Recently, the Income Tax Appellate Tribunal ( ITAT) of Jaipur ruled in a case that involved the issuance of notice under Section 148 of the Income Tax Act 1961 (ITA) to a dead individual.
Banwari Lal Soothwal, the assessee who expired on 09/02/2016, was issued a notice under Section 148 for non filing of income tax returns by the Assessing Officer (AO). Upon receiving no reply, the AO made an addition of Rs.89, 89, 504 on account of long term capital gain on sale of the assessee’s plots based on the sub-registrar’s estimation of the plots’ value.
Get a Copy of the Handbook on Income Tax Act with Free E-Book Access Click here.
Aggrieved, the appellant/authorized representative/ legal heir of the assessee appealed against the decision before the Commissioner of Income Tax (A) [ CIT (A) ]. The CIT (A) however, upheld the AO’s order and passed an order under section 250 of ITA.
Aggrieved, the legal heir appealed against the order before ITAT.
It was submitted before the tribunal that such a notice issued in the name of a dead individual is Void Ab Initio, meaning it was invalid from the beginning itself. The counsel for the appellant relied on the precedents put forward by judicial judgements, such as the Supreme Court’s decisions in the case of ITO Vs. Bhupendra Bhikhalal Desai and in case of PCIT Vs. Maruti Suzuki , which held that such notices are in fact, unenforceable.
Get a Copy of the Handbook on Income Tax Act with Free E-Book Access Click here.
The appellant also highlighted that a similar issue was raised in assessment year 2012-13 where no addition was made. It was argued that the AO further erred in not allowing the deduction for indexed cost of acquisition in computing the long term capital gain and by substituting the actual sales consideration of Rs.44,45,326/- with the value assessed by the sub-registrar at Rs.89,89,504/-.
The Revenue Department/Respondent, however, contested the appeal, arguing that the death of the assessee was not notified to the AO, which made it impossible to know this fact unless it was submitted by the legal heir. No other contrary contentions were made by the respondent.
Get a Copy of the Handbook on Income Tax Act with Free E-Book Access Click here.
After listening to both the sides, The bench of Dr. Seethlakshmi and Dr Dipak P Ripote held that the notice issued under Section 148 was a jurisdictional notice and must be served on a living person. Since Banwari Lal Soothwal was deceased, the notice and subsequent reassessment order were in fact void. The Tribunal emphasized that the correct procedure under section 159, which involves issuing notices to the legal representative of the deceased, was not followed.
Accordingly, the appeal was allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
