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The income tax department cannot issue reassessment orders to a dead person or their legal heirs, the Bombay high court ruled on Thursday.
A division bench of justices GS Kulkarni and Advait Sethna said the Income Tax Act requires the issuance of a show-cause notice to the assessee, who should get an opportunity to present their case. Since this isn’t possible if the person is dead, such notices and orders cannot be passed, the bench said.
The court was hearing a petition filed by Gaurang Wakade, a resident of Arlington in the United States, who challenged a notice issued by an income tax officer from Mumbai to his late mother, Meena Wakade, in 2022. The notice called for the reassessment of her accounts for the year 2015-16. The department can call for a reassessment under section 148A of the Income Tax Act if it thinks the assessee has not included all their income in their tax assessment for the year.
Wakade challenged the notice primarily on the grounds that his mother had died in March 2020. He submitted that the I-T department could not issue such a notice after her death.
The high court accepted the argument, striking down the notice and the reassessment order. The bench clarified that the Supreme Court has held it to be the first principle of civilised jurisprudence that a person against whom any action is sought to be taken or whose rights or interests are being affected should be given a reasonable opportunity to defend themselves.
Once Meena Wakade died, “there was no question of her defending such action or being heard so as to accord any sanctity to such order,” the bench said. Clarifying that the entire action was of no consequence, the court also said that in such a situation, even the legal heirs cannot be bound by such orders.
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