ITAT Surat annuls reassessment initiated on deceased assessee: legal scrutiny of Section 148 notice and Section 159 framework

1. Background and procedural history

The matter before the ITAT Surat in Late Smt. Vasantiben Manubhai Joshi Vs ITO concerned the validity of a reassessment framed under Section 144 read with Section 147 of the Income Tax Act 1961 for AY 2011-12. The appeal arose from the order dated 03.04.2025 passed by the Commissioner of Income Tax (Appeals) – NFAC, Delhi, which had upheld the ex-parte reassessment made by the ITO, Ward-9, Vapi vide order dated 12.12.2018.

The original assessee was Smt. Vasantiben Manubhai Joshi, an individual who had not filed a return of income for AY 2011-12. During the appellate phase, the appeal came to be prosecuted by her legal heirs – first by her husband before the CIT(A), and thereafter by her son, Shri Deepakbhai Manubhai Joshi, before the Tribunal.

1.1 Condonation of delay

The appeal before the Tribunal was filed with a delay of 9 days. The assessee moved an application supported by an affidavit seeking condonation.

Relying on the principles laid down by the Supreme Court in Collector, Land Acquisition Vs Mst. Katiji and others, 1987 AIR 1353, 1987 2 SCC 387, the ITAT noted that:

  • The delay was minimal.
  • The assessee had explained the circumstances in the condonation application.
  • There was no indication of negligence, mala fides or any attempt to gain advantage from the delay.

The Tribunal held that “technical considerations” should not override the need to secure “substantial justice” and accordingly condoned the 9‑day delay, admitting the appeal for adjudication on merits.

2. Key facts leading to reassessment

2.1 Initiation of proceedings under Section 147

The Assessing Officer (AO) received information that time deposits aggregating to Rs. 69,05,721/- had been placed with banks in the name of the assessee during the relevant financial year corresponding to AY 2011-12. On this basis, the AO formed a belief that income chargeable to tax had escaped assessment and issued a notice under Section 148 dated 28.03.2018 in the name of Smt. Vasantiben Manubhai Joshi.

No return of income was filed in response to this notice. The AO then issued further notices under Section 142(1) to pursue the reassessment proceedings.

Crucial to the controversy is the fact that:

  • Date of death of assessee: 24.01.2016
  • Date of notice under Section 148: 28.03.2018
  • Date of intimation of death by legal heir: 30.11.2018
  • Date of assessment order under Section 144 r.w.s. 147: 12.12.2018

Thus, the Section 148 notice was issued more than two years after the death of the assessee.

In response to the notices under Section 142(1), the assessee’s husband Shri Manubhai Joshi wrote to the AO on 30.11.2018, informing him that:

  • His wife, Smt. Vasantiben Manubhai Joshi, had passed away on 24.01.2016.
  • The reassessment was being pursued on the strength of a notice under Section 148 issued in the name of a deceased person.
  • Judicial precedents consistently hold that such notices are invalid and no valid jurisdiction can be assumed on that basis.

He expressly objected to the continuation of the reassessment proceedings.

2.3 Ex-parte assessment and additions

Despite this intimation and objection, the AO:

  • Rejected the legal heir’s challenge to the validity of the Section 148 notice.
  • Continued the reassessment proceedings.
  • Ultimately completed an ex‑parte assessment under Section 144 read with Section 147 on 12.12.2018.

The AO determined total income at Rs. 56,13,148/-, including:

  • Addition of Rs. 55,34,660/- as alleged unexplained investment in fixed deposits.
  • Addition of Rs. 78,488/- as unexplained interest income.

The husband of the deceased, acting as legal heir, filed an appeal before the CIT(A), challenging both:

  • The legality of reopening and jurisdiction (notice issued to a deceased person), and
  • The additions on merits.

The CIT(A) dismissed the appeal. Thereafter, another legal heir, the son Shri Deepakbhai Manubhai Joshi, pursued a further appeal before the ITAT Surat.

3. Grounds raised before ITAT

The primary challenge before the Tribunal was encapsulated in Ground No. 1, which attacked the very foundation of the reassessment:

  1. The notice under Section 148 was issued in the name of a deceased assessee.
  2. Consequently, all proceedings flowing from such invalid notice, including the assessment order under Section 144 read with Section 147, were asserted to be without jurisdiction and liable to be quashed in entirety.

Without prejudice to this foundational objection, the assessee also contested:

  • The addition of Rs. 55,34,660/- towards alleged unexplained investment in fixed deposits.
  • The addition of Rs. 78,488/- towards alleged unexplained interest income.

However, the Tribunal first addressed the jurisdictional question, as it went to the root of the assessment.

The central question was: