Reopening under s.147 valid when initial s.148 notice issued before death; proceedings continue against legal heir

HC upheld the reopening of assessment under s.147, holding that the initial notice under the erstwhile s.148 was validly issued when the assessee was alive. As the reassessment proceedings are a continuation of that notice, they can lawfully be pursued against the legal representative to recover tax from the deceased's estate. The AO was entitled to amend the addressee details in the subsequent order under s.148A(d) and notice under s.148. Reliance on the earlier HC ruling where notice was issued to a dead person was held misplaced.

---

---

Issues:
1. Validity of notice issued in the name of a deceased assessee.
2. Interpretation of Section 159 of the Income Tax Act, 1961 regarding continuation of assessment proceedings against legal representatives.

Issue 1: Validity of notice issued in the name of a deceased assessee
The writ petition filed sought to quash a notice issued under Section 148A(b) of the Income Tax Act, 1961, and subsequent orders for the assessment year 2015-16, in the name of a deceased assessee. The petitioner contended that issuing a notice in the name of a dead assessee renders the proceedings void-ab-initio. The petitioner relied on the decision in Sangeeta Vig v. ITO to support this argument. However, the court found that the notice, issued after the death of the assessee, was a continuation of the earlier notice issued while the assessee was alive. The court referred to the Supreme Court's direction in the case of Ashish Agarwal, stating that notices issued under Section 148 between April 1, 2021, and June 30, 2021, are to be treated as Show Cause Notices under Section 148A(b) of the Act.

Issue 2: Interpretation of Section 159 of the Income Tax Act
The court analyzed Section 159 of the Income Tax Act, which deals with the continuation of assessment proceedings against legal representatives. The court noted that the legal heir of the deceased assessee had been duly informed of the assessment proceedings and had been made a party to the case. The court referred to Section 159(2)(a) of the Act, which states that any proceeding taken against the deceased before their death is deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased. The court emphasized that the liability of the legal representative is limited to the extent to which the estate left by the deceased can meet the tax liability, subject to certain conditions mentioned in the Act.

In conclusion, the court dismissed the writ petition, affirming the validity of the assessment proceedings against the legal representative of the deceased assessee. The court clarified that all other rights and contentions of the parties on the merits of the issue were left open, except for the legal issue of the continuation of assessment proceedings against the legal representative as determined in the proceedings.

---