The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has ruled that a reassessment notice addressed to a taxpayer after his death is legally invalid and cannot confer jurisdiction upon the Assessing Officer.
Upholding the relief granted by the Commissioner of Income Tax (Appeals), the Tribunal dismissed the Revenue’s appeal and quashed the reassessment proceedings that had culminated in an addition of approximately ₹8.71 crore as long-term capital gains for Assessment Year 2009-10.
The ITAT clarified that where a taxpayer has died before the initiation of reassessment, the Income Tax Department must identify the legal representative and issue the statutory notice to that person specifically in the capacity of legal heir. Such notice must also be issued within the limitation period prescribed under the Income Tax Act, 1961.
Buy Now: Income tax E-Compilation – August 2026
Property Sale Declared at ₹2.75 Crore
The dispute arose from the sale of an immovable property situated in Greater Kailash, Delhi. In his income-tax return filed on July 22, 2009, the taxpayer disclosed the property’s sale consideration as ₹2.75 crore.
The return declared a total income of approximately ₹2.09 crore and was processed under Section 143(1) of the Income Tax Act.
No regular assessment proceedings were initiated at that stage. The matter resurfaced several years later following a search conducted by the Income Tax Department at the premises of a deed writer in September 2013.
Draft Agreement Mentioning ₹9.90 Crore Found During Search
During the search, the Department recovered a computer hard disk containing documents relating to various property transactions. The material reportedly included two draft agreements connected with the Greater Kailash property sold by the taxpayer.
One of the drafts mentioned a consideration of ₹9.90 crore, substantially exceeding the ₹2.75 crore recorded in the registered sale deed and disclosed in the income-tax return.
On the basis of the seized material, the Assessing Officer formed the view that ₹9.90 crore represented the property’s actual sale price. The difference was consequently brought to tax, resulting in the computation of long-term capital gains of around ₹8.71 crore.
Taxpayer Died Before Reassessment Notice Was Issued
A crucial jurisdictional defect, however, arose at the very inception of the reassessment proceedings.
The taxpayer had died on October 2, 2015. Despite his death, the Assessing Officer issued the notice under Section 148 on March 31, 2016, in the name of the deceased taxpayer.
Upon receiving the notice, the legal heir informed the Assessing Officer through a written communication dated April 19, 2016, that the person named in the notice had already died. The legal heir accordingly requested that the proceedings be discontinued.
The Assessing Officer nevertheless called upon the legal heir to furnish a return and continued with the reassessment. An order was eventually passed by treating ₹9.90 crore as the actual sale consideration and making the disputed capital gains addition.
CIT(A) Deletes Entire Addition
The reassessment was challenged before the Commissioner of Income Tax (Appeals). The appellate authority accepted the jurisdictional objection and held that the notice issued under Section 148 in the name of a deceased person was invalid.
Since the very foundation of the reassessment was found to be legally defective, the CIT(A) annulled the proceedings and deleted the entire addition of approximately ₹8.71 crore.
Aggrieved by the decision, the Income Tax Department approached the Delhi ITAT.
Notice to Deceased Person Cannot Create Jurisdiction: ITAT
The Tribunal rejected the Revenue’s challenge and held that a notice addressed to a person who was not alive on the date of its issuance could not validly initiate reassessment proceedings.
The ITAT observed that once a taxpayer has died, proceedings relating to his taxable income must be taken against the legal representative in accordance with Section 159 of the Income Tax Act.
For the reassessment to be valid, the Department is required to identify the legal heir and issue the notice to that person expressly in the capacity of the deceased taxpayer’s legal representative.
Merely asking a legal heir to participate after issuing the original notice in the deceased person’s name cannot cure the absence of a valid jurisdictional notice, the Tribunal held.
Defect Not Curable Under Section 292BB
The ITAT further rejected the contention that the irregularity could be cured under Section 292BB of the Income Tax Act.
Section 292BB generally prevents an assessee who has participated in proceedings from subsequently objecting that a notice was not served, was served late or was served improperly. However, the Tribunal distinguished defects concerning service from the complete absence of a legally valid notice.
According to the ITAT, issuing a notice to a person who had already died was not a minor procedural lapse or an error in the manner of service. It was a substantive jurisdictional illegality because no enforceable notice had been issued to a person recognised by law.
Consequently, Section 292BB could not validate proceedings founded on a notice issued to a non-existent person.
Legal Heir Not Required to Proactively Report Death
The Tribunal also held that a legal heir is not under any statutory obligation to independently or proactively notify the Income Tax Department about the taxpayer’s death before any proceedings are initiated.
The responsibility to issue a legally sustainable notice rests with the tax authorities. Therefore, the Department could not justify the defective notice merely by claiming that it was unaware of the taxpayer’s death when the notice was issued.
In the present case, the legal heir had, in any event, informed the Assessing Officer shortly after receiving the notice and had specifically objected to its validity.
Limitation Period Proves Decisive
The limitation period assumed particular importance because March 31, 2016—the date on which the defective notice was issued—was also the final date available to the Department for reopening the assessment.
The Assessing Officer could have validly initiated proceedings against the legal representative by issuing the required notice to the legal heir within that deadline. No such notice was issued.
After the limitation period expired, the Department could not correct the jurisdictional defect by substituting the legal heir or treating subsequent participation as compliance with the statutory requirement.
The ITAT accordingly concluded that the reassessment was void from the outset and dismissed the Revenue’s appeal.
