Legal Heir Participation Cannot Cure Invalid U/s 153C Jurisdiction

Saroj Gupta Vs DCIT (ITAT Delhi)

Section 153C Notice to Deceased Person Invalid; Participation by Legal Heir Cannot Cure Jurisdictional Defect

Search assessments for AYs 2014-15 to 2020-21 were initiated under section 153C in the name of the original assessee, who had already died on 01.01.2021. The jurisdictional 153C notice dated 30.06.2022 and the recorded satisfactions were all issued in the name of the deceased person and no fresh notice under section 153C was ever issued in the name of the legal heir.

The Department argued that once the legal heir later participated in the proceedings and filed replies after being informed, the defect stood cured under section 292BB and by analogy with the Supreme Court decision in Mahagun Realtors.

The Tribunal rejected this contention, holding that issuance of a valid jurisdictional notice to the correct person is a sine qua non for assumption of jurisdiction under section 153C. A notice issued to a dead person is a nullity in law and cannot be validated by subsequent participation of the legal heir. Section 292BB cures defects in service of notice, not complete absence of a valid notice to the proper person.

Distinguishing amalgamation cases like Mahagun Realtors, the Tribunal held that death of an individual requires a fresh statutory notice to the legal representative. Since no such notice was ever issued after the death was brought to the AO’s knowledge, the very foundation of jurisdiction failed.

Accordingly, all assessments framed under section 153C in the name of the deceased person were held void ab initio and quashed for all the seven assessment years. The assessee’s appeals were allowed in full.

FULL TEXT OF THE ORDER OF ITAT DELHI

The instant appeals, preferred by the assessee, are directed against separate orders of the Ld. CIT(Appeals)-25, New Delhi in proceedings under Section 153C r.w.s. 144 of the Income Tax Act, 1961 (herein after referred to as the “Act”). Relevant details are tabulated as under:

All these appeals were heard analogously and are being disposed of by a single composite order for the sake of convenience.

2. From the facts leading to the instant appeals are that Pawan Kumar Gupta, original assessee, died on 01.01.2021 which is evident from the death certificate and appearing at page 274 of the paper book filed on behalf of the assessee before us.

3. In fact search notice under Section 153C was issued on 30.06.2022 appearing at page 223 of the paper book admittedly issued in the name of the deceased person Pawan Kumar Gupta followed by show cause dated 13.01.2024 appearing at page 248-267 of the PB filed before us. It also appears that the satisfaction recorded by the Ld. AO of the searched person was of 9.6.2022 in the name of the deceased assessee followed by the satisfaction recorded by the AO of the assessee on 24.6.2022 appearing at pages 112-113 of the PB. It is also a fact that the death of the assessee was intimated by the legal heir of the assessee on 31.01.2024 to the AO of the assessee and the legal heir was issued with the letter dated 7.3.2024. Such fact is evident from para 16 of the assessment order which is brought to our notice by the Ld. DR. It is also further submitted by him that the legal heir of the assessee duly participated in the proceeding and neither raised any objection.

4. Learned Sr. Counsel Shri Salil Kapoor appearing for the assessee joins the issue here to this effect that the jurisdictional notice under Section 153C was admittedly issued in the name of the original assessee who died long back on 01.01.2021. No show cause was issued in the name of the legal heir neither 153C jurisdictional notice, which is a sine qua non in order to us emption of jurisdiction in a matter has been issued in the name of the legal heir of the assessee. The said notice 153C of the Act ought to have been issued by the Ld. AO when the fact of death of the assessee was brought to the notice by the legal heir of the assessee before him. Having not done so, the jurisdiction exercised by the Ld. AO in search matter under Section 153C is found to have no legal basis, as vehemently argued by him. In this regard he has relied upon very many judgments including the decisions in Savita Kapila v. ACIT [Delhi High Court – WP(C) 3258/2020]; Rajendra Kumar Sehgal v. ITO [Delhi High Court – WP(C) 11255/2017]; & DCIT v. Pranav Gupta [ITAT Delhi –ITA No. 2192/Del/2023 dated 20.06.2025].

