Section 148 Reassessment Appeal Dismissed as Proceedings Continued Against Deceased Assessee: Calcutta HC

ITO Vs Narendra Kumar Agarwal (Calcutta High Court)

Issue: Whether reassessment proceedings under Sections 148A(d) and 148 can be sustained when initiated against a deceased assessee despite the Department having prior knowledge of the death.

Summary: The Calcutta High Court dismissed the Department’s appeal and declined to interfere with the Single Judge’s order quashing the order passed under Section 148A(d) and the consequential notice issued under Section 148 for Assessment Year 2020-21. The Department had received information regarding alleged bogus purchases and issued proceedings after the assessee’s death, despite a death certificate having been uploaded in the e-proceedings portal and despite an earlier High Court order quashing a similar notice for Assessment Year 2018-19 on the same ground. The Department contended that it could not identify the legal heirs due to non-cooperation and therefore issued the notice in the name of the “Legal Heir of Late Chiranji Lal Agarwala” using the deceased’s PAN. The Court held that the Department had full knowledge of the assessee’s death and found no error in the Single Judge’s conclusion that the proceedings had effectively been initiated against a deceased person. It held that using the deceased’s PAN for technical reasons did not justify continuing proceedings against a non-existent entity and dismissed the appeal along with the connected application.

Brief facts: The Department received information from the Insight Portal regarding alleged bogus purchases by the assessee for AY 2020-21. Notice under Section 148A(b) dated 28.03.2024 was issued in the name of the assessee. In reply, the death certificate was uploaded, showing that the assessee had died on 28.04.2021. The Department thereafter issued a notice seeking legal heir details but claimed that no legal heir came forward or registered on the income-tax portal. The Assessing Officer nevertheless passed an order under Section 148A(d) and issued a notice under Section 148 in the name of “Legal Heir of Late Chiranji Lal Agarwala”, using the PAN of the deceased. The Single Judge quashed the proceedings. The Department preferred an appeal before the Division Bench. On these facts a question arose Whether reassessment proceedings can continue against a deceased assessee merely because the legal heirs did not register themselves on the e-filing portal or furnish legal heir details.

Court’s Observations: The Division Bench dismissed the Department’s appeal by holdings that once the Department had knowledge of the assessee’s death, it could not continue proceedings against the deceased. The Department had already faced an earlier writ petition where a notice issued to the same deceased assessee for another assessment year had been quashed on identical grounds. Issuing notices in the name of the “legal heir” while continuing to use the deceased’s PAN and proceeding against a non-existent person was legally impermissible. Failure of the representative or legal heirs to register on the income-tax portal cannot validate proceedings initiated against a dead person. The Department’s plea of technical difficulties in identifying legal heirs was rejected. Proceedings initiated against a deceased person are void and cannot be sustained merely because of procedural or technical reasons.

Courts Decision: Where the Revenue has knowledge that the assessee has died, any notice or reassessment proceeding initiated against the deceased is void ab initio. Administrative inconvenience, absence of legal heir registration on the e-filing portal, or technical constraints cannot override this settled legal principle.

FULL TEXT OF THE JUDGMENT/ORDER OF CALCUTTA HIGH COURT

1. This Mandamus Appeal is directed against the judgment and order dated 24^th July, 2025, passed by the Learned Single Judge in WPO No. 465 of 2025. By the impugned order, the Learned Single Judge was pleased to quash an order dated 19t^h April, 2024, passed under Section 148A(d) of the Income Tax Act, 1961, along with the consequential notice issued under Section 148 of the said Act for the Assessment Year 2020-21.

2. The facts, in a nutshell, are that information was received from the Insight Portal regarding certain alleged bogus purchases made by the assessee, Chiranji Lal Agarwala. Based on this information and after obtaining the necessary statutory approvals, the Department issued a notice under Section 148(b) of the Act on 28^th March, 2024, for the Assessment Year 2020-21. In response to this initial notice, a copy of the assessee’s death certificate was uploaded in the E-Proceedings module, which revealed that Chiranji Lal Agarwala had passed away on 28t^h April, 2021.

