Income Tax Notices Quashed as Proceedings Were Initiated Against a Deceased Person

Devendra Pareek Vs ACIT (Rajasthan High Court)

The Rajasthan High Court considered a writ petition concerning proceedings initiated by the Income Tax Department under Section 148A of the Income Tax Act, 1961 against a person who had already expired.

The Court observed that the issue was no longer res integra and that the legal position was well settled. It noted that proceedings under Section 148A cannot be initiated against a deceased person. In such cases, the Department is required to proceed by taking recourse to Section 159 of the Act, which deals with legal representatives. The Court found that this requirement had not been complied with in the present matter.

The Court referred to an earlier decision of a Coordinate Bench in Legal Heirs of Smt. Sneh Lata Bhandari Vs. Income Tax Officer and Ors. decided on 27.02.2024. In that case, the Court had held that liability proceedings against legal representatives of a deceased assessee could be initiated only after complying with the mandatory provisions of Section 148A(b) of the Act. Since Section 148A(b) had not been complied with against the legal representatives, the notice issued under Section 148A and the consequential order under Section 148A(d) were quashed. However, the Department was granted liberty to reinitiate proceedings against the legal representatives by strictly complying with Sections 148A(b) and 159 of the Act. The Court had also directed that the period between filing and disposal of the writ petition be excluded while computing limitation for initiating such proceedings.

The Rajasthan High Court further noted that the same principle had been reiterated and followed by another Division Bench in Meena V. Kumar Vs. Principal Chief Commissioner of Income Tax & Anr., decided on 22.03.2024.

Finding no reason to take a different view, the Court followed the settled legal position. Accordingly, the writ petition was allowed. The notices issued under Section 274 of the Income Tax Act, 1961 were quashed and set aside. At the same time, liberty was granted to the respondents to proceed in accordance with law.

FULL TEXT OF THE JUDGMENT/ORDER OF RAJASTHAN HIGH COURT

1. Heard.

2. The issue raised in the present writ petition is no more res integra. The department had initiated proceedings under Section 148A of the Income Tax Department, 1961 (for short ‘the Act of 1961’) against the persons who have already expired.

2. The law in this regard is well settled that proceedings against person who has expired, cannot be initiated under Section 148A of the Act of 1961 and what is required to be inducted is by way of taking aid of Section 159 of the Act of 1961, which has not been done in the present case.

3. A Coordinate Bench of this Court in D.B. Civil Writ Petition No.9985/2023-Legal Heirs of Smt. Sneh Lata Bhandari Vs. Income Tax Officer and Ors., has settled the aforesaid proposition vide judgment dated 27.02.2024. It would be apposite to quote relevant part of the order as under:

“7. This Court is of the firm opinion that the proceedings under the liability created against the legal representatives of the deceased assessee can be initiated against the petitioner but only after compliance of mandatory provisions under Section 148A (b) of the Act of 1961. It is writ large on the record and the reply that the provision of Section 148A(b) of the Act of 1961 has not been complied against the legal representatives of the deceased Smt. Sneh Lata Bhandari.

8. In limited nature of adjudication, the impugned notice dated 21.04.2023 (Annexure-7) under Section 148A of the Act of 1961and the order dated 21.04.2023 (Annexure-8) passed under Section 148A(d) of the Act of 1961 are hereby quashed and set aside.

9. However, the respondents shall be free to reinitiate the proceedings against the legal representatives of the deceased Smt. Sheh Lata Bhandari, while strictly complying with the provisions of the Section 148A(b) and 159 of the Act of 1961.

10. Both the parties shall be free to proceed strictly in accordance with law.

11. Since, the liberty has been given to the respondent-Department to reinitiate the proceedings under Section 148A(b)and Section 159 of the Act of 1961, the limitation period between the filing of the writ petition and till its disposal shall be excluded for the purpose of computation of limitation period for initiating such proceedings.”

5. The same has been again reiterated and followed by another Division Bench of this Court in D.B. Civil Writ Petition No.15115/2022-Meena V. Kumar Vs. Principal Chief Commissioner of Income Tax & Anr., decided on 22.03.2024.

6. We have no reason to differ and accordingly, the present writ petition stands allowed and notices issued under Section 274 of the Act of 1961 are quashed and set aside with liberty to the respondents to act in accordance with law.