5. The written submissions filed by the Ld. DR reads as under:

“Sub: Submission on behalf of the Department in the above-captioned appeal in respect of issue of initiating and conducting the assessment

proceeding u/s 153C of the Act in the name of deceased Assessee-Reg.

MAY IT PLEASE YOUR HONOURS’

1. The Assessee has raised the following ground, being Ground No.1, pertaining to the issue mentioned in the captioned subject –

“1. On the facts and in law, the Assessing Officer has erred in initiating and conducting the assessment proceedings under Section 153C of the Act in the name of a deceased Assessee, rendering the entire proceedings a nullity in the eyes of law. The CIT(A) has further erred in failing to quash the same.

2. The Department’s submissions in this regard are as under-

2.1. It is respectfully submitted that when the Assessing Officer was intimated about the death of the Assessee Sh. Pawn Kumar Gupta vide submission dated 31-01-2024, the assessing officer issued subsequent letters through legal heir of Sh. Pawn Kumar Gupta to file replies and in response the legal heir Smt. Saroj Gupta w/o Late Sh. Pawn Kumar Gupta filed the replies. Therefore, the legal heir knowingly participated in assessment proceedings. Also, the legal heir did not challenge the invalidity of notice u/s 153C of the Act during assessment proceedings. Thus, there was no prejudice caused to the legal heir and she was afforded enough opportunities by the assessing officer during assessment proceedings. The assessment order u/s 153C is also passed through legal heir Smt. Saroj Gupta.

2.2. Reliance is also placed upon Principal Commissioner of Income-tax V. Mahagun Realtors (P.) Ltd. [2022] 137 taxmann.com 91 (SC) [Copy Enclosed] wherein Hon’ble Supreme Court has upheld the validity of an assessment conducted in the name of a non-existing Assessee (amalgamating company) on the facts where the amalgamated company participated in the assessment proceedings and no prejudice was shown. Death of an individual and amalgamation of a company are both forms of a “Person” ceasing to exist. Thus, in view of the ratio of the judgment Principal Commissioner of Income-tax V. Mahagun Realtors (P.) Ltd. [2022] 137 taxmann.com 91 (SC) the assessment order, dated 18-03-204, made u/s 153C of the Act in the name of Late Sh. Pawn Kumar Gupta through legal heir Smt. Saroj Gupta is valid and lawful.”

5.1 Ld. DR also referred to Section 292BB, which for the sake of ready reference is reproduced below:

“Notice deemed to be valid in certain circumstances.

292BB. Where an assessee has appeared in any proceeding or “co-operated in any inquiry relating to an assessment or reassessment, it shall be deemed that any notice under any provision of this Act, which is required to be served upon him, has been duly served upon him in time in accordance with the provisions of this Act and such assessee shall be precluded from taking any objection in any proceeding or inquiry under this Act that the notice was-

a. not served upon him; or

b. not served upon him in time; or

c. served upon him in an improper manner:

Provided that nothing contained in this section shall apply where the assessee has raised such objection before the completion of such assessment or reassessment.]”

5.2  It is the case of the Revenue as submitted by the Ld. DR that since the legal heir of the deceased assessee already participated in the proceedings the assessee is now stopped to raise the issue before any legal form. However, we find that the requirement of issuing notice under Section 153C on the legal heir is sine qua non for proceeding further in the case of deceased assessee, in the absence of which the entire proceeding is vitiated as per the ratio laid down by the different judicial forums.

6. Thus, having heard the respective submissions made on behalf of the parties and considering the facts and circumstances of the matter particularly having regard to the particular fact of notice under Section 153C admittedly once issued in the name of the deceased assessee and never thereafter issued in the name of the legal heir, respectfully relying upon the judgment discussed above, the entire proceeding is found to be vitiated and therefore, liable to be quashed. We order accordingly.

7. In the result, assessee’s appeals are allowed.

Order pronounced in open court on 13.01.2026.