Assessment against a deceased assessee is void; proceedings must continue only against the legal representative under income-tax law.

Assessment proceedings initiated and concluded against a deceased assessee are void, because where death occurs during pendency the Revenue must proceed against the legal representative under Section 159(2)(a) from the stage existing on the date of death. Accordingly, the assessment order, computation sheet, demand notices and penalty proceedings could not stand. Once those consequential demands fell, the bank account freezing order also could not survive independently. The matter was remitted to the stage after the Section 148 notice so that proceedings could continue lawfully against the legal representative with an opportunity to respond.

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Issues: (i) Whether the assessment order, demand notices, penalty order and related proceedings could stand when the assessee had died before the assessment order was passed; (ii) Whether the freezing of the bank account and the consequential proceedings could continue after the assessment order was set aside, and how the matter was to proceed thereafter.

Issue (i): Whether the assessment order, demand notices, penalty order and related proceedings could stand when the assessee had died before the assessment order was passed.

Analysis: The proceedings under Section 147 read with Section 144 of the Income-tax Act, 1961 culminated in an order passed against a person who had already died. The Act requires that, where the assessee dies during the pendency of proceedings, the proceedings must continue against the legal representative under Section 159(2)(a) of the Act from the stage at which they stood on the date of death. An assessment made against a /dead person is a nullity and cannot be sustained.

Conclusion: The assessment order, computation sheet, demand notices and penalty proceedings were set aside.

Issue (ii): Whether the freezing of the bank account and the consequential proceedings could continue after the assessment order was set aside, and how the matter was to proceed thereafter.

Analysis: Once the assessment and consequential demands were set aside, the freezing of the bank account could not survive independently. The proper course was to restore the matter to the stage after issuance of notice under Section 148 of the Income-tax Act, 1961, so that the Revenue could proceed in accordance with Section 159(2)(a) against the legal representative and afford an opportunity to reply.

Conclusion: The freezing order was set aside and the matter was remitted to the stage after the Section 148 notice for continuation in accordance with law.

Final Conclusion: The writ petition succeeded to the extent that proceedings taken against the deceased assessee were annulled and the matter was sent back for fresh continuation against the legal representative from the appropriate stage.

Ratio Decidendi: An assessment or consequential demand made against a deceased assessee is void, and upon the death of the assessee during pendency of proceedings, the Revenue must continue the proceedings only against the legal representative in accordance with Section 159(2)(a) of the Income-tax Act, 1961.

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