in the name of the legalheir.

Court Findings / Order

  • The Court held that the initial notice was issued during the lifetime of the assessee, making the proceedings valid.
  • In terms of Section 159(2)(a), proceedings initiated against a deceased person during their lifetime can be continued against the legal representative.
  • The Assessing Officer rightly amended the name to reflect the legal heir.
  • The reliance on Sangeeta Vig was misplaced, as in that case, the notice was issued after death, unlike the present case.
  • Accordingly, the writ petition was disposed of, and proceedings were allowed to continue.

Important Clarification by Court

  • Proceedings initiated during the lifetime of the assessee do not lapse upon death.
  • Legal representatives step into the shoes of the deceased for tax proceedings.
  • The Court clarified that all other merits of the case remain open except the issue of continuation of proceedings.

Sections Involved

  • Section 143(3) – Assessment
  • Section 147 – Income Escaping Assessment
  • Section 148 – Reassessment Notice
  • Section 148A(b) – Show Cause Notice before Reassessment
  • Section 148A(d) – Order for Reassessment
  • Section 159 – Liability of Legal Representatives

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2022:DHC:4028-DB/58927092022CW138212022_193823.pdf  

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