2010 (3) TMI 768 - AT - Income Tax

Search and Seizure - The Id. Counsel for the assessee pointed out that search was carried out on 13.9.1990 and the deceased assessee died on 2.2.1990 i.e. prior to the date of search and the husband of the assessee also died on 18.3.2009 - held that section 159(2) is subject to sub-section (1)(a) that any proceedings taken against the deceased before his death shall be deemed to have taken against the legal representatives and may be continued against the legal representatives from the stage at which it stood on the date of the death of the deceased. It can be said that no proceedings were taken against the assessee before his death as the search took place even after about 7 months of the death of the assessee, therefore, sub-section (2) of section 159 of the Act is not applicable to the present appeal. - since in the present case the proceedings were initiated after the death of the assessee, consequently, the AO was not justified in farming the assessments.

Summary

Issues:
1. Assessment validity on a deceased person.
2. Applicability of section 159(2) in the case.

Analysis:

Issue 1: Assessment validity on a deceased person
The case involved appeals against orders of the Ld. Commissioner of Income Tax (Appeals) relating to Assessment years 1989-90 and 1990-91. The legal issue raised was whether assessment could be framed on a dead person. The search was conducted after the death of the assessee, and it was argued that no valid assessment could be made on a deceased individual. The Tribunal agreed, citing precedents and Section 159(2) of the Income Tax Act. The Tribunal held that proceedings initiated after the death of the assessee could not lead to a valid assessment on the deceased person. The decision was supported by various judicial pronouncements and the dismissal of a Special Leave Petition by the Hon'ble Apex Court.

Issue 2: Applicability of section 159(2)
The learned Sr. DR argued that Section 159(2) allowed proceedings that could have been taken against the deceased to be continued against the legal representatives. However, the Tribunal found that as no proceedings were initiated against the deceased before their death, Section 159(2) was not applicable in this case. The Tribunal emphasized that the search warrants were issued in the name of the deceased, rendering the search and subsequent assessment invalid. The decision was further strengthened by a previous Tribunal ruling and relevant judicial precedents.

In conclusion, the Tribunal allowed both appeals, setting aside the assessments made on the deceased person. The judgment highlighted the legal principle that assessments cannot be validly framed on individuals who have passed away before the initiation of proceedings, emphasizing the importance of procedural compliance and legal standing in such cases.