Case Law Details
Late Madhuben Kantilal Patel Through Legal Heir And Son Kalpeshbhai Kantilal Patel Vs Union Of India (Gujarat High Court)
Introduction: The Gujarat High Court recently delivered a judgment in the case of Late Madhuben Kantilal Patel through Legal Heir and Son Kalpeshbhai Kantilal Patel vs Union of India. The petitioner challenged the proceedings initiated under Section 147, 148, and other related provisions of the Income Tax Act, 1961 (“the Act”). The crux of the matter revolved around the legality of issuing a notice under Section 148 in the name of the deceased taxpayer and subsequent actions taken by the authorities.
Factual Background: Late Smt. Madhuben Kantibhai Patel, the taxpayer, filed the income tax return for the assessment year 2017-18 but unfortunately passed away on August 25, 2020, during the COVID-19 pandemic. Her legal heir, Kalpeshbhai Kantibhai Patel, applied to become the “Representative Assessee.” The registration was initially rejected on March 14, 2021, due to incomplete documents. However, after reapplication on March 24, 2021, the legal heirs were registered, and they filed the return for the assessment year 2020-21 on behalf of the deceased.
Grievance and Legal Challenge: The petitioner contested the notice issued by respondent No.2 under Section 148 on June 30, 2021, in the name of the deceased for the assessment year 2017-18. The petitioner argued that, being the representative assessee, the notice to the deceased was impermissible under the law. The petitioner sought various reliefs, including declaring the impugned notice as devoid of legality, challenging the validity of certain notifications, and quashing the notice issued under Section 148.
Court Proceedings: The court heard arguments from both sides, and it was not disputed that the notice was issued to the late Madhuben Kantibhai Patel but represented by Kalpeshbhai Kantibhai Patel, the present petitioner. The draft order under Section 148A of the Act was served upon the legal heirs, following the directions of the Hon’ble Apex Court in a relevant case. The first notice was issued on June 30, 2021, and subsequent actions were taken after compliance with the amended act.
Court’s Decision: The court, however, disagreed with the respondent’s contention that subsequent notice issued to the legal heir would validate the initial action of issuing the notice to the deceased assessee. The court emphasized that the initial notice, issued when the assessee had already passed away, was not sustainable and illegal.
The judgment referred to a previous case, Chandreshbhai Jayantibhai Patel vs. Income Tax Officer, where it was held that a notice issued under Section 148 against a deceased person is invalid unless the legal representative waives the right to objection. The court concluded that the legal representative, in this case, did not waive the requirement of notice under Section 148, and therefore, the subsequent notice to the legal heir does not cure the defect of the initial notice.
Citing similar views in the case of Urmilaben Aniruddhasinhji Jadeja vs. ITO, the court quashed and set aside the impugned notice and all consequential orders. The judgment clarified that if permissible under the law, a fresh notice under Section 159(2)(b) of the Income Tax Act in relation to the legal heirs is permitted.
Conclusion: The Gujarat High Court’s judgment reiterates the importance of adhering to procedural requirements under the Income Tax Act, especially when dealing with notices issued in the name of deceased taxpayers. It emphasizes that subsequent actions, even if taken with compliance, cannot cure the defect of an initially invalid notice. The decision provides clarity on the legal standing of notices issued to deceased individuals and reinforces the need for strict adherence to jurisdictional requirements in such matters.
FULL TEXT OF THE JUDGMENT/ORDER OF GUJARAT HIGH COURT
1. Petitioner is before this Court seeking to challenge the proceedings carried out under Section 147, 148 and other allied provisions of the Income Tax Act, 1961 (“hereinafter referred to as “the Act”) .
2. Brief facts leading to the present petition are as follows:-
2.1 This petition is filed by the legal heir of Late Smt Madhuben Kantibhai Patel being her son. Late Smt. Madhuben had filed the return of income for the assessment year 2017-18 through electronic medium on 1.1.2018 declaring the total income is of Rs.5,173/-.
2.2 She passed away unfortunately on 25th August, 2020 during the pandemic due to COVID-19 virus. The legal heirs applied to become the petitioner’s “Representative Assessee” on the ITBA portal on 13.3.2021 supplying the death certificate of the deceased, her PAN card and the legal heir’s PAN card with the affidavit certifying the legal heirs of the petitioner’s deceased husband. Registration as a legal heirs was rejected on 14.3.202 1, as it did not fulfill the checklist of the documents.
2.3 On 24th March, 2021, the petitioner again made a request submitting all requisite documents. This was accepted and legal heirs also filed the return of income for assessment year 2020- 21 on 26.3.2021 on behalf of Late Smt. Madhuben being registered as legal representative.
3. It is grievance on the part of the petitioner that respondent No.2 being aware of the petitioner being representative assessee, having issued the notice under Section 148 on 30.6.2021 under the name of the deceased for the assessment year 2017-18 stating that the respondent No.2 has reason to believe that the income chargeable to tax for the assessment year 2017-18 has escaped the assessment within the meaning of Section 147 of the Act. It is proposed to reassess the income while issuance of this notice under Section 148 of the Act.
