Heir will not receive tax notice: ITAT quashes order on deceased taxpayer

The Income Tax Appellate Tribunal (ITAT), Mumbai bench, ruled out that an assessment order issued in the name of a deceased taxpayer was ‘non-est’ (does not exist) and dismissed the addition made to the deceased individual’s taxable income.

The taxpayer died in August 2015, and the assessment order, which added Rs 1 crore to his taxable income for the financial year 2009-10, was issued in February of the following calendar year.

In an order dated May 2023, the Commissioner (Appeals) – Faceless Appeals Centre upheld this addition.

Following that, his wife, the legal heir, filed an appeal with the ITAT. She claimed that the Commissioner (Appeals) had a duty to record her but had neglected to do so. She emphasised that in another order issued by the ITAT in November 2020, she was clearly identified as the lawful heir.

According to the tax tribunal, in the present case, no notice was issued in the name of the legal heir following the death of the taxpayer (late M.H. Bothra).

When a person dies, his or her legal heir is obligated to pay tax dues that the deceased would have been obligated to pay under section 159 of the Income Tax Act. As a result, if a valid assessment is carried out, the legal heir will be liable for the demand raised on the deceased taxpayer.

In this case, as the assessment order framed in the name of the deceased taxpayer was declared non-est in law, the tax demand raised would be invalid, the expert explained.