Fresh notice to legal representative is mandatory for deceased assessee assessments; appellate directions cannot extend reassessment limitation.

Assessment of a deceased assessee's income on a legal representative required fresh compliance with the statutory notice and opportunity procedure under section 24B(3); prior compliance by the deceased did not dispense with that safeguard, so the assessments were invalid. The saving provision in the second proviso to section 34(3) did not extend limitation, because a legal representative who was not within the scope of the appeal and a direction unnecessary to decide that appeal fell outside the proviso. The reassessments under the Income-tax Act, and the corresponding Excess Profits Tax assessments, could not be sustained.

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Issues: (i) Whether section 24B(3) of the Income-tax Act, 1922 required the prescribed procedure to be followed afresh before making assessments on the legal representative after the death of the assessee, even though the deceased had already complied with the notices during his lifetime; (ii) Whether the second proviso to section 34(3) of the Income-tax Act, 1922 saved the reassessments from limitation on the basis of the Appellate Assistant Commissioner's direction.

Issue (i): Whether section 24B(3) of the Income-tax Act, 1922 required the prescribed procedure to be followed afresh before making assessments on the legal representative after the death of the assessee, even though the deceased had already complied with the notices during his lifetime.

Analysis: Section 24B was intended to provide machinery for assessment of a deceased person's income and to keep the assessment process alive after death. The provision was held to cover cases where the deceased had filed a return and also cases where further inquiry or notices under the Act had already occurred during his lifetime. The Court held that the opportunity contemplated by section 24B(3) was substantive and had to be afforded to the executor, administrator, or other legal representative before the assessment could validly be completed. The earlier compliance by the deceased did not dispense with the statutory requirement of issuing the appropriate notice and enabling the legal representative to meet the assessment.

Conclusion: Section 24B(3) applied, and the assessments were invalid because the prescribed procedure was not duly followed in the presence of the legal representative.

Issue (ii): Whether the second proviso to section 34(3) of the Income-tax Act, 1922 saved the reassessments from limitation on the basis of the Appellate Assistant Commissioner's direction.

Analysis: The expression "any person" in the second proviso was confined to a person intimately connected with the subject-matter of the appeal or revision in the sense explained by the Supreme Court. A legal representative who was neither a party whose assessment was under appeal nor a person liable for the income included in that assessment was not within that confined class. The Court further held that a finding or direction must be one that is necessary for the disposal of the appeal and within the appellate authority's powers. A direction to assess the legal representative was unnecessary for disposing of the appeal filed by the other assessee and therefore fell outside the proviso. As a result, the proviso could not extend the period of limitation.

Conclusion: The second proviso to section 34(3) did not save the reassessments from limitation.

Final Conclusion: The reassessments under the Income-tax Act and the corresponding assessments under the Excess Profits Tax Act could not be sustained, and the reference was answered entirely against the revenue.

Ratio Decidendi: Where assessment of a deceased person's income is made on a legal representative, the statutory procedure for notice and opportunity under section 24B(3) is mandatory and must be complied with afresh; further, a saving clause for reassessment based on appellate findings or directions applies only to persons and directions strictly within the scope of the appeal.

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