Estate-based tax recovery survives asset conversion; firm payment to legal representatives after notice remains at its own risk.

Under section 24B, liability for a deceased assessee's income-tax arrears extends to the estate inherited by the legal representatives, but only up to the value of the estate so inherited. The inherited asset remains relevant even if it is converted into another form after inheritance, and recovery may proceed against the substituted asset to the same extent. Where the firm had notice of the tax arrears and of the deceased's property in the hands of the legal representatives, payment made to them in disregard of section 46(5A) was at the firm's risk. The firm's liability was therefore confined to the amount found due from it to the deceased's estate, and recovery was upheld.

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Issues: Whether the legal representatives of a deceased assessee remained liable for the deceased's income-tax arrears after the inherited amount had been converted into capital in a reconstituted partnership, and whether the firm was liable under the notice issued under section 46(5A).

Analysis: Liability under section 24B extends to the estate of the deceased inherited by the legal representatives, up to the value of the estate so inherited. The character of the inherited asset does not cease to be relevant merely because it is converted into another form after inheritance. If the legal representatives retain or substitute the asset, recovery may proceed against the substituted asset to the same extent as against the original asset. The firm had notice of the tax arrears and of the deceased's property in the hands of the legal representatives, and payment to them in disregard of the notice under section 46(5A) was at its own risk.

Conclusion: The firm remained liable to withhold and make payment towards the deceased's tax arrears, and the challenge to recovery failed. The liability was confined to the amount found due from the firm to the deceased's estate, namely Rs. 20,239.78.

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