The Delhi High Court has held that Income-Tax notices issued in the name of a dead person are null and void.

The petitioner, Sripathi Subbaraya Manohara, legal heir of late Sripathi Subbaraya Gupta, had approached the High Court challenging notice from the Income-Tax Department on orders on assessment and penalty. These were issued / passed in the name of late Sripathi Subbaraya Gupta – the assessee – and related to the Assessment Year 2012-13. The asssessee expired on June 17, 2014.

The petitioner said that she was not aware of the proceedings emanating from the showcause notice dated March 22, 2019, untill November 21, 2019, when she received the order and notices. It was submitted that the SCN having been issued in favour of a dead person, was invalid and all proceedings thereafter, were non-est.

“Impugned notice dated March 22, 2019, under Section 148 of the Act, having been issued in the name of a dead person, is null and void, and all consequent proceedings/orders, including the assessment order and notices dated November 14, 2019, being equally tainted, are liable to be set aside,” said a Division Bench of Justices Navin Chawla and Manmohan in a recent ruling.

Various notices issued

A lawyer for the Tax Department acknowledged that the assessee was dead, but the assessing officer was not aware about the demise of the assessee as inspite of issuance of various notices to the petitioner, the same was not informed to the assessing officer.

After hearing, the Bench quoted parts of order passed in another matter, where it was said that requirement of issuing notice to a correct person and not to a dead person is not merely a procedural requirement, but a condition precedent to the impugned notice being valid in law.

Section 159 of the Act, 1961 applies to a situation where proceedings are initiated/pending against the assessee when he is alive and after his death the legal representative steps into the shoes of the deceased assessee. Also, the legal heirs are under no statutory obligation to intimate the death of the assessee.

As the ruling in Kapila case has not been challenged by the Tax Department in the apex court, the Division Bench went by it and set aside the show cause notice, the assessment order and penalty order.

Divakar Vijayasarathy, Founder & Managing Partner of DVS Advisors LLP, said that had the proceedings been initiated when the assessee was alive or the notice been sent directly to the Legal Representative (LR), instead of the name of the deceased, the outcome could have been different. “There are some instances where the courts have taken a view that mistakes in procedural aspect as error or omission and ruled in favour of the department. In this case the court stated that since the notice itself is null and void, it cannot be treated as an error or omission,” he said.