Reassessment Notice Issued in the Name of a Deceased Assessee Is Invalid — ITAT Delhi Rules in DCIT Vs Sh. Pranav Gupta

Overview

The Income Tax Appellate Tribunal, Delhi Bench, has authoritatively settled a recurring controversy in reassessment proceedings: a notice issued under Section 148 of the Income Tax Act, 1961 in the name of a person who had already died is a legal nullity. The Tribunal dismissed the Revenue's appeal and upheld the deletion of an addition of Rs. 8,71,56,676/- on account of long-term capital gain, confirming that the entire reassessment was void ab initio. The decision was pronounced in open court on 20.06.2025 in DCIT Vs Sh. Pranav Gupta (ITA No. 2192/Del/2023), relating to Assessment Year 2009-10.

Case Background and Key Facts

The original assessee, Shri Vijay Kumar Gupta, filed his return of income on 22.07.2009 declaring total income of Rs. 2,09,13,750/-. The return was processed under Section 143(1) of the Income Tax Act, 1961. The return disclosed a long-term capital gain arising from the sale of a house property situated at C169 Greater Kailash, New Delhi, with a declared sale consideration of Rs. 2,75,00,000/-.

Shri Vijay Kumar Gupta passed away on 02.10.2015.

Subsequent to his death, the Assessing Officer issued a notice under Section 148 on 31.03.2016 — in the name of the deceased assessee. Upon receiving this notice, his son and legal heir, Shri Pranav Gupta, communicated to the Assessing Officer on 19.04.2016 that the notice had been served upon a person who was no longer alive, and requested the proceedings to be dropped. The legal heir also requested a copy of the recorded reasons.

Background to the Reassessment

The impetus for reopening the assessment originated from a search and seizure action conducted on 17.09.2013 at the premises of Shri Naresh Gupta, a deed writer. During the search, a computer hard disk was recovered containing draft agreements for various property transactions that reflected cash components not mentioned in the officially registered sale deeds. Two such draft agreements pertaining to the property at C169 Greater Kailash, New Delhi, bearing amounts inconsistent with the registered sale deed, were unearthed.

Based on one of these draft agreements mentioning Rs. 9.90 crores as consideration, the Assessing Officer adopted that figure as the actual sale consideration and computed long-term capital gain at Rs. 8,71,56,675/-, significantly higher than what was declared. The assessment was completed under Section 147/Section 143(3) of the Income Tax Act, 1961 vide order dated 30.12.2016.

Proceedings Before the First Appellate Authority

The legal heir challenged the validity of the reassessment proceedings before the CIT(A)-31, Delhi. The First Appellate Authority accepted the jurisdictional objection, holding that the Section 148 notice issued in the name of a deceased person was not a valid notice, and that no valid notice had been served either upon the original assessee during his lifetime or upon the legal heir within the statutory limitation period. The CIT(A) accordingly allowed the appeal and deleted the entire addition of Rs. 8,71,56,676/-.

Aggrieved by this order dated 08.06.2023, the Revenue preferred the present appeal before the ITAT Delhi.

The central question examined by the Tribunal was:

Whether reassessment proceedings can be validly initiated by issuing a notice under Section 148 of the Income Tax Act, 1961 in the name of a person who was already deceased at the time of issuance, particularly when the statutory limitation period expired on that same date and no valid notice was served upon the legal heir within that period.

Arguments Advanced on Behalf of the Assessee

The learned Authorised Representative, Mr. S. Krishnan, made the following submissions: