Bombay High Court declares notices and proceedings in deceased assessee’s name as null and void under Income Tax Act

Bombay High Court declares notices and proceedings in deceased assessee’s name as null and void under Income Tax Act

Cites the rulings of the Supreme Court in previous cases

The Bombay High Court has ruled that all notices and consequential proceedings under the Income Tax Act (IT Act) in the name of a deceased assessee were null and void.

The Court stated that if the concerned officers followed the settled law and refrained from issuing such notices, it would not only benefit the citizens, but also not overburden the courts.

The petitioner, the legal heir of Usha B. Sanghvi (deceased assessee), was aggrieved by the notice issued under Section 148A(b) of the IT Act, the order under Section 148A(d), and the notice under Section 148, in the name of the deceased person.

Additionally, the Principal Commissioner of Income Tax granted approval to the Assistant Commissioner of Income Tax Circle to re-open the assessment of the deceased. The petitioner sought relief from the actions taken by the tax authorities.

The bench comprising of Justice Dhiraj Singh Thakur and Justice Kamal Khata referred to the judgment in the Principal Commissioner of Income Tax, New Delhi vs Maruti Suzuki India Ltd. [LQ/SC/2019/1125] case, wherein the Supreme Court ruled that issuing a notice and passing an order in the name of an old entity was legally invalid. The court had also held that such an error could not be cured under Section 292B of the IT Act, as it constituted a substantive illegality and not a mere violation of procedure.

The Judges quashed the impugned notices and order, while examining the decision rendered in the CLSA India Private Limited vs The Deputy Commissioner of Income Tax & Ors case, wherein while allowing the petition, the court had held that the revenue department’s stand that the reassessment was justified because the PAN in the name of the non-existent entity remained active, did not create an exception in favor of the revenue to dilute in any manner the principles enunciated by the apex court in the Saraswati Industrial Syndicate Limited vs Commissioner of Income Tax [LQ/SC/1990/496] case and in the PCIT New Delhi vs Maruti Suzuki India Ltd case.