Proceedings Against Deceased Cannot Continue Against Legal Representatives: Karnataka HC

Aditya Narayan Parida

1 week ago

If proceedings had been initiated during the Assessee’s lifetime, they could have been validly continued against their legal representatives.

In a landmark ruling, the Karnataka High Court in the case of ITO Vs Smt. Preethi has held that any proceedings initiated against a deceased individual are null and void and cannot be continued against their legal representatives unless such proceedings were initiated during the lifetime of the deceased. The Division Bench upheld the decision of the learned Single Judge, dismissing the appeal by the Income Tax Department.

Key Facts of the Case

The matter arose when the Assessing Authority received information regarding Smt. Ramanatha Gurulakshmi, who allegedly had substantial cash deposits, immovable property transactions, and unfiled income tax returns for the Assessment Year (AY) 2016-17. Specific allegations included undeclared income from interest and capital gains.

Notice Issuance: A notice under Section 148A(b) of the Income Tax Act, 1961, was issued on January 31, 2023, via Speed Post, requiring the Assessee to explain why proceedings under Section 148 should not be initiated. The notice was delivered on February 3, 2023.
Subsequent Notices: As there was no response, another notice dated February 15, 2023, was issued. This led to an order under Section 148A(d) being passed on March 11, 2023, followed by a notice under Section 148 directing the filing of returns.
Deceased Assessee: On November 15, 2023, a statutory notice under Section 142(1) was issued but returned unserved with the postal remark ‘Deceased’. Despite this, a subsequent notice dated November 30, 2023, was issued. In response, the legal representative of the deceased submitted a reply on November 28, 2023, confirming the Assessee’s death on October 14, 2022.
Assessment Order: Despite being aware of the Assessee’s demise, the Assessing Authority referred to Section 159(2)(d) of the Income Tax Act and passed an order under Section 147 read with Section 144 on March 29, 2024, against the deceased Assessee for AY 2016-17.

Also Read: Recovery of Tax Liabilities from a Deceased Person

High Court Judgment

The Karnataka High Court categorically ruled that:

Nullity of Proceedings: Proceedings initiated against a deceased person are inherently null and void.
Legal Representatives: If proceedings had been initiated during the Assessee’s lifetime, they could have been validly continued against their legal representatives. However, in this case, the initiation occurred posthumously.
Upholding the Single Judge’s Order: The Bench agreed with the Single Judge’s decision to quash the assessment order and related proceedings, terming them invalid due to the factual scenario of initiation after the Assessee’s death.

Also Read: Key Updates on Tax & Corporate Law – January 27, 2025

Legal Implications

This judgment underscores the principle that legal proceedings under the Income Tax Act must comply with procedural requirements. Section 159 of the Act provides for assessments involving deceased individuals, but its applicability hinges on initiation during the Assessee’s lifetime.

Case Details

Case Name: ITO Vs Smt. Preethi
Appeal Number: Writ Appeal No. 1407 of 2024 (T-IT)
Date of Judgment/Order: January 22, 2025
Assessment Year: 2016-17

The Karnataka HC’s decision serves as a vital precedent, reinforcing the necessity of adhering to procedural laws when dealing with assessments involving deceased individuals.