4. The legal heirs had tendered two communications dated 19th July, 2021 and 22nd July, 2021 in response to the said notice challenging its validity on the ground that the notice to the deceased was impermissible under the law. The prayers sought for by the petitioner are as follows :-
“a. The Hon’ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order direction or command in the nature of writ of mandamus holding and declaring that the impugned notice issued in the name of the deceased petitioner is devoid of any legality.
b. The Hon’ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order, direction or command in the nature of writ of mandamus holding and declaring that the Notification No. 10/2021, dated 27.2.2021, Notification No. 38/2021 dated 27.4.2021, Notification No. 74/2021 and Notification No. 113/2021 are ultra vires the Income Tax Act, 1961 and the Finance Act, 2021 and that the Resultant Sections 147, 148, 149, 150 and 151 are ex-facie illegal as two parallel provisions cannot be applicable simultaneously under the same statue when the Finance Act has specifically amended the provisions of Section 148 and made it applicable from 1 .4 .2021.
c. That the Hon’ble Court be pleased to issue a writ of mandamus or a writ in the nature of mandamus or any other appropriate writ, order or direction quashing and setting aside the impugned notice dated 30.6.2021 issued under Section 148 of the Income Tax Act by the Respondent No.2 .
d. The pending the hearing and final disposal of the petition, the Hon’ble Court be pleased to stay the proceedings instituted vide impugned notice dated 30.6.2021 issued under Section 148 of the Income Tax Act by the Assessing Officer and to restrain the respondent No.2 from acting in furtherance thereof.
e. For ad interim relief in terms of Para VIII(a), (b),(c) and (d) hereinabove.
f. Award the cost of this petition.
g. Grant such other and further reliefs as this Hon’ble Court deems fit.”
5. This Court had issued notice to the respondents and also granted interim protection vide order dated 7th March, 2022 [Coram: Mr.J.B.Pardiwala, (as His Lordship then was) & Ms. Nisha Thakore, JJ] .
6. We have heard Ms. Nupur Shah, learned advocate appearing for the petitioner and Mr.Nikunt Raval, learned Standing Cousel for the respondents
7. It is not being disputed that the notice issued is on late Madhuben Kantibhai Patel represented by Mr. Kalpeshbhai Kantibhai Patel- present petitioner.
8. The draft order under clause (d) of Section 148A of the Act was also served upon the legal heirs, pursuant to the directions issued by the Hon’ble Apex Court in the case of Union of India Vs. Ashish Agrawal & others (444 ITR Pg.1.) The said notice had been issued on the legal heirs. That, the first notice was issued on 30th June, 2021 and thereafter, pursuant to the directions issued in case of Ashish Agrawal’s case, the Court permitted the entire procedure as per the amended act to be completed and thereafter, the notice impugned had been issued upon all the legal heirs .
9. We are not in agreement with the respondent that the subsequent notice since has been issued on the legal heir, it would in any manner validate the initial action of the respondent of issuing the notice to the deceased assessee. It is a matter on record that the assessee passed away on 25th August, 2020 and the death certificate of the deceased was also communicated to the officer concerned in a short period. The first Notice under Section 148 of the I.T.Act was issued on 30th June, 2021 which itself was not sustainable and was illegal. This Court in various decisions has already decided this issue.
9.1 This Court in the case of Chandreshbhai Jayantibhai Patel Vs. Income Tax Officer reported in [2019] 101 taxmann.com 362 has dealt with the very issue of issuance of notice to the dead person to hold that the same is unsustainable under the law and that defect of initiation of notice to the deceased cannot be cured for the notice has to be treated as invalid. The Court has held and observed thus:-
“Therefore, the question that arises for consideration is whether the notice under Section 148 issued against the deceased assessee can be said to be in conformity with or according to the intent and purposes of the Act. In this regard, it may be noted that a notice under Section 148 is a jurisdictional notice, and existence of a valid notice under Section 148 is a condition precedent for exercise of jurisdiction by the Assessing Officer to assess or reassess under Section 147. The want of a valid notice affects the jurisdiction of the Assessing Officer to proceed with the assessment and thus, affects the validity of the preceding for assessment or reassessment. A notice issued under Section 148 against a dead person is invlid, innless the legal representative submits to the jurisdiction of the Assessing Officer without raising any objection. Therefore, where the legal representative does not waive his right to a notice under Section 148, it cannot be said that the notice issued against the dead person is in conformity with or according to the intent and purpose of the Act which requires issuance of notice to the assessee, whereupon the Assessing Officer assumes jurisdiction under Section 147 and consequently, the provisions of Section 292B would not be attracted. Therefore, in view of the provisions of section 159(2)(b), it is permissible for the Assessing Officer to issue a fresh notice under Section 148 against the legal representative, provided that the same is not barred by limitation; he however, cannot continue the proceedings on the basis of an invlid notice issued under Section 148 to the dead assessee.
In the facts of the present case, as noticed herein above, the notice under section 148, which is a jurisdictional notice, has been issued to a dead person. Upon receipt of such notice, the legal representative has raised an objection to the validity of such notice and has nto complied with the same. The legal representative not having waived the requirement of notice under section 148 and not having submitted to the jurisdiction of the Assessing Officer pursuant to the impugned notice, the provisions of Section 292B would nto be attracted and hence, the notice under Section 148 has to be treated as invalid. In the absence of a valid notice, the Assessing Officer has no authority to assume the jurisdiction under Section 147 and hence, continuation of the proceeding under Section 147 pursuant to such invalid notice, is without authority of law. The impugned notice as well as the proceedings taken pursuant thereto, therefore, cannot be sustained.
For the forgoing reasons, the impugned notice issued by the respondent under section 148 as well as all proceedings pursuant thereto, are hereby quashed and set aside.”
10. The similar view is taken in case of Urmilaben Aniruddhasinhji Jadeja Vs. ITO [117 taxmann.com 504 (Gujarat)
11. Resultantly, this petition is allowed. Quashing and setting aside the notice and all consequential orders. However, if otherwise permissible under the law, a fresh notice under Section 159(2)(b) of the Income Tax Act in this relation to the legal heirs is permitted. Interim relief if any, granted earlier stands vacated.
Petition stands disposed of accordingly.
Author Bio
