There is no provision in Income Tax Act for discounting the time spent during the pendency of proceedings against the deceased assessee while computing the limitation period for initiating the proceedings against his Legal Representatives.
In a recent judgment, the Hon’ble Karnataka High Court has held that there is no provision in the Income Tax Act, 1961 (the Act) which provides for discounting the time spent during the pendency of proceedings against the deceased assessee while computing the limitation period for initiating the proceedings against his Legal Representatives.
ABCAUS Case Law Citation:
4407 (2025) (02) abcaus.in HC
In the instant case, the Revenue had challenged the order passed by the Single Judge of the High Court in setting aside the notice issued under Section 148 of the Act in the name of the deceased assessee.
The Assessing Officer (AO) had received information that the assessee had deposited huge amount of cash in bank account and that during the relevant Assessment Year she had made transactions pertaining to immovable properties and further that she had not filed her Returns of income.
A notice was issued to her u/s 148A(b) of the Act by Speed Post whereby she was asked to show as to why notice u/s.148 should not be issued. Second notice was sent after fifteen days.
As no reply was filed to the above notices, order u/s 148A(d) was passed and further notice u/s 148 also was issued directing the Assessee to file her returns. This was followed by statutory notice issued u/s 142(1) by Speed Post. However, the same went back unserved with a postal remark ‘deceased’. Yet another notice followed under the same provision. This time, the present respondent sent a reply mentioning that the assessee had died well before the first notice was issued u/s 148A(b) of the Act.
Assessing Authority after referring to Section 159(2)(d) of the Act made the Assessment u/s 147 r/w Section 144 against the deceased assessee for the relevant Assessment Year.
The respondent/legal heir of the deceased assessee filed a Writ Petition laying a challenge inter alia to the above Assessment Order, on the ground that, it was made generated against a dead person and consequently was liable to be treated as null & void and therefore could not be enforced against him, even if he is a legal representative of the deceased. The Single Judge vide order agreed with this and granted relief to the legal representative.
The Division Bench of the Hon’ble High Court agreed with the Single Judge that the Assessment Order and other proceedings taken up against the deceased are all null & void. The Hon’ble High Court held that the proceedings initiated against the assessee by issuing notice after his demise cannot be continued against his/her legal representative. Had the proceedings been initiated against the Assessee during his life time, they could be continued against the legal representatives of the deceased Assessee. However, that was not the factual position in the instant case.
The Revenue placed a strong reliance on the text of clause (a), (b) and (c) of Section 159(2) of the Act related to initiation of proceedings against a legal representative in case of death of the assessee.
The Hon’ble High Court observed that the provisions of section 159 inter alia indicate with clarity that the proceedings initiated against the assessee during his lifetime can be continued against his Legal Representatives, and their liability could be co-extensive with the value of the estate of the deceased. They do not admit the interpretation sought to be placed by the Revenue to the effect that initiation of proceedings can be made against the deceased Assessee and orders passed therein would bind or can be enforced against the Legal Representatives.
The Hon’ble High Court opined that had the proceedings been initiated during the lifetime of the Assessee, but continued against his Legal Representatives, that could have been admissible in the scheme of the Act. However, that was not the case. If the Parliament intended that, a proceeding of the kind can be initiated against the Assessee posthumously and orders passed therein should bind his Legal Representatives, the language of the provision would have been much different. There is a strong presumption that the Parliament fully understands what public policy needs to be enacted and the text of language to be employed for such enactment. English is a foreign language, is a poor ground of rebuttal, especially when a plethora of legislations are in that language, although along with Hindi.
The second contention of the Revenue was that liberty be given for initiating fresh proceedings against the Legal Representatives of the Assessee, once proceedings taken up against the deceased Assessee has been declared void. This contention was structured on a premise that the Legal Representatives i.e., persons who hold estate of the deceased Assessee in their hands are under a legal obligation to inform the Revenue as to the death of the Assessee.
However, the Hon’ble High Court noted that to support such a premise, no provision of law in general and no section of the Act in particular were brought to the notice of the Court. Though clause (b) of Section 159(2) enables proceedings being taken against Legal Representatives of the deceased, it is subject to such proceedings being capable of being taken against the deceased. If the statutorily prescribed time limit has expired as against the deceased himself, as has happened in this case then no proceedings can be taken against his LR.
The Hon’ble High Court opined that conspicuously, there is no provision in the Act which provides for discounting the time spent during the pendency of proceedings against the deceased Assessee while computing the limitation period for initiating the proceedings against his Legal Representatives.
Accordingly, the Appeal was dismissed.
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