Can the Income Tax Department issue a notice after a taxpayer’s death? Allahabad HC answers
The Allahabad High Court has ruled that the Income Tax Department cannot issue a reassessment notice in the name of a person who has already died, holding that such a notice is void from the outset and cannot later be validated by simply substituting the deceased’s legal heir. The judgment provides important clarity for families dealing with tax proceedings after the death of a taxpayer.
The case involved a reassessment notice issued on 28 March 2025 to Sanjay Dubey, more than a year after his death on 7 January 2024. The notice related to alleged unaccounted cash payments made during the purchase of a flat in Lucknow. After learning about his death, the Income Tax Department replaced his wife, Asha Dubey, as the legal representative and proceeded to raise a tax demand against her. She challenged the proceedings before the High Court.
The Division Bench of Justices Shekhar B. Saraf and Abdhesh Kumar Chaudhary observed that “to tax the dead is a contradiction in terms” and held that tax authorities had no jurisdiction to initiate reassessment proceedings against a deceased person.
When can tax proceedings continue against legal heirs?
The court clarified that legal heirs are not automatically insulated from tax proceedings. Under Section 159 of the Income-tax Act, tax proceedings that were validly initiated while the taxpayer was alive can continue against the legal representative after the taxpayer’s death.
However, if the department seeks to initiate reassessment only after the taxpayer has died, it must issue the notice directly to the legal representative within the prescribed limitation period. A notice addressed to the deceased person cannot later be corrected by replacing the name of the taxpayer with that of a legal heir, the court said.
The tax department argued that it was unaware of Dubey’s death when it issued the notice. It also pointed out that an income-tax return had been filed in the deceased’s name after his death using his Aadhaar-linked one-time password. The court observed that filing such a return was improper but said that this could not create jurisdiction where none existed under the law. It added that the department was free to take action under the appropriate provisions, if applicable.
Why the ruling matters for taxpayers’ families
A key takeaway from the judgment is that issuing a notice to a deceased person is a jurisdictional defect, not merely a procedural error. Consequently, the defect cannot be cured under Section 292B of the Income-tax Act, which protects certain notices from being invalidated because of technical mistakes. The court also held that even if a legal heir participates in the proceedings, it does not validate an otherwise invalid notice under Section 292BB.
The High Court nevertheless recognised that the existing legal framework could sometimes lead to loss of revenue if the limitation period expires before a fresh notice is issued. It therefore directed its Senior Registrar to forward a copy of the judgment to the Union Finance Ministry for consideration of possible legislative amendments to the Income-tax Act and other tax laws to address the issue.
