Facts of the Case

The case revolves around a reassessment notice issued under Section 148 of the Income Tax Act to a deceased assessee, late Smt. Rukmani Sehgal. The assessee had filed her income tax returns regularly, including for Assessment Year 2010–11, which had already been processed.

After her death on 17.01.2015, the Assessing Officer issued a reassessment notice dated 29.03.2017 in her name. The petitioner, being the legal representative, challenged the validity of such notice.

The Revenue justified the reopening based on alleged transactions involving loss claims connected to Varun Capital Services Ltd., but later attempted to “correct” the reasons citing typographical error.

Issues Involved

  1. Whether a reassessment notice under Section 148 can be validly issued in the name of a deceased person.
  2. Whether such defect can be cured under Section 292BB of the Income Tax Act.
  3. Whether reassessment proceedings are valid without issuance of notice under Section 143(2).
  4. Whether “reasons to believe” can be modified or corrected after issuance of notice.

Petitioner’s Arguments

  • The Act does not permit initiation of reassessment proceedings against a dead person.
  • Section 159 only allows proceedings against legal representatives, not against deceased persons directly.
  • The “reasons to believe” were vague, incorrect, and lacked application of mind.
  • The Revenue attempted to change the basis of reassessment by issuing a “clarification,” which is impermissible.
  • No notice under Section 143(2) was issued, rendering reassessment invalid.

Respondent’s Arguments

  • The error in issuing notice to a deceased person is curable under Section 292BB.
  • The defect is procedural and does not invalidate the reassessment.
  • Reliance was placed on judicial precedents to argue that technical defects should not defeat substantive proceedings.

Court’s Findings / Order

  • Notice issued to a deceased person is void ab initio and cannot be sustained in law.
  • Section 159 clearly mandates that proceedings must be initiated against legal representatives, not the deceased.
  • Section 292BB does not apply where the notice itself is issued to a non-existent person.
  • The attempt to “correct” reasons to believe after issuance of notice indicates non-application of mind and is legally impermissible.
  • Absence of notice under Section 143(2) renders reassessment proceedings invalid as per settled law.

Final Order

The reassessment notice and all consequential proceedings were quashed, and the writ petition was allowed.

Important Clarifications by Court

  • A notice issued to a dead person is not a procedural irregularity but a jurisdictional defect.
  • Legal representatives can only be proceeded against if notice is properly addressed to them.
  • Section 292BB cannot cure a fundamentally invalid notice.
  • “Reasons to believe” must be accurate and cannot be improved or substituted later.
  • Non-issuance of notice under Section 143(2) is fatal to reassessment proceedings.

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2018:DHC:9041-DB/SMD19112018CW112552017_151339.pdf

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