Income Tax Proceedings against Deceased Person Invalid, must be Initiated against Legal Heirs u/s 159: Bombay HC [Read Order]

In a recent ruling, the Bombay High Court held that tax proceedings initiated in the name of a deceased person are invalid and must be directed against legal heirs under Section 159 of the Income Tax Act.

Amjad Ahmed Shaikh, the petitioner and legal heir of the deceased, challenged the validity of income tax notices issued under Sections 148, 148A(d), 147, 144, 144B, and 156 of the Income Tax Act. The petitioner’s counsel argued that the department had been informed of his father’s death in May 2018, yet proceeded to issue assessment orders in his name as late as March 2024. The petitioner’s counsel argued that such notices and orders were legally null and void.

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The Income Tax Department defended its actions by stating that all communications had been sent to the deceased’s chartered accountant, who had not informed them about the demise. The department also invoked Section 159 of the Income Tax Act, arguing that proceedings can continue against legal representatives, thereby justifying the notices in the deceased’s name.

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The Bombay High Court rejected the department’s justification, noting that once the death of the assessee was known, issuing notices in his name was impermissible. The court held that Section 159 only allows tax proceedings to be continued against legal heirs and not against a deceased individual.

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The court referenced previous rulings such as Devendra (supra.), Gourang Anil Wakade (supra.), and Sumit Balkrishna Gupta (supra.) that established that such notices were a nullity in law.

The court quashed assessment orders and demand notices issued by the Income Tax Department against the late Ahmed Gulamnabi Shaikh, despite prior intimation of his demise but clarified that the department remains free to initiate fresh proceedings against the legal representative in accordance with the law. The writ petition was allowed.

To Read the full text of the Order CLICK HERE

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