Tax laws are made for the living; I-T notice to dead person invalid: HC | India News
The Allahabad High Court quashed income tax reassessment proceedings against a deceased person, holding that a notice issued after a taxpayer’s death is invalid from its inception and cannot be made valid later by replacing the deceased with a legal heir.
“To tax the dead is a contradiction in terms. Tax laws are made by the living to tax the living,” the court observed.
What is the case?
The case stemmed from a reassessment notice issued by the Income Tax Department to Sanjay Dubey on March 28, 2025, more than a year after his death on January 7, 2024. The notice was related to alleged unaccounted cash payments made while purchasing a flat in Lucknow. After learning of his death, the department substituted his wife, Asha Dubey, as the legal representative and raised a tax demand against her.
Asha Dubey challenged the proceedings before the High Court, arguing that the reassessment notice itself was invalid as it had been issued after her husband’s death.
What did the court say?
The bench said Section 159 of the Income Tax Act allows proceedings initiated while an assessee was alive to continue against the legal representative after the assessee’s death. However, if reassessment proceedings are initiated after the taxpayer has died, the department must issue the notice directly to the legal representative within the prescribed limitation period.
The court further held that issuing a notice to a deceased person is a jurisdictional defect rather than a procedural irregularity and, therefore, cannot be cured under Section 292B of the Income Tax Act. It also ruled that participation by a legal heir in such proceedings does not validate the notice or attract the bar under Section 292BB.
Recognising that the existing legal framework could result in revenue loss in some cases, the High Court directed its Senior Registrar to send a copy of the judgment to the Union Finance Ministry for consideration of possible amendments to the Income Tax Act and other tax laws to address the issue. The court said Parliament may consider appropriate legislative changes to remove the loopholes flagged in this case.
