Delhi HC held that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition

Case Background (SAVITA KAPILA v. ASSISTANT COMMISSIONER OF INCOME TAX)

On July 16, 2020 Delhi High Court held that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition. Writ petition was filed seeking direction to the respondent to quash the notice issued to the deceased assessee under Section 148 of the Income Tax Act, 1961 and all the consequential proceedings and orderspassed by the respondent.

It was noticed by income tax department that no return had been filed by the deceased assessee and the source of deposits and receipts remained unexplained and had escaped assessment. Accordingly, the case was selected under Section 147/148 of the Act 1961. However,deceased-assessee had already expired on 21st December, 2018.

More notices were served which could not reach him or his legal heirs.The assessing officer then issued an order to legal heirs for non-compliance with notices. A final show cause notice was issued directing to file the return or assessment order would be filed. Proceedings were transferred to petitioner and assessment order was passed in her name whereby the addition of Rs. 21,31,000 was made and demand for Rs. 14,19,060 was raised.

ARGUMENTS ON BEHALF OF THE PETITIONER

The petitioners claimed that the requirement under Section 148 of the Act, 1961 had not been fulfilled and pointed that notices were not issued to petitioner or any legal representative and proceeding were transferred to the petitioner and no other legal representative. It was submitted that the proceedings against the petitioner were barred by limitation as per section 149(1)(b). It also argued that Section 159 won’t be applicable in this case as proceedings were not initiated against assessee when he was alive.

ARGUMENTS ON BEHALF OF THE RESPONDENT

It was submitted by the respondent that the writ petition could not to be entertained as it had been preferred after the completion of assessment proceedings and in accordance with the statutory provisions, and it claimed that the petitioner must approach the Appellate Commissioner under Section 246A, for grievance. He submitted that the legal representative is liable for the liabilities of the deceased-assessee under section 159 and it cannot be said that the assessment proceedings are null and void because the Assessing officer was unaware of the death.  It was further submitted that the proviso to Section 292BB of the Act would be attracted to the present case and the petitioner would be prevented from questioning the validity of the notice.

REJOINDER ARGUMENTS ON BEHALF OF THE PETITIONER

The petitioners emphasized that there was no statutory obligation upon the legal heirs to intimate the death of the assessee to the respondent and provisions of Section 292BB of the Act were not attracted to the present case as the petitioner had merely uploaded the death certificate of the deceased-assessee online and had infact neither filed a return on behalf of the deceased-assessee nor submitted to the jurisdiction of the assessing officer and had not even waived the requirement of Section 148 of the Act.

COURT’S REASONING

The Court held that an alternative statutory remedy does not operate as a bar to maintainability of a writ petition. It stated that the fact that an assessment order has been passed and it is open to challenge by way of an appeal, does not denude the petitioner of its right to challenge the notice for assessment if it is without jurisdiction. Further it stated that the requirement under Section 148 of service of notice was not fulfilled in the present instance as requirement of issuing notice to a correct person and not to a dead person is not merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. Also, no notice was issued under Section 148 to the petitioner during limitation and hence the proceedings are barred under Section 149(1)(b). The court held that Section 159 of the Act, 1961does not apply to the present case. Section 292B does not apply to the present case as the issuance of notice to a dead person does not come under the ambit of mistake and 292BB is applicable on the assessee and not the legal heir. Hence the notice issued to the deceased assessee under Section 148 and all the consequential proceedings and orders passed by the respondent were quashed.