Madras High Court upholds validity of tax assessment made in deceased person’s name

 Recently, the Madras High Court has held that an income tax assessment made in the name of a deceased person remains valid and enforceable against his legal heirs.

The taxpayer had passed away in January 2024 and thereafter, the tax department issued a notice and completed the assessment in his name. His son filed a writ petition challenging the proceedings before the High Court, arguing that the assessment made after his father’s death was invalid. The petitioner claimed that the assessment was void since it was completed in the name of a person who had already passed away and that the department ought to have issued notices to the legal heirs. The tax department argued that it was never informed about the death of the taxpayer and that the legal heir had participated in parts of the reassessment proceedings. The department maintained that the assessment made in the deceased’s name was valid and that any resulting liability would be recoverable from the legal heirs as per Section 159 of the Income-tax Act, 1961 (‘the Act’).

The Court agreed with the department’s position, noting that there was no record to show that the legal heir had notified the tax authorities about the taxpayer’s death. It further held that even if the legal heir had informed the tax department, the assessment made in the deceased’s name would still be valid, and any tax liability arising from it would attach to the legal heirs as per Section 159(2) and 159(3) of the Act which states that legal heir shall be deemed to the assessee for the tax proceedings. However, the Court gave the legal heir an opportunity to present his case afresh and directed the tax officer to pass a fresh order based on the merits of the case.

This judgment highlights that an assessment made in the name of a deceased taxpayer is not automatically invalid, especially if the department was not informed of the death. From a practical perspective, the families should ensure timely communication of a taxpayer’s death to the tax department to avoid unnecessary disputes