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2025 (1) TMI 1300 - HC - Income TaxReopening of assessment u/s 147 - liability of legal representatives for the tax obligations of a deceased person - HELD THAT - The proceedings initiated against the Assessee by issuing notice after his demise cannot be continued against his/her legal representative. Had the proceedings been initiated against the Assessee during his life time they could be continued against the legal representatives of the deceased Assessee. However that is not the factual position here. Therefore the order of the learned Single Judge cannot be faltered in quashing what were challenged before him. Second contention of the learned Panel Counsel that liberty ought to have been reserved to the Revenue for initiating fresh proceedings against the Legal Representatives of the Assessee once proceedings taken up against the deceased Assessee are set at naught again does not impress us even in the least. This contention is structured on a premise that the Legal Representatives i.e. persons who hold estate of the deceased Assessee in their hands are under a legal obligation to inform the Revenue as to the death of the Assessee. To support such a premise no provision of law in general and no section of 1961 Act in particular are brought to our notice. Clause (b) of Section 159 (2) enables proceedings being taken against Legal Representatives of the deceased is true. However that is subject to such proceedings being capable of being taken against the deceased. If the statutorily prescribed time limit has expired as against the deceased himself as has happened in this case then no proceedings can be taken against his LRs. Conspicuously there is no provision in 1961 Act which provides for discounting the time spent during the pendency of proceedings against the deceased Assessee while computing the limitation period for initiating the proceedings against his Legal Representatives. Appeal dismissed.
ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS 1. Validity of Proceedings Against a Deceased Assessee Relevant legal framework and precedents: The legal framework revolves around Section 159 of the Income Tax Act, 1961, which outlines the liability of legal representatives for the tax obligations of a deceased person. Sub-sections (1) and (2) specify that proceedings initiated during the lifetime of the deceased can be continued against the legal representatives, but they do not explicitly allow for initiation posthumously. Court's interpretation and reasoning: The Court agreed with the Single Judge's finding that proceedings initiated after the death of the assessee are null and void. Section 159 does not permit initiation of proceedings against a deceased person and subsequent enforcement against legal representatives unless the proceedings began during the deceased's lifetime. Key evidence and findings: The notices were issued after the death of the assessee, and the legal representative informed the Revenue of the death. The Court found that the proceedings were improperly initiated against a deceased individual. Application of law to facts: The Court applied Section 159 and determined that since the proceedings were not initiated during the lifetime of the deceased, they could not be continued against the legal representatives. Treatment of competing arguments: The Revenue argued that Section 159 allowed for proceedings against legal representatives, but the Court rejected this, stating the provision did not support posthumous initiation. Conclusions: The Court concluded that the assessment and related notices against the deceased were void and unenforceable against the legal representatives. 2. Possibility of Initiating Fresh Proceedings Against Legal Representatives Relevant legal framework and precedents: Section 159(2)(b) allows proceedings against legal representatives if they could have been taken against the deceased. However, such proceedings must adhere to statutory time limits, as outlined in Section 149. Court's interpretation and reasoning: The Court noted that the statutory time limit for initiating proceedings for the assessment year 2016-17 had expired. Therefore, new proceedings against the legal representatives were not permissible. Key evidence and findings: The time limit for initiating proceedings had lapsed by the time the legal representatives could be notified, rendering any new proceedings time-barred. Application of law to facts: The Court applied the limitation provisions and found that the time for initiating proceedings had expired, precluding any new actions against the legal representatives. Treatment of competing arguments: The Revenue's argument for reserving liberty to initiate fresh proceedings was dismissed, as no legal provision allowed for extending the limitation period due to the pendency of invalid proceedings. Conclusions: The Court concluded that fresh proceedings against the legal representatives could not be initiated due to the expiration of the statutory time limit. SIGNIFICANT HOLDINGS Preserve verbatim quotes of crucial legal reasoning: The Court emphasized that "the proceedings initiated against the Assessee during his lifetime can be continued against his Legal Representatives," but initiation posthumously is not permissible. Core principles established: The judgment reinforces that legal proceedings cannot be initiated against deceased individuals and subsequently enforced against their legal representatives unless commenced during their lifetime. It also underscores the importance of adhering to statutory time limits for initiating tax proceedings. Final determinations on each issue: The Court upheld the Single Judge's decision, declaring the assessment and related notices void and unenforceable against the legal representatives. It also denied the Revenue's request to initiate fresh proceedings due to the expiration of the statutory time limit.
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