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Issues: (i) Whether reassessment proceedings validly continued against the legal representatives of the deceased assessee without a fresh notice under section 34(1A) or section 34 of the Indian Income-tax Act, 1922. (ii) Whether section 24B(3) of the Indian Income-tax Act, 1922 applied so as to authorise reassessment on the legal representatives and validation of the notice under section 22(4).
Issue (i): Whether reassessment proceedings validly continued against the legal representatives of the deceased assessee without a fresh notice under section 34(1A) or section 34 of the Indian Income-tax Act, 1922.
Analysis: A notice under section 34(1A) had been served on the assessee during his lifetime, and he had not complied with it. The Court treated that notice as carrying the requirements of section 22(2), following the settled construction that the reassessment machinery must be read so as to remain workable. On that basis, the proceedings already initiated did not lapse on the assessee's death, and there was no requirement to issue a fresh notice under section 34(1A) or section 34 to the legal representatives.
Conclusion: The issue was answered in the affirmative and in favour of the Revenue.
Issue (ii): Whether section 24B(3) of the Indian Income-tax Act, 1922 applied so as to authorise reassessment on the legal representatives and validation of the notice under section 22(4).
Analysis: The Court held that section 24B(3) provided the machinery for assessment of a deceased person's income where the deceased had not furnished the required return or had furnished an incorrect or incomplete return. By equating the notice under section 34(1A) with a notice under section 22(2), the statutory preconditions for invoking section 24B(3) were satisfied. The Court further held that a notice under section 22(4) could validly be issued to the legal representatives, and in any event a further notice under section 22(4) was not necessary on the facts.
Conclusion: The issue was answered in the affirmative and in favour of the Revenue.
Final Conclusion: The reassessment against the legal representatives was upheld and the reference was answered against the assessee on the substantive questions decided.
Ratio Decidendi: Where a valid notice under section 34(1A) has been served on a deceased assessee before death, the reassessment machinery may continue against the legal representatives, and section 24B(3) permits the assessment to be completed by treating that notice as sufficient for the purposes of the statutory procedure.
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