Income Tax Reassessment Notice Issued to a Deceased Person Is Void from Inception: Allahabad HC

Court : Allahabad High Court

Brief :

The Allahabad High Court examined the validity of reassessment proceedings initiated in the name of a taxpayer more than one year after his death. The principal issue was whether a notice issued to a deceased person could subsequently be validated by substituting the deceased assessee with his legal representative.

Sanjay Dubey passed away on January 7, 2024. Despite his death, the Income Tax Department issued a reassessment notice in his name on March 28, 2025. The proceedings were based on information obtained during a search conducted against the Omaxe Group in April 2021. The Department alleged that he had made an undisclosed cash payment of ₹27.44 lakh for purchasing a residential property in Lucknow.

The tax authorities subsequently assessed an additional income of ₹69.06 lakh and raised a tax demand of ₹39.67 lakh against his wife, Asha Dubey, treating her as the deceased assessee’s legal representative.

Asha Dubey informed the Department about her husband’s death and challenged the validity of the reassessment proceedings. After her objections were rejected and her name was substituted in place of the deceased taxpayer, she approached the Allahabad High Court.

The Department argued that it was unaware of Sanjay Dubey’s death when the notice was issued. It further submitted that the petitioner had filed an income tax return in her deceased husband’s name and verified it through an Aadhaar-based OTP after his death.

The Court observed that filing and verifying a return in the name of a deceased person was legally improper. It clarified that the Department could initiate appropriate proceedings against the petitioner under Section 140 and, subject to due process, Section 277 of the Income-tax Act. However, the petitioner’s alleged unlawful conduct could not confer jurisdiction upon the tax authorities where such jurisdiction did not otherwise exist under the law.

The Court considered whether Sections 292B and 292BB could cure the defect in the notice and whether Section 150 could permit the issuance of a fresh notice after the expiry of the statutory limitation period. CA Sansaar

Citation :

Case: Smt. Asha Dubey v. Union of India and Others
Bench: Justice Shekhar B. Saraf and Justice Abdhesh Kumar Chaudhary
Relevant Provisions: Sections 140, 148, 150, 159, 277, 292B and 292BB of the Income-tax Act, 1961

Judgement :

The Allahabad High Court held that a reassessment notice must be issued in the name of the legally correct person. Since Sanjay Dubey was not alive when the notice was issued, the notice and all consequential proceedings were void from inception.

The Court explained that Section 159 permits proceedings validly initiated during an assessee’s lifetime to continue against the legal representative after the assessee’s death. However, where reassessment proceedings are initiated after the taxpayer’s death, the notice must be issued directly to the legal representative within the prescribed limitation period.

The subsequent substitution of the deceased assessee with a legal representative could not cure the absence of jurisdiction at the time of issuing the original notice.

The Court further held that issuing a statutory notice to a deceased person constitutes a fundamental jurisdictional defect and not a minor procedural irregularity. Consequently, Section 292B could not be invoked to validate the notice.

Participation by a legal representative in proceedings initiated against a deceased person also does not validate an inherently invalid notice. Section 292BB cannot create jurisdiction where the foundational notice was issued to a person who was no longer alive. The Court also clarified that a legal heir has no statutory obligation to immediately inform the Income Tax Department about the taxpayer’s death.

The High Court rejected the Department’s reliance on Section 150 for issuing a fresh notice after the limitation period had expired. It held that an order merely quashing an invalid reassessment notice does not amount to a statutory “finding” or “direction” permitting fresh proceedings beyond the prescribed limitation period. Potential revenue loss or equitable considerations cannot override mandatory statutory requirements.

The Court laid down the following principles:

1. A notice under Section 148 must be issued in the name of the legally correct person.
2. A reassessment notice issued to a deceased taxpayer, along with all consequential proceedings, is void from inception.
3. Proceedings validly initiated during an assessee’s lifetime may continue against the legal representative under Section 159.
4. If reassessment proceedings are initiated after the assessee’s death, the notice must be issued directly to the legal representative within the prescribed limitation period.
5. Subsequent substitution of the deceased taxpayer with a legal heir cannot cure the original jurisdictional defect.
6. A notice issued to a deceased person cannot be validated under Section 292B.
7. Participation by the legal representative cannot validate proceedings founded upon an inherently invalid notice.
8. Section 292BB does not prevent a legal representative from challenging a notice issued to a deceased person.
9. A legal heir has no statutory duty to immediately notify the Income Tax Department about the taxpayer’s death.
10. Potential revenue loss or equitable considerations cannot validate proceedings that fail to comply with mandatory legal requirements.

Accordingly, the High Court set aside the reassessment notice, assessment proceedings and consequential tax demand.

Considering the practical difficulties that such cases may cause to the tax administration, the Court directed its Senior Registrar to forward a copy of the judgment to the Union Ministry of Finance. The Central Government was permitted to examine whether suitable amendments to the Income-tax Act or other tax laws were required to address similar situations. CA Sansaar