2003 (3) TMI 6 - HC - Income Tax

Court Invalidates Assessment Against Deceased, Orders Involvement of Legal Representatives

Smt. Sudha Prasad Versus Chief Commissioner Of Income-Tax And Others.

The court held that the assessment against the deceased individual was invalid and unenforceable as the Department failed to follow the proper procedure ... Assessment on deceased – Legal representative - According to writ petitioner (widow), since the machinery available under section 159(2)(b) of the Act was not resorted to by the Department, the order of assessment passed against a deceased person has to be deemed to be a nullity and unenforceable. – Deaprtment submitted that since it is a case of a bona fide mistake arising out of ignorance of the death of B. B. Prasad, the Department should be allowed to complete the proceeding under the Act by giving an opportunity to the legal representatives of deceased B. B. Prasad either to file a return or to file an objection to the notice under section 142 - We are of the view that an opportunity should be given to the Department to complete the proceeding, after giving an opportunity to the writ petitioner, the widow of the deceased B. B. Prasad, to file a return or an objection to the notice under section 142 Issues involved: Assessment against deceased person, validity of order of assessment, enforceability of demand notice, application of section 159 of the Income-tax Act, 1961, procedural irregularities in assessment proceedings, opportunity for legal representatives to participate in the assessment process.Analysis:The petitioner, a legal representative of a deceased individual, challenged the order of assessment and demand notice issued under the Income-tax Act, 1961, contending that the assessment against the deceased was invalid as it was passed after the individual's death. The Department argued that they were not informed of the death and proceeded with the assessment against the deceased. The court observed that under section 159 of the Act, assessment proceedings that could have been taken against the deceased may be conducted against the legal representative. However, since the Department did not follow the procedure under section 159(2)(b) by issuing a notice to the legal representatives, the assessment against the deceased was deemed a nullity and unenforceable.The court acknowledged that an assessment against a deceased person is inherently flawed but noted that in this case, the assessment was completed without the Department being aware of the death. The court held that since the proceedings were not initiated with notice to the legal representatives, the order of assessment and demand notice needed to be set aside. The petitioner's counsel sought to quash the assessment order and demand notice, allowing the Department to proceed correctly. The Department, citing a bona fide mistake due to ignorance of the death, requested an opportunity to involve the legal representatives in the proceedings.The court decided to allow the Department to continue the proceedings by providing an opportunity for the legal representatives, specifically the widow of the deceased, to participate. No fresh notice was required for the widow as she was present in court. The widow was given the option to file a return or an objection to the notice under section 142 of the Act. The assessing authority was directed to complete the assessment after hearing the legal representatives, if any, of the deceased individual. The widow was tasked with providing details of other legal representatives, if applicable, along with her objection.In conclusion, the court allowed the writ petition, setting aside the assessment order and demand notice, and remitted the proceeding to the assessing authority for completion in compliance with the law and the directions provided.