Rajendrakumar Padmshibhai Padshala Vs ITO (Gujarat High Court)
Summary: The Gujarat High Court allowed the petition filed by Rajendrakumar Padmshibhai Padshala and held that reassessment proceedings initiated by issuing a notice under section 148 of the Income-tax Act, 1961 in the name of a person who had already died could not be continued against the legal representative where the legal representative had objected to the notice from the inception and had not participated by filing a return. The Court consequently quashed the notice dated 27.03.2019 under section 148, the consequential assessment order dated 29.11.2019 under sections 144 read with 147, and the penalty order under section 271F.
Gujarat HC Quashes Reassessment Proceedings Initiated Against Deceased Assessee
The dispute before the Court concerned the validity of reassessment proceedings initiated against late Karsanbhai Gagajibhai Padashala after his death on 13.03.2019. The notice under section 148 was issued on 27.03.2019 in his name. No response was filed to the subsequent notices because they were issued at the deceased person’s village address. The Assessing Officer thereafter completed an assessment under section 144 read with section 147, raised demand and imposed penalty under section 271F. The petitioner subsequently informed the Assessing Officer of the death and supplied the death certificate. The central issue was whether the defective notice could nevertheless sustain the proceedings by treating the legal representative as an assessee under section 159 or by invoking section 292B. The Court relied on its earlier decisions, particularly Chandreshbhai Jayantibhai Patel and Bhupendra Bhikhalal Desai, and explained the distinction between a proceeding already initiated during the lifetime of the assessee and a proceeding first initiated after death. Under section 159(2)(a), a proceeding already taken against the deceased before death may continue against the legal representative. Under section 159(2)(b), a proceeding which could have been taken against the deceased if he had survived may be taken against the legal representative, but the necessary notice under section 148 must be issued to the legal representative. In the present facts, the section 147 proceeding had not been initiated before death. Therefore, the notice issued to the deceased could not be treated as a valid foundation for proceedings against the legal representative. The Court also distinguished cases in which the legal representative had responded to the notice by filing a return and participating in the proceedings. Here, the petitioner had consistently objected to the validity of the notice and had not submitted to the Assessing Officer’s jurisdiction. The Court therefore held that section 292B could not cure the jurisdictional defect and allowed the petition.
