Section 159 applies only if reassessment notice is issued before Assessee’s death

 

In a writ petition recently, the court has held that Section 159 applies only if reassessment notice is issued before Assessee’s death. In short, if notice under section 148 is issued in the  name of the deceased person and not in the name of the legal heir, the same would be illegal and the entire assessment proceeding would get quashed.

The case details is as under:
Late Sh. Lal Chand Verma vs. Union of India (W.P.(C) 8184/2023 & CM APPL. 31377/2023)

Let us have a Short Overview of the case:

Facts:
1. In July 2021 the taxpayer passed away but the reassessment notice was furnished in his name only in March 2023.

2. The son of the deceased taxpayer told the department about his father’s demise and then the department passed a reassessment notice u/s 148 of the Income Tax Act considering the financial transactions of Rs 14,55,000 as the deceased taxpayer’s taxable income for the pertinent assessment year.

3. Thereafter the son moved the HC to quash the notice and the IT department invoked Sec 159 of the Income Tax Act, which places the liability of the deceased person on his legal representative.

Hon Delhi HC held as below:
1. The sine qua non for acquiring jurisdiction to reopen an assessment is that notice under section 148 should be issued to a correct person and not to a dead person.

2. Section 159 of the Act is applicable when proceedings are initiated and pending against an assessee during their lifetime and the legal representative assumes responsibility after the assessee’s death.

3. Consequently, the jurisdictional requirement under section 148 of the Act, 1961 of service of notice was not fulfilled in the present instance and Sec 159 of the Act is also not applicable

The Copy of the order is as under :

Late-Sh.-Lal-Chand-Verma-Vs-Union-of-India-Anr.-Delhi-High-Court