The Income-tax Appellate Tribunal (ITAT), Mumbai bench, has held an assessment order passed in the name of a deceased taxpayer to be ‘non-est’ (does not exist) and quashed the addition made to the taxable income of the deceased individual.
The taxpayer had passed away in August 2015 and the assessment order, which resulted in an addition of Rs 1 crore to his taxable income for financial year 2009-10, was issued in February of the next calendar year.
This addition was upheld by the Commissioner (Appeals) – Faceless Appeals Center, in an order dated May 2023.
Subsequently, the legal heir, who was his wife, filed an appeal with the ITAT. She submitted that the Commissioner (Appeals) was duty-bound to bring her on record but had failed to do so. She pointed out that in another order passed by the ITAT in November 2020 she had been clearly mentioned as the legal heir.
The tax tribunal observed, “Undisputedly in the present case, after the death of the taxpayer (Late M.H. Bothra), no notice was issued in the name of the legal heir.”
Under section 159 of the Income Tax Act, when a person dies, his/her legal heir is liable to pay tax dues which the deceased would have been liable to pay. “Thus, if a valid assessment is carried out, the legal heir will be responsible for the demand raised on the deceased taxpayer. In this case, as the assessment order framed in the name of the deceased taxpayer was held non-est in law, consequently the tax demand raised would not be valid,” the expert said.