The Delhi High Court has held that the employee or his legal heirs cannot be held liable for the non-deposit of TDS.
The bench of Justice Yashwant Varma and Justice Ravinder Dudeja has observed that since the tax has already been deducted on the salary income, as is evident from Form-16, the reassessment action leading to demand of tax cannot be initiated against the assessee or even his legal representatives. Even on account of non-deposit of TDS by the employer, there was no justification for the demand being shown as outstanding against the employee.
Background
Vipin Gupta, husband of the petitioner, passed away on 17.08.2019. His return of income under Section 139(1) of the Income Tax Act could not be filed by his legal representatives.
A notice under Section 148-A(b) was issued in the name of the deceased assessee Sh. Vipin Gupta, asking him to show cause as to why notice under Section 148 of the Act should not be issued. The notice was served through a registered post at the address of the deceased assessee, which was received by the petitioner on 19.02.2024.
The petitioner filed her response to the impugned notice on 26.02.2024, intimating the death of her husband. Regarding the averments made in the notice, it was submitted that the salary income received by the deceased assessee during the year under consideration had already been subjected to Deduction of Tax at Source (TDS) under Section 192. Therefore, there was no income chargeable to tax which had escaped assessment insofar as the salary received by the deceased/assessee was concerned.
However, in complete non-consideration of the response filed by the petitioner, respondent department proceeded to pass order under Section 148-A(d) of the Act as also issued notice under Section 148 of the Income Tax Act.
Arguments
The petitioner contended that the initiation of action under Section 148 in case of the assessee is void ab initio as the notices under Section 148-A(b) and under Section 148 were issued in the name of a dead person. Despite having been informed that the assessee has expired, the department has proceeded to initiate action under Section 148 of the Income Tax Act.
Conclusion
The court held that Show Cause Notice having been issued against a dead person cannot be sustained, and consequently, the recovery proceedings initiated pursuant thereto, were quashed. the proceedings were not initiated against the assessee when he was alive and after his death, his legal heirs did not step into the shoes of the deceased assessee.
The court while allowing the petition quashed the notice under Section 148-A(b), order under Section 148-A(d) and notice under Section 148.
Case title: Sh. Meenu Gupta (Legal Heir Of Late Sh. Vipin Gupta) V/S Assistant Commissioner Of Income Tax, Circle 67(1), Delhi & Ors.
Citation: W.P.(C) 10162/2024 & CM APPL. 41748/2024 (Stay)
Counsel for the Petitioner: Kalrav Mehrotra
Counsel for the Respondent: Ruchir Bhatia, SSC
Date of Decision: 20/09/2024
