Income-tax reassessment notice u/s148 issued to deceased taxpayer, proceedings voided for not substituting legal heirs

Reassessment against a deceased assessee was challenged on the ground that notice under s. 148 and the ensuing proceedings were initiated and continued in the name of a dead person. The HC held that while the Department was not at fault in initially issuing notice without knowledge of death, it acted contrary to law by continuing reassessment without substituting and proceeding against the legal representatives after being informed of the death; such proceedings are invalid. Consequently, the impugned reassessment order and the s. 148 notice were set aside, with liberty to reinitiate reassessment by issuing a fresh s. 148 notice to the legal representatives after complying with statutory formalities.

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1. ISSUES PRESENTED AND CONSIDERED

(i) Whether a reassessment initiated and continued by issuance of notice under Section 148 and culminating in an assessment order under Section 147 read with Sections 144 and 144B, all in the name of a person who had already died, is legally sustainable once the revenue authorities are informed of the death.

(ii) Whether, and to what extent, the revenue authorities may reinitiate reassessment proceedings after such setting aside, and what obligation lies on the petitioner to furnish particulars of other legal representatives for proceedings to be taken in accordance with law.

2. ISSUE-WISE DETAILED ANALYSIS

Issue (i): Validity of reassessment/assessment in the name of a deceased person after the department is informed of death

Legal framework (as discussed): The Court considered reassessment initiated by notice under Section 148, and the assessment framed under Section 147 read with Sections 144 and 144B of the Income Tax Act, 1961. The Court also considered the concept of proceeding against legal representatives in terms of Section 159, to the limited extent of assessing whether the department should have taken corrective measures upon being informed of the assessee's death.

Interpretation and reasoning: The Court found it undisputed that the person in whose name the Section 148 notice was issued had already died, and therefore the proceeding was initiated against a dead person. The Court further accepted that, when the Section 148 notice was issued, the revenue authorities had no information about the death and thus could not be faulted merely for the initial issuance. However, once the revenue authorities were put on notice of the death by a subsequent communication (which was also reflected in the departmental order-sheet noting the death), the Court held that the authorities could not lawfully continue the reassessment proceeding without taking corrective measures. Continuation and culmination of the proceeding in the deceased person's name, despite knowledge of death, was held not in accordance with law.

Conclusion: The Court set aside the assessment order dated March 27, 2025 on the ground that the reassessment was continued and concluded in the name of a deceased person after the death was brought to the department's notice. Since the reopening notice under Section 148 (dated April 12, 2023) was also issued against a dead person, that notice was likewise set aside.

Issue (ii): Liberty to reinitiate reassessment and obligations concerning disclosure of legal representatives

Legal framework (as discussed): The Court addressed the permissibility of fresh reassessment initiation through a fresh notice under Section 148, subject to compliance with statutory formalities, and contemplated reassessment against legal representatives in terms of Section 159.

Interpretation and reasoning: While granting relief by setting aside the impugned notice and assessment, the Court clarified that the revenue authorities are not barred from reinitiating reassessment proceedings in accordance with law by issuing a fresh Section 148 notice to the legal representatives of the deceased assessee, after observing statutory formalities. The Court also balanced this liberty with a direction regarding cooperation from the petitioner: upon the department writing and seeking information, the petitioner would remain obliged to furnish the names of other legal representatives, if any. To prevent future objection based on non-impleadment, the Court further held that if the petitioner does not respond to such request, the department may proceed against the petitioner alone by treating the petitioner as the sole legal representative, and in that event the proceeding would not be open to challenge on the ground that all legal representatives were not impleaded.

Conclusion: The Court expressly preserved the department's right to restart reassessment lawfully against the legal representatives and imposed a conditional obligation on the petitioner to disclose other legal representatives when asked, failing which proceedings against the petitioner alone would not be assailable for non-impleadment of other legal representatives.

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