ITO Vs Late Bhupendra Bhikhalal Desai (Since Decd.) Through His Legal Heir Raju Bhupendra Desai (Supreme Court of India)
Summary: The Supreme Court was concerned with the challenge to the Gujarat High Court judgment in the case of Late Bhupendra Bhikhalal Desai (Since Decd.) Through Legal Heir Raju Bhupendra Desai Vs ITO. The High Court had allowed the writ petition and quashed the notice issued under Section 153C of the Income-tax Act, 1961 and the consequential order, holding that a notice issued to a dead person was unenforceable in law.
For the relevant assessment year, the original assessee had filed his return on 6 January 2012 under Section 139. The High Court recorded that he died on 23 April 2017, while the submission of his counsel referred to 28 April 2017. A notice dated 29 March 2019 under Section 153C was nevertheless issued in the name of the deceased. His son, Raju Bhupendra Desai, subsequently informed the Department of the death and requested that the proceedings be dropped. The Department rejected the objection, relying, among other provisions, on Sections 124(3)(c), 139A(5)(d), 140, 153C and 2(31), and contending that the legal heir had not earlier informed the Department or surrendered the deceased’s PAN.
The High Court considered whether proceedings pursuant to a Section 153C notice issued to a dead person could be sustained. Relying upon its earlier decision in Chandreshbhai Jayantibhai Patel Vs ITO, the Court applied the principle that a notice issued to a dead assessee is not merely a technical defect where the legal representative has not submitted to the jurisdiction.
The High Court distinguished cases where legal representatives had participated in proceedings or filed returns without objection. Here, the legal heir merely informed the Assessing Officer about the death and requested that the proceedings be dropped. The Court held that Section 159(2)(b) permitted proceedings to be taken against a legal representative where proceedings could have been taken against the deceased had he survived, but a valid notice had to be issued to the legal representative.
The Court further held that Section 292B could not cure the defect because the Section 153C notice issued in the name of the deceased was not in conformity with the intent and purpose of the Act. It also rejected the Revenue’s contention that the legal heir could be treated as a “body of individuals” under Section 2(31). Referring to Shabina Abraham & Others Vs Collector of Central Excise, the Court observed that the definition of “person” did not include legal representatives of persons who were deceased. The Court also relied on the statutory-language principle stated in CST vs. Modi Sugar Mills Ltd..
The High Court additionally noted that, despite the Department’s lack of earlier knowledge of the death, the limitation period of 21 months had not expired and a valid notice could have been issued to the legal heir. It ultimately held that the notice was invalid and the further proceedings pursuant to it were not tenable, and accordingly quashed the impugned notice and order, as well as the corresponding notices and orders in the connected writ applications.
The Supreme Court, considering the challenge to the impugned order(s), recorded that it was “not inclined to interfere with the impugned order(s).” The special leave petitions were accordingly dismissed and pending applications were disposed of.
Thus, the Supreme Court declined interference with the Gujarat High Court’s order. The High Court’s disposition quashing the Section 153C notice issued in the name of the deceased assessee and the consequential proceedings was therefore left undisturbed. The Supreme Court’s brief order did not separately enlarge upon or finally determine the broader legal reasoning discussed by the High Court.
FULL TEXT OF THE SUPREME COURT JUDGMENT/ORDER
We are not inclined to interfere with the impugned order(s).
The special leave petitions are, accordingly, dismissed.
Pending applications stand disposed of.
