The Income Tax Appellate Tribunal, Delhi, has unequivocally held that any notice issued under Section 148 of the Income Tax Act, 1961, to a deceased assessee is void ab initio, rendering all subsequent assessment proceedings illegal. This ruling reinforces the foundational principle that tax liability cannot attach to a non-existent legal personality, and places the burden squarely on the revenue to identify and proceed against the proper legal representative.
Background & Facts
The Dispute
The deceased assessee, Neeraj Kataria, passed away on 31 December 2016. Nearly seven years later, in March 2023, the Assessing Officer issued a notice under Section 148 for the assessment year 2019-20, based on information that the deceased had received enhanced compensation and interest on acquired agricultural land. Despite the death being established by a certified death certificate, the AO proceeded to complete the assessment under Section 147 read with Section 144 and Section 144B, assessing an income of Rs. 3.65 crore under the head "Income from Other Sources".
Procedural History
- 31 December 2016: Assessee Neeraj Kataria died.
- 24 March 2023: Notice under Section 148 issued in the name of the deceased.
- 28 September 2020: A return declaring nil income was uploaded and verified as "Neeraj Kataria" - a fact the AO relied upon.
- 6 March 2024: Assessment order passed on the deceased.
- 22 July 2025: CIT(A) sustained the addition, holding that the legal heirs failed to inform the department of the death.
- 10 March 2026: ITAT Delhi allowed the appeal, quashing the assessment.
Relief Sought
The appellant sought quashing of the notice under Section 148 and the assessment order, arguing that proceedings against a deceased person are void ab initio and that no statutory duty exists on legal heirs to intimate the department of the death.
The Legal Issue
The central question was whether a notice issued under Section 148 of the Income Tax Act, 1961, to a deceased person confers jurisdiction on the Assessing Officer to complete a reassessment, and whether the failure of legal heirs to inform the department of the death validates such proceedings.
Arguments Presented
For the Petitioner
The appellant relied on multiple High Court judgments, including Savita Kapila v. ACIT, Rashid Lala v. ITO, and Dharamraj v. ITO, to argue that:
- The term "person" under Section 2(31) refers exclusively to a living individual.
- A deceased person ceases to be a "person" under the Act, rendering any notice or assessment against them void ab initio.
- Section 292B cannot cure a foundational defect such as issuing notice to a non-existent entity.
- No statutory provision imposes a duty on legal heirs to notify the department of the death or cancel the PAN.
For the Respondent
The Revenue contended that:
- A return was filed and verified in the name of the deceased after his death, indicating tacit participation in the proceedings.
- The legal heirs failed to inform the department of the death, thereby causing procedural delay.
- Section 159 allows assessment on legal representatives, and the AO was justified in proceeding against the deceased before identifying the representative.
The Court's Analysis
The Tribunal meticulously reviewed the statutory framework and binding precedents. It emphasized that Section 148 requires the notice to be issued to a "person" who is legally capable of being assessed. The expression "individual" under Section 2(31), as interpreted by the Andhra Pradesh, Madras, Gujarat, Bombay, and Delhi High Courts, excludes deceased persons.
"Notice issued in the name of a dead person is not enforceable in law."
The Tribunal rejected the Revenue’s reliance on Section 292B, holding that it cannot rectify a jurisdictional defect arising from initiating proceedings against a non-existent entity. The filing of a return by a deceased person, even if verified, is legally impossible and cannot be construed as waiver or estoppel.
The Court further distinguished Savita Kapila, which held that legal representatives have no duty to intimate the department of death, and affirmed that the department’s failure to verify the status of the assessee before initiating proceedings cannot be remedied by shifting blame to the heirs.
The Tribunal concluded that the assessment order, being founded on an invalid notice, is void ab initio. All subsequent actions - including demand notices and penalty proceedings - are tainted by this initial illegality.
The Verdict
The appellant won. The ITAT Delhi held that notice under Section 148 issued to a deceased person is void ab initio, and any assessment based on such notice is illegal. The assessment order was quashed, and the appeal was allowed.
What This Means For Similar Cases
Notice Must Be Issued to Living Legal Representative
- Practitioners must immediately challenge any notice under Section 148 issued in the name of a deceased person.
- Revenue authorities must identify and serve notices on legal representatives under Section 159 before initiating reassessment.
- Failure to do so renders proceedings void, regardless of subsequent participation or delay.
No Duty to Intimate Death Rests on Legal Heirs
- Legal heirs are under no statutory obligation to notify the department of the death of an assessee.
- The department’s internal records (e.g., PAN status) cannot be used to justify proceeding against a deceased person.
- Arguments based on "lack of communication" from heirs are legally unsustainable.
Section 292B Cannot Cure Jurisdictional Defects
- Section 292B applies only to procedural irregularities, not to fundamental errors like jurisdiction over a non-existent person.
- Any attempt to invoke Section 292B to validate notices issued to deceased persons will be rejected by courts.
- Practitioners should raise this as a preliminary objection in all reassessment cases involving deceased assessee.
