2018 (12) TMI 1523 - HC - Income Tax

Demand notice issued u/s 156 - Treating the petitioner as the relative of the deceased - Held that - One Sulochana was the assessee, who also was no more at the time of passing the impugned proceedings. It is stated by the petitioner that the said deceased assessee is the sister-in-law of the petitioner s mother-in-law. Section 2(41) defines the term relative as follows relative , in relation to an individual, means the husband, wife, brother or sister or any lineal ascendant or descendant of that individual. Certainly, the definition of the term relative, as defined under section 2(41), does not include the relationship between the petitioner and the deceased assessee. Therefore, find that the order of assessment and the consequential demand issued on the petitioner by treating the petitioner as the relative of the deceased cannot be sustained in the eye of law. Merely because the petitioner is residing in the same property where the deceased assessee was living before her death, cannot be a reason to conclude as if the petitioner is also one of the legal heirs of the deceased. If such presumption is permitted, it would go against the definition of relative as defined under section 2(41). Therefore, find that the impugned order cannot be sustained, insofar as the petitioner is concerned. Accordingly, the Writ Petition is allowed and both the proceedings are quashed only insofar as the petitioner is concerned.

Summary

Issues:
Challenge to assessment order and demand notice under Income Tax Act, 1961 based on petitioner's relationship to deceased assessee.

Analysis:
The petitioner contested the assessment order and demand notice issued under the Income Tax Act, 1961 for the assessment year 2010-11, claiming she is not an assessee under the respondent. The petitioner argued that she was erroneously treated as a legal heir of the deceased assessee, Sulochana, and therefore, the proceedings against her were unjustified. She clarified that she was not a party to any legal proceedings or a beneficiary under any will related to the deceased. The petitioner also emphasized that she did not fall under the definition of "relative" as per section 2(41) of the Income Tax Act.

In response, the respondent contended that the petitioner resided in the same property as the deceased assessee, indicating a connection to the deceased's assets. The respondent justified the initiation of proceedings and the assessment order based on this connection between the petitioner and the deceased.

Upon hearing both sides, the court noted that the petitioner was not the assessee, and the deceased Sulochana was the actual assessee, who had passed away before the proceedings. The court referred to the definition of "relative" under section 2(41) of the Income Tax Act, which did not encompass the relationship between the petitioner and the deceased. Therefore, the court concluded that treating the petitioner as a relative of the deceased for the assessment and demand notice was legally unsustainable. The court emphasized that merely residing in the same property as the deceased did not establish the petitioner as a legal heir. Consequently, the court allowed the writ petition, quashed the proceedings against the petitioner, and closed the connected miscellaneous petition without costs.