Reassessment on a Dead Person Illegal: ITAT Sets Aside Rs. 59.44 Lakh Addition

The Income Tax Department issued reassessment notices in 2023 to a man who had already died in 2016. The law says you cannot start a reassessment against a dead person; the notice must be issued to the legal heir. Since the notice itself was invalid, the entire reassessment was illegal. ITAT quashed the entire reassessment and allowed the legal heir’s appeal.

The case has been filed by Deep Sudhirbhai Sheth (Legal Heirs of Sudhir Himmatlal Sheth) before the ITAT Ahmedabad, challenging an order passed by the CIT(A)/ NFAC Delhi on August 06, 2025. The case is related to the assessment year 2016-17.

The Income Tax Department reopened the tax case of Late Shri Sudhir Himmatlal Sheth for the assessment year (AY) 2016-17 because they noticed that the owner of M/s. Shubhlaxmi Jewellers did not file an income tax return (ITR) for the assessment year 2016-17. When examined, it was noticed that the following transactions were performed by the taxpayer in the relevant assessment year:

• Cash deposits in one or more bank accounts aggregating to Rs. 1,864,000.
• Purchase of equity shares amounting to Rs. 511,935.
• Sale of equity shares amounting to Rs. 32,540.
• Purchase of immovable property for a consideration of Rs. 31,50,000.
• Other cash transactions to the extent of Rs. 200,000.

However, the person had already passed in 2016, long before the notice was issued in 2023. So, the legal heir, Deep Sudhirbhai Sheth, challenged the reassessment.

During reassessment, the department issued a notice under section 148 on March 18, 2023. Many notices under Sections 142(1), 143(2), etc., were also issued. No one answered the notices, as the taxpayer was no longer alive. In conclusion, the tax department completed the assessment by issuing an ex parte and estimated income as Rs. 5,944,380.

When the case was filed before CIT(A), the legal heir argued that the taxpayer died on May 23, 2016. All the notices were issued in 2023 and were all addressed to a dead person; hence, no one was aware of those notices, and this is also invalid as per the law. Therefore, the reassessment is void. However, the CIT(A) accepted the death certificate as additional evidence and did not decide whether notice to a dead person is valid; instead, it sent the matter back to the tax department for fresh assessment.

When the case was taken before the ITAT Ahmedabad, the legal heir said the entire reassessment is illegal because it started with an invalid notice. CIT(A) should have decided this question first. The ITAT should cancel the assessment.

The tribunal noted the taxpayer really died in 2016. The notices by the tax department were issued in 2023, seven years after the death. As per the law, a notice issued to a dead person is invalid, and Section 292B cannot cure this defect. The tax department should issue a notice to the legal heir under Section 159. The CIT(A) should have decided this primary legal issue. In conclusion, remand the case to the tax authorities for fresh consideration without deciding the validity was wrong. All notices issued under Sections 148A(b) and 148 are invalid. Reassessment proceedings are quashed. Set aside the order of CIT(A) and allowed the appeal.