Income Tax Assessment Proceedings against Deceased Persons

Introduction: Even after a person’s demise, income tax obligations persist. This article delves into the legal nuances surrounding the assessment proceedings against deceased individuals, detailing the responsibilities of their legal representatives.

Even deceased are require to comply with the provisions of the Income tax acts. The law ensures the recovery of tax liability of the deceases, through his legal representative. So even the person is dead, tax has to be paid to the government if any tax payable when the person was alive. In this case the law is compiled by the legal representative of the deceased person.

Legal representatives of the assesse, to whom his estates pass on, is liable for compliances and to pay any tax liability / tax arrears.

“Legal representative” means a person who represents the estate of a deceased person. The term legal representative includes an heir, executors, administrator or other legal representative.

Provision

Provision of section 159 of the income tax applied on the death of the assesse. As per the provision the legal representative of the deceased is the deemed assesee. The Section establishes a legal fiction only for the purpose of assessment proceedings for the particular year. Any income earned or accrued during the year of an individual’s demise may be divided proportionally up until the date of death, and the legal representative may be held accountable for the income accumulated by the deceased up the date of death.

Assessment Proceedings:

The legal representative of the assesse is deemed to be an assesse on the death of the assesse. As per the provisions section, all the proceedings taken against the assesse when he was alive are deemed to have been taken against the legal representative on the death of the assessee and would continue against the legal representative.

Further any proceeding not commenced, but could have been initiated against the deceased if he had survived, can be taken against the legal representative. The responsibility of the legal representative shall be limited to the extent to which the deceased’s estate is able to fulfil said liability.

In case of more than one legal representative all the legal representatives are personally liable to pay the tax liability, limited to the value of assets of deceased in the possession of that legal representative..

There are some remarkable judgements and observations which could clear the provisions more precisely and

1. Assessee died before completion of assessment proceedings:

The judgement of the M.P. high court in CIT v. Dalumal Shyanumal (2005). In this case it is held that the assessing officer is required to bring the legal representative of the deceased on record and proceed from the stage where it was as on date of death of the assessee. If the assessee died before the assessment proceedings were completed.

2. Information of death of assesse to the department:

In the case of Savita Kapila, legal heir of late Shri Mohinder Paul Kapila v. ACIT (2020) (Delhi HC) held Legal representative are not obliged to inform the income tax department about the demise of the assesse.

3. Notice and order to dead person:

In the instance where the assessment is complete but assesse died before issuance of the assessment order. The issuance of assessment notice and assessment order to the dead person is invalid. In case of Vikram Bhatnagar v. Assistant Commissioner of Income Tax Delhi HC held that issuing of notice against the dead person and the assessment order passed against the dead person on his PAN without bringing on record all his legal representatives is null and void.

Conclusion:

In the instance of the death of the assesse the filing of Income-tax return of the deceased may become a difficult task. As the legal representatives may not be aware of the activities done by the deceased, prior to his death and practically it could be difficult to obtain details of income. The legal heirs merely by being aware of the provisions of Income-tax and following procedural formalities can save from the litigation with the department.

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