Karnataka HC Quashes Tax Assessment Begun Against Man A Year After His Death, Leaving Open Proceedings Against Heirs If Law Permits

The assessee, Thelappillil Varghese, died on 21 June 2024.

The Income Tax Department issued a notice under Section 143(2) of the Income Tax Act, 1961 on 23 June 2025, and subsequently passed an assessment order under Section 144 read with Section 144B and issued a demand notice under Section 156, both dated 11 February 2026.

His wife, representing him, challenged those proceedings on the ground that they had been commenced against a deceased person.

The Department accepted that the proceedings had begun against the deceased assessee, but submitted that Section 159(2)(b) permitted proceedings against his legal representatives.

The petitioner confirmed that the address in the cause title was suitable for service of any notice.

Section 159(2)(b) of the Income Tax Act, 1961 was invoked by the Department as permitting proceedings against an assessee’s legal representatives.

The Court quashed the assessment order and demand notice made in proceedings commenced against the deceased assessee, while expressly preserving the Department’s ability to commence proceedings against the petitioner or other legal representatives, provided such proceedings are permissible in law.

The Court accepted the undisputed fact that the assessee had died before the Section 143(2) notice was issued and that the proceedings were commenced against him as a deceased person.

It therefore quashed the resulting assessment order and demand notice. At the same time, noting the Department’s reliance on Section 159(2)(b), the Court did not foreclose proceedings against the legal representatives; it left that possibility open subject to the law and specified that notice sent to the address stated in the cause title would constitute due service.

The Court quashed the assessment order dated 11 February 2026 and the corresponding demand notice, without prejudice to the Department commencing proceedings against the petitioner or other legal representatives if permissible in law.

A notice addressed or sent to the address stated in the cause title was to constitute due service.

Although the petition also sought relief concerning the Section 143(2) notice and penalty notices, the operative order expressly quashed only the assessment order and demand notice.