Notice of demand is a condition precedent to tax recovery against a legal representative under the Income-tax Act.

A legal representative is liable for a deceased assessee's tax dues only to the extent of the inherited estate and is treated as an assessee under section 159(3) of the Income-tax Act, 1961. Recovery proceedings under section 226 can be initiated only against a person who is an assessee in default, and default arises under section 220(4) only if the tax demanded under section 156 is not paid within time. Mere knowledge of arrears does not replace service of the notice of demand, so recovery without such service is invalid.

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Issues: Whether recovery proceedings for arrears of tax could be initiated against a legal representative without service of a notice of demand.

Analysis: A legal representative is liable for the deceased assessee's tax liability only to the extent of the estate inherited and is deemed to be an assessee under section 159(3) of the Income-tax Act, 1961. However, recovery proceedings under section 226 can be taken only against a person who is an assessee in default. Under section 220(4), an assessee becomes in default only when the tax specified in the notice of demand under section 156 is not paid within the prescribed time. Mere knowledge of the arrears does not dispense with service of the notice of demand.

Conclusion: Recovery proceedings could not be lawfully initiated without service of a notice of demand, and the proceedings were invalid.

Ratio Decidendi: Service of a notice of demand is a condition precedent to treating a person as an assessee in default and to commencing recovery proceedings under the Income-tax Act, 1961.

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