2019 (7) TMI 992 - HC - Income Tax

Reopening of assessment post demise of writ petitioner's father - writ petitioner before this Court is 24 years of age and he is pursuing his Master's degree(M.Tech) - liability of a legal representative - recovery proceedings - HELD THAT - There is no disputation or disagreement that the liability of a legal representative under the IT Act is limited to the extent to which the estate is capable of meeting the liability. To be noted, writ petitioner has not inherited anything from his father and he has/had nothing to do with his father's aforementioned bank account is learned counsel's say. Owing to the peculiar facts and circumstances of this case, with a rider that this case shall not be cited as a precedent, the following order is passed a) Impugned SCN dated 26.12.2018 bearing reference PAN. ALPPC0202L/2018-19 and the impugned assessment order also dated 26.12.2018 are set aside. b) The statement made on oath i.e ., affidavit filed in support of the writ petition by the writ petitioner that he has not inherited any assets and deposits from his father(assessee) particularly ground (f), which has been extracted and reproduced supra is recorded. c) It is open to the respondent to proceed against the aforesaid Bank Account bearing A/c No 12451930001835, HDFC Bank, 22, 7th East Cross, Gandhi Nagar,Katpadi, Vellore, IFSC HDFC0001245 and any other assets of the assessee (writ petitioner's father), if unearthed and if it comes to light or surfaces in future.

Summary

Issues involved:
1. Assessment under the Income Tax Act, 1961 for the Assessment Year 2010-2011.
2. Legal implications regarding the liability of a legal representative under Section 159 of the IT Act.
3. Inheritance claims and assets of the deceased father in relation to the writ petitioner.

Assessment under the Income Tax Act, 1961 for the Assessment Year 2010-2011:
The case involves a writ petition pertaining to the Assessment Year 2010-2011 under the Income Tax Act, where the petitioner, a minor at the time, faced scrutiny assessment proceedings post his father's sudden demise. The petitioner, unaware of his father's business activities, expressed his predicament in a detailed reply to the notice issued under Section 147 of the IT Act. Following subsequent notices and events, an Assessment Order dated 26.12.2018 assessed the income tax at a substantial amount, which the petitioner contested based on his lack of inheritance from his deceased father. The petitioner highlighted his ignorance of his father's financial affairs and the challenging circumstances post his parents' untimely deaths.

Legal implications regarding the liability of a legal representative under Section 159 of the IT Act:
The judgment delves into the legal framework concerning the liability of legal representatives under Section 159 of the IT Act. Specifically, the court emphasized that the liability of a legal representative is constrained by the estate's ability to meet the liabilities, as outlined in Sub Section 6 of Section 159. Notably, the petitioner, who had not inherited any assets from his father, was deemed not liable beyond the estate's capacity. The court's decision underscored the importance of the legal provisions governing the extent of liability for legal representatives under the IT Act, ensuring a fair and just application of the law in light of the petitioner's circumstances.

Inheritance claims and assets of the deceased father in relation to the writ petitioner:
A crucial aspect of the case revolved around the petitioner's assertion that he did not inherit any property, cash deposits, or movables from his deceased father. This claim was substantiated in the affidavit filed in support of the writ petition, emphasizing the petitioner's lack of financial connection to his father's estate. Despite the Revenue counsel's reference to transactions in the father's bank account as a basis for the proceedings, the court acknowledged the petitioner's disassociation from his father's financial affairs and assets. The judgment highlighted the petitioner's vulnerable position following his parents' deaths and clarified the limitations on his liability as a legal representative, considering the absence of inheritance and financial ties to his father's estate.

In conclusion, the judgment navigated through the intricate details of the case, addressing the assessment under the IT Act, the legal implications of a legal representative's liability, and the inheritance claims concerning the deceased father's assets. By interpreting and applying the relevant legal provisions, the court provided a nuanced resolution tailored to the unique circumstances of the petitioner, safeguarding his interests and ensuring a just outcome in the context of the complex familial and financial challenges faced by the petitioner.