2022 (11) TMI 24 - HC - Income Tax

Reopening of assessment u/s 147 - Notice issued to the deceased assessee during her lifetime - HELD THAT - Since the present assessment proceedings are in continuation of the initial notice dated 25th April, 2021, issued to the deceased assessee during her lifetime, the same can be continued against the legal representative from the stage at which it stood on the date of the death of the deceased so as to collect the tax from the estate of the deceased person. Initial notice was issued at the time when the assessee was alive (the present proceedings are in continuation) and thus, the AO has rightfully amended the details of the addressee in its consequent order under Section 148A(d) and notice under Section 148 of the Act. The reliance placed by the assessee on the decision of this Court in Sangeeta Vig 2022 (6) TMI 658 - DELHI HIGH COURT in misplaced since in that case the initial notice under the erstwhile Section 148 of the Act, was issued at a time when the assessee was dead. However, in the present case, as noted above, the assessee was alive at the time of the issuance of initial notice under erstwhile Section 148 of the Act.

Summary

Issues:
1. Validity of notice issued in the name of a deceased assessee.
2. Interpretation of Section 159 of the Income Tax Act, 1961 regarding continuation of assessment proceedings against legal representatives.

Issue 1: Validity of notice issued in the name of a deceased assessee
The writ petition filed sought to quash a notice issued under Section 148A(b) of the Income Tax Act, 1961, and subsequent orders for the assessment year 2015-16, in the name of a deceased assessee. The petitioner contended that issuing a notice in the name of a dead assessee renders the proceedings void-ab-initio. The petitioner relied on the decision in Sangeeta Vig v. ITO to support this argument. However, the court found that the notice, issued after the death of the assessee, was a continuation of the earlier notice issued while the assessee was alive. The court referred to the Supreme Court's direction in the case of Ashish Agarwal, stating that notices issued under Section 148 between April 1, 2021, and June 30, 2021, are to be treated as Show Cause Notices under Section 148A(b) of the Act.

Issue 2: Interpretation of Section 159 of the Income Tax Act
The court analyzed Section 159 of the Income Tax Act, which deals with the continuation of assessment proceedings against legal representatives. The court noted that the legal heir of the deceased assessee had been duly informed of the assessment proceedings and had been made a party to the case. The court referred to Section 159(2)(a) of the Act, which states that any proceeding taken against the deceased before their death is deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased. The court emphasized that the liability of the legal representative is limited to the extent to which the estate left by the deceased can meet the tax liability, subject to certain conditions mentioned in the Act.

In conclusion, the court dismissed the writ petition, affirming the validity of the assessment proceedings against the legal representative of the deceased assessee. The court clarified that all other rights and contentions of the parties on the merits of the issue were left open, except for the legal issue of the continuation of assessment proceedings against the legal representative as determined in the proceedings.