Legal representative reassessment and limitation: appellate directions can save the proceeding, and a fresh assessment need not restart entirely.

A reassessment against a legal representative was held not to be barred by limitation where it was made in consequence of, or to give effect to, an appellate finding or direction, bringing it within the saving provision in the second proviso to section 34(3) of the Indian Income-tax Act, 1922. Section 24B(3) was also read to permit assessment of the deceased's income through the executrix or other legal representative on the basis of the deceased's returns, with proper notice and opportunity, without requiring the entire assessment process to be restarted from the beginning. The revenue therefore succeeded on limitation and the validity of the assessments.

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Issues: (i) Whether the second proviso to section 34(3) of the Indian Income-tax Act, 1922 saved the reassessment from limitation. (ii) Whether section 24B(3) of the Indian Income-tax Act, 1922 required the assessment procedure to be repeated in full against the legal representative.

Issue (i): Whether the second proviso to section 34(3) of the Indian Income-tax Act, 1922 saved the reassessment from limitation.

Analysis: The assessment proceedings had commenced during the deceased assessee's lifetime and continued after death against the legal representatives. The earlier assessment was set aside only because notice had not been given to the executrix, and the appellate direction required a fresh assessment on her. That direction was a finding or direction made in appellate proceedings and was vital to the reassessment. The executrix was not a stranger to the assessment but a person directly impleaded as legal representative and, in substance, an assessee for the purposes of the proceedings.

Conclusion: The second proviso to section 34(3) applied and the reassessment was not barred by limitation.

Issue (ii): Whether section 24B(3) of the Indian Income-tax Act, 1922 required the assessment procedure to be repeated in full against the legal representative.

Analysis: Section 24B enabled assessment of the deceased's income through the executor, administrator or other legal representative where the assessee died after furnishing a return. The provision authorised the revenue to proceed on the basis of the deceased's returns and to require the legal representative to produce relevant accounts, documents or other evidence. It did not support the view that the entire assessment process had to be restarted as if nothing had occurred during the deceased's lifetime, although proper notice and opportunity had to be given to the legal representative.

Conclusion: Section 24B(3) applied, and the assessment on the executrix was validly taken in the statutory scheme.

Final Conclusion: The revenue's appeals succeeded on limitation, while the assessee's appeals failed on the challenge to the validity of the assessments, resulting in partial success for the revenue overall.

Ratio Decidendi: A reassessment made on a legal representative is saved from limitation when it is made in consequence of, or to give effect to, a finding or direction in appellate proceedings, and section 24B permits assessment of the deceased's income through the legal representative without requiring a wholly fresh proceeding divorced from the original assessment process.

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