Late Sh. Lal Chand Verma Vs Union of India & Anr. (Delhi High Court)
Conclusion: Sine qua non for acquiring jurisdiction to reopen an assessment was that notice under section 148 should be issued to a correct person and not to a dead person. Moreso, section 159 was applicable when proceedings were initiated and pending against an assessee during their lifetime, and the legal representative assumed responsibility after the assessee’s death.
Held: In the instant case, the original assessee Lal Chand Verma passed away on 30 July 2021. It appeared that the Income Tax Officer acting on the basis of a statement purportedly made by another assessee, namely, Sh. Sanjay Jain during assessment proceedings pertaining to the latter, proceeded to issue a notice under Section 148A(b) of the Act, in relation to the Assessment Year 2019-2020, dated 30 March 2023, calling upon the deceased assessee to furnish an explanation as to why certain financial transactions should not be considered as income chargeable to tax, and inter-alia indicating that a notice under Section 148 of the Act might be issued for reassessment on the basis of the alleged escaped income. In response to the said notice, the son/legal heir of the deceased assessee submitted a reply on 01 April 2023 wherein he unequivocally apprised the respondent of the demise of his father/assessee, furnishing alongwith a copy of the death certificate as conclusive evidence, and asserted that the notice was null and void ab initio. However, notwithstanding the factum of the death of the assessee having been brought to the attention of the respondent, the respondent on 13 April 2023 proceeded to pass the impugned notice under Section 148A(d) as well as an accompanying notice under section 148 of the Act, whereby the respondent directed the deceased assessee to reassess his income and further deemed financial transactions amounting to ₹14,55,000/- as his taxable income for the Assessment Year 2019-2020. It was held that following the decision in case of Savita Kapila v. Assistant Commissioner of Income Tax4 as well as Dharamraj v. Income Tax Officer wherein it was concluded that the sine qua non for acquiring jurisdiction to reopen an assessment was that notice under section 148 should be issued to a correct person and not to a dead person. Consequently, the jurisdictional requirement under section 148 of service of notice was not fulfilled in the present instanced. Moreover, section 159 of the Act was applicable when proceedings were initiated and pending against an assessee during their lifetime, and the legal representative assumed responsibility after the assessee’s death. This was not the factual scenario in the present case; therefore, Section 159 of the Act was not applicable here.