3. Despite being put on notice regarding the death of the assessee, the Department issued a show cause notice on 9t^h April, 2024, addressed to the representative of the deceased. This notice requested the submission of legal heir documents and relevant details to bring the legal heirs on record so that proceedings could be properly initiated. According to the appellant/Department, there was no compliance from the side of the representative and the legal heirs were not brought on record.

4. The appellant-Department contends that the Assessing Officer (AO) was left with no alternative way to identify the legal heirs due to this non­cooperation. Consequently, on 19t^h April, 2024, the AO passed an order under Section 148A(d) and issued a notice under Section 148 in the name of “Legal Heir of Late Chiranji Lal Agarwala”.

5. The Department argues that the Learned Single Judge failed to appreciate that the AO had no means of ascertaining the specific names of the legal heirs. It is the Department’s case that the representative intentionally chose not to register as a legal heir on the e-filing portal to avoid the proceedings. They further submit that for technical reasons,

the notices were generated against the Permanent Account Number (PAN) of the deceased assessee because no specific person had been added as a legal heir in the Department’s records. The Department maintains that the notice was not invalid or illegal as it was addressed to the “Legal Heir,” even if it utilized the deceased’s PAN.

6. The matter, as noted, has a chequered history. Learned counsel appearing for the appellant/department admits that this is not the first instance of litigation regarding notices issued to this deceased assessee. Previously, a notice under Section 148 was issued on 18t^h April, 2022, for the Assessment Year 2018-19. That notice was challenged in a writ petition (WPA No. 8838 of 2022) on the ground that it was issued against a dead person. A coordinate Bench of this Court, by an order dated 6^th June, 2022, took note of Chiranji Lal Agarwal’s death on 28^th April, 2021 and quashed that impugned notice.

7. Notwithstanding the fact that the Department was fully aware of the assessee’s death, both through the death certificate uploaded in the E-Proceedings module and the previous High Court order quashing notices for a different assessment year, they proceeded to issue a further notice under Section 148A(b) for the Assessment Year 2020-21 in the name of Chiranji Lal Agarwala.

8. It is quite astonishing that a notice issued under Section 148 of the Act has been issued by the Income Tax, Ward No. 34(1) to one Chiranji Lal Agarwala after knowing fully well that the person has expired. While the Department claims the notice was issued to the “legal heir,” it was still generated against the PAN of the deceased and initiated against a person who was no longer in existence at the time the information was processed. The Department’s contention that it was compelled to act due to non-compliance by an ‘unknown representative’ cannot negate the fundamental legal principle that a notice served on a deceased person is void in the eyes of law.

9. The Learned Single Judge correctly identified that the Department had, in essence, proceeded against a deceased individual. The failure of the representative to register on the portal does not grant the Department the authority to continue proceedings in a manner that is legally unsustainable. The Department’s insistence on using the PAN of the deceased for an order dated April 2024, when the death was recorded in April 2021, cannot be excused as a mere “technical reason”.

10. We find no error in the proposition of law applied by the Learned Single Judge. The Department had full knowledge of the factum of death and had even seen previous notices quashed on the same grounds for a prior assessment year. To repeat the same procedural error for the Assessment Year 2020-21 is an exercise in futility and a disregard for established legal precedents regarding deceased assessees.

11. Accordingly, we do not wish to interfere with the order passed by His Lordship the Hon’ble Justice Raja Basu Chowdhury dated 24^th July, 2025. The grounds for appeal presented by the Department lack merit, as the Department cannot proceed against a non-existent entity.

12. Therefore, the appeal and the connected application are dismissed.

13. There shall be no order as to costs.

14. Urgent photostat certified copy of this order, if applied for, be supplied to the parties upon compliance with all requisite formalities.