Reassessment proceedings against deceased assessee set aside due to failure to substitute legal representative under Section 159(2)(b)

The Madras HC set aside reassessment proceedings initiated against a deceased assessee. The court held that while Section 159(2)(b) of the Income Tax Act permits proceedings against a deceased person's legal representative, the department failed to substitute the legal representative in place of the deceased. The assessment order was improperly passed in the name of the dead person despite the legal representative's participation. Following precedent, the court ruled that no proceedings can be initiated against a dead person, making the orders unsustainable and liable to be set aside.

---

---

Issues:
The issues to be decided in this case are:
(i) whether the notice issued under Section 148 of the Income Tax Act against the deceased person and subsequent proceedings are valid and sustainable in lawRs. and
(ii) Since the petitioner participated in the proceedings initiated by the respondents against her deceased husband, can the same be continued without substituting the petitioner as the legal representative in the place of the deceasedRs.

Judgment Details:

Issue 1:
The petitioner argued that the notice issued under Section 148 of the Income Tax Act against a deceased person is non-est in law and illegal. The petitioner participated in the proceedings as the legal representative of her deceased husband. The respondents passed the assessment order and penalty proceedings against the deceased person. The petitioner sought to quash these orders.

Issue 2:
The respondents contended that it is their duty to initiate proceedings against the assessee and that the petitioner participated in the proceedings for the assessment year 2018-2019. They argued that the proceedings cannot be ignored at this stage. They also mentioned that for the assessment year 2019-2020, proceedings were initiated against the legal representatives of the deceased person.

Legal Provisions:
Section 159 of the Income Tax Act states that the legal representative of a deceased person shall be liable to pay any sum the deceased would have been liable to pay. It allows for the continuation of proceedings against the legal representative from the stage at which it stood on the date of the deceased's death.

Analysis:
The court observed that while the proceedings were initiated after the death of the assessee, they were conducted in the name of the deceased person, despite the petitioner participating as the legal representative. The court cited a previous judgment stating that no proceedings can be initiated against a dead person.

Conclusion:
The court held that the impugned orders were not sustainable as they were passed in the name of a dead person without substituting the legal representative. The assessment order and penalty proceedings were set aside, with liberty granted to the respondent to initiate proceedings against the legal representative of the deceased assessee in accordance with the law. The writ petitions were allowed with no costs, and connected miscellaneous petitions were closed.

---