Legal heirs not bound to inform I-T dept about assessee's death, rules HC

The Delhi High Court on Thursday ruled that there was no obligation on the legal heir to inform the tax department about the death of a taxpayer.


“This Court is of the view that in the absence of a statutory provision it is difficult to cast a duty upon the legal representatives to intimate the factum of death of an assessee to the income-tax department,” the court ruled.


It said there might after all be cases where legal representatives would be estranged from the deceased assessee or the deceased assessee might have bequeathed their entire wealth to a charity.


“Consequently, whether the PAN record was updated or not or whether the department was made aware by the legal representatives or not is irrelevant,” the court said.


The court passed an order in a case related to the tax department issuing a notice to a person in March, 2019, regarding some unexplained income not mentioned in the return. The person in question had died in December 2018. Subsequently, a showcause notice was also served on the deceased as to why penalty should not be levied on him.


Upon finding that the assessee was dead, the assessing officer passed an order in November 2019, imposing a penalty upon the deceased-assessee through his legal heir for non-compliance of notices issued to the assessee.


The court quashed the notices and all the subsequent orders of the assessing officer.


Kapil Rana, founder and chairman, HostBooks Ltd, said: “The legal heirs can be a party to the assessment process where the assessment has already started or the legal heir by his own accord agrees to become a party to the assessment.”


Naveen Wadhwa, tax expert at Taxmann, cautioned that legal representatives must furnish return of income if the assessee died before filing it. “If such a return is not furnished, it may invite notice from the income-tax department. However, such a notice has to be issued in the name of the legal representative, not in the name of the dead person,” he said.

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