The Karnataka High Court held that proceedings initiated against an Income Tax Assessee by issuing notice after his demise cannot be continued against his/her legal representative. It was found that the procedures were started against the deceased Assessee while he was still alive and may have been carried out against his attorneys.
The authorities discovered that Assessee Ramanatha Gurulakshmi had substantial cash deposits, had engaged in transactions involving real estate throughout the Assessment Year 2016–17, and had neglected to file her returns, which would have declared interest from the deposits and capital gains. She received a notification from Speed Post on January 31, 2023, under section 148A(b) of the Income Tax Act, 1961, asking her to explain why she shouldn’t have received the notice. Additionally, on February 15, 2023, a second warning was sent. On March 11, 2023, an order under section 148A(d) was passed because no response was filed to the aforementioned notices. Additionally, a notice under section 148 was issued, instructing the assessee to file her returns.
A statutory notice dated 15.11.2023 came to be issued under section 142(1). The respondent then sent a reply dated 28.11.2023 mentioning that the Assessee died on 14.10.2022. However, the Assessing Authority after referring to Sec.159(2)(d) of the Act made the Assessment under section 147 r/w Sec.144, on 29.03.2024 against the deceased Assessee for the Assessment Year 2016-17.
Achieve Success: Expert-Led Courses for Tax and Finance Pros, Click Here
To change the contested ruling, the revenue panel’s attorney used Section 159(2)(a)(b)&(c) of the Income Tax Act. The court emphasized that “the language of the provision would have been much different 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 court held that “This contention is 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. To support such a premise, no provision of law in general and no section of 1961 Act in particular are brought to our notice.”
According to a split bench consisting of Justices Krishna S. Dixit and G. Basavaraja, the procedures were started against the deceased Assessee while he was still alive and may have been carried out against his attorneys.
The bench held this after rejecting an appeal from the Income Tax officer contesting a one-judge bench ruling that had supported Preethi V’s petition and revoked the demand and penalty notices as well as any further legal actions that may have followed